UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 10, 2015 (March 9, 2015)
LOCAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
|
|
|
|
|
Delaware |
|
001-34197 |
|
33-0849123 |
(State or other Jurisdiction
of Incorporation) |
|
(Commission
File Number) |
|
(I.R.S. Employer
Identification No.) |
7555 Irvine Center Drive
Irvine, California 92618
(Address of Principal Executive Offices)
(949) 784-0800
(Registrants telephone number, including area code)
N/A
(Former name or
former address, if changed since last report)
Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. |
Entry into a Material Definitive Agreement |
Securities Purchase Agreement
On March 9, 2015, Local Corporation (the Company) entered into a Securities Purchase Agreement (Purchase Agreement) with the
investors named therein (the Investors) relating to the sale and issuance in (i) a direct offering, registered under the Securities Act of 1933, as amended (the Securities Act), of $4,750,000 aggregate principal amount
of Series B Senior Convertible Notes (each, a Series B Note, and collectively, Series B Notes) (including up to 6,699,575 shares of the Companys common stock, par value $0.00001 per share (the Common Stock),
initially issuable upon conversion or otherwise under the Series B Notes (subject to adjustment as described below)) in an offering (Series B Offering) pursuant to a prospectus supplement to the Companys effective shelf
registration statement on Form S-3 (Registration No. 333-196429) and (ii) a contemporaneous private offering (the Series A Offering and, collectively with the Series B Offering, the Notes Offering), of $4,568,056
aggregate principal amount of the Companys Series A Senior Convertible Notes (collectively, Series A Notes and together with the Series B Notes, the Notes) (including up to 8,255,266 shares of the Companys
Common Stock initially issuable upon conversion or otherwise under the Series A Notes (subject to adjustment as described below)) and warrants (the Warrants) to purchase up to 7,708,091 shares of the Companys Common Stock
(subject to adjustment as described below), for a term of five years after the closing of the Notes Offering. The Company expects to receive total gross proceeds under the Purchase Agreement of approximately $9.32 million.
The Purchase Agreement obligates the Company to indemnify the Investors and various related parties for certain losses including those resulting from
(i) any misrepresentation or breach of any representation or warranty made by the Company, (ii) any breach of any obligation of the Company and (iii) certain claims by third parties.
The Purchase Agreement contains representations and warranties of the Company and the Investors which are typical for transactions of this type, including
representations by each Investor that such investor is a qualified institutional buyer (as defined in Rule 144A under the Securities Act), an accredited investor (as defined in Rule 501 of Regulation D under the Securities Act) or a qualified
investor under the European Union prospectus directive. The representations and warranties made by the Company in the Purchase Agreement are qualified by reference to certain exceptions contained in disclosure schedules delivered to the Investors.
Accordingly, the representations and warranties contained in the Purchase Agreement should not be relied upon by others who have not reviewed those disclosure schedules and the documentation surrounding the transaction as a whole. Each of the
Investors has a pre-existing relationship with the Company, either as a significant investor in the Companys existing debt and/or equity securities or as a member of the Companys board of directors or executive management.
The Notes Offering is expected to close (the Closing) on March 12, 2015 (the Closing Date), subject to satisfaction of customary
closing conditions, including the filing of a prospectus supplement relating to the Series B Notes and the Common Stock issuable upon conversion or otherwise under the Series B Notes.
Indenture and Supplemental Indentures
The Company will
issue the Notes under an indenture, to be dated as of the Closing Date, between the Company and U.S. Bank National Association, as trustee (the Base Indenture), as supplemented by a first supplemental indenture, to be dated as of the
Closing Date, relating to the Series A Notes (the First Supplemental Indenture), and a second supplemental indenture, to be dated as of the Closing Date, relating to the Series B Notes (the Second Supplemental Indenture and,
together with the First
2
Supplemental Indenture, the Supplemental Indentures and, the Base Indenture as supplemented by the Supplemental Indentures, the Indenture). The terms of the Notes include
those provided in the Indenture (including the applicable Supplemental Indenture) and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the Trust Indenture Act).
Series A Notes and Series B Notes
Each series of Notes
will be issued at par and are not subject to defeasance. Each series of Notes will be issued in certificated form and not as global securities.
Ranking
Each series of Notes will be the senior
subordinated unsecured obligations of the Company and not the obligations of the Companys subsidiaries. Each series of the Notes will be subordinated in right of payment to the Companys principal credit facility and any successor
facility, equal in right of payment with one another, effectively subordinated to the Companys existing and future secured debt, to the extent of the value of the collateral securing such debt, and to any debt of the Companys
subsidiaries, and senior to all other indebtedness of the Company. So long as any Notes remain outstanding, neither the Company nor any of its current or future subsidiaries will grant a security interest in their respective assets, nor will the
Company or such subsidiaries incur any new debt except for (i) trade payables in the ordinary course of its business and (ii) certain permitted indebtedness, including its principal credit facility and any successor facility, which will be
permitted senior indebtedness under the Notes and the Indenture.
Maturity Date
Unless earlier converted or redeemed, the Series A Notes will mature on April 11, 2018 and the Series B Notes will mature on August 1, 2016, subject,
in each case, to the right of the Investors to extend the date (i) if an event of default under the applicable series of Notes has occurred and is continuing or any event shall have occurred and be continuing that with the passage of time and
the failure to cure would result in an event of default under the applicable series of Notes or (ii) for a period of twenty business days after the consummation of a fundamental transaction if certain events occur (such date with respect to
each series of Notes, as may be extended, the Maturity Date).
Interest
The Series A Notes will bear interest at a rate of 8.00% per annum on the outstanding principal amount, computed on the basis a 360-day year and twelve
30-day months. Interest is payable on the Series A Notes commencing July 1, 2015 and quarterly thereafter on January 1, April 1, July 1 and October 1 (each a Series A Interest Date).
The Company may pay the applicable interest amounts due on a Series A Interest Date in shares of its Common Stock, subject to the satisfaction of certain
Equity Conditions (as defined herein), or elect to pay in cash (or a combination of both cash and shares of its Common Stock). If the Company is not permitted to deliver shares of Common Stock with respect to a Series A Interest Date due to a
failure to satisfy any of the conditions, it must pay the applicable interest in cash, unless the conditions are waived by the holder of the Series A Note. The Supplemental Indentures limit the Companys ability to pay interest and other
amounts in cash with respect to each series of Notes. See Limits on Cash Payments, below.
3
If the Company makes a payment due on any Series A Interest Date in shares of its Common Stock, the amount due on
the Series A Interest Date (less any cash interest paid on such date) will be converted into shares of its Common Stock at a price per share equal to the Series A Interest Conversion Price (as defined herein). The Series A Interest Conversion
Price is the lesser of (i) the Series A Conversion Price (as defined herein) then in effect and (ii) 80% of the quotient of (x) the sum of the volume weighted average price of the Common Stock for each of the five consecutive
trading days immediately preceding such Series A Interest Date, divided by (y) five (as adjusted for stock splits, stock dividends, recapitalizations and similar events). The Series A Conversion Price will initially be $0.5534 per
share, subject to adjustment as described below under Conversion.
Interest on the Series B Notes will accrue at 10.00% per annum
on the outstanding principal amount, computed on the basis of a 360-day year and twelve 30-day months, and compounded monthly. Interest on the Series B Notes is payable (i) on each Series B Interest Date (as defined herein) occurring on an
Installment Date (as defined herein) as part of the applicable Installment Amount (as defined herein) and (ii) with respect to each other Series B Interest Date, on such Series B Interest Date, in cash. With respect to any given calendar month,
the Series B Interest Date means (x) if prior to the Maturity Date, such Installment Date, if any, in such calendar month or (y) if on or after the Maturity Date, the first trading day of such calendar month.
If a holder elects to convert or redeem all or any portion of either series of Notes prior to the applicable Maturity Date, all accrued and unpaid interest on
the amount being converted or redeemed will also be payable.
The interest rate payable on each series of Notes will increase to 18.00% per annum (i)
upon the occurrence of and during the continuance of any Event of Default pursuant to such series of Notes or (ii) at any time that the Companys Common Stock is not listed on The New York Stock Exchange, the NYSE MKT, the Nasdaq Global
Select Market, the Nasdaq Global Market or the NASDAQ Capital Market. The Company will also be required to pay a late charge of 18.00% on any amount of principal or other amounts due on each series of Notes which are not paid when due. Late charges
on the Series A Notes are payable in arrears on each Series A Interest Date. Late charges on the Series B Notes are payable in arrears on each Installment Date.
Conversion
All amounts due under the Series A Notes and
the Series B Notes (principal, interest, and late charges, if any) are convertible at any time, in whole or in part, at the option of the holders into shares of the Company Common Stock at either the Series A Conversion Price or the Series B
Conversion Price (as defined herein), respectively, which prices are subject to adjustment as described below. If a holder elects to convert all or any portion of either series of Notes prior to the applicable Maturity Date, all accrued and unpaid
interest and accrued and unpaid late charges on the principal amount being converted at the applicable Conversion Price (as defined herein). In the event of a partial conversion of the Series B Notes, the principal amount converted shall be deducted
from the Installment Amount(s) relating to the Installment Date(s) as set forth in the applicable conversion notice. The Series B Conversion Price will initially be $0.7090 per share, subject to adjustment as described below. The
Series A Conversion Price and the Series B Conversion Price are referred to collectively herein as the Conversion Prices.
Each Conversion
Price is subject to adjustment for stock splits, combinations or similar events. While any of either series of Notes are outstanding, if the Company issues Common Stock or is deemed to issue Common Stock for a consideration per share (the New
Issuance Price) less than a price equal to the Conversion Price in effect for each series of Notes immediately prior to such issue or sale or deemed issuance or sale (the foregoing a Dilutive Issuance), then, immediately after such
Dilutive Issuance, the Conversion Price then in effect for each series of Notes shall be reduced to the New Issuance Price, subject to certain exclusions.
4
In addition, the Company has agreed that, if immediately following the close of business on a specified date in
March 2016 (the Adjustment Date), the Series A Conversion Price then in effect exceeds the price equal to the quotient of (x) the sum of the volume weighted average price of the Common Stock for each of the five consecutive trading
days immediately preceding the Adjustment Date, divided by (y) five (the Adjusted Conversion Price), the Series A Conversion Price will be reset to the Adjusted Conversion Price as of such Adjustment Date.
If the Company fails to timely deliver Common Stock upon conversion of either series of the Notes, the Company has agreed to pay buy-in damages of
the converting holder and certain other amounts.
Redemption of Series A Notes at the Companys Option
If certain conditions are satisfied, the Company may redeem all (but not less than all) of the outstanding principal amount of the Series A Notes, together
with interest to the redemption date and late charges, if any, at a redemption price equal to the amount to be redeemed plus, if the redemption date occurs prior to the first anniversary of the Closing Date, a make-whole amount equal to the amount
of interest that would accrue under the Series A Notes at the interest rate then in effect assuming (for calculation purposes only) that the amount of the Series A Notes being redeemed as of the redemption date remains outstanding through the first
anniversary of the Closing Date. Holders of the Series A Notes may convert their Series A Notes, in whole or in part, as described above, at the Series A Conversion Price then in effect.
Payment of Principal and Interest on Series B Notes
The
Company has agreed to make amortization payments with respect to the principal amount of the Series B Note on each of the following dates, collectively, the Installment Dates:
|
|
|
initially, thirty days after the Closing Date; and |
|
|
|
thereafter, the first trading day of each calendar month immediately following the previous Installment Date until the Maturity Date. |
On each Installment Date, the Company will pay an Installment Amount on each Series B Note that is equal to the sum of (A) (I) with
respect to any Installment Date other than the Maturity Date, the lesser of (X) each holders pro rata share of $200,000, and (Y) the principal amount then outstanding under the Series B Note as of such Installment Date, and (II) with
respect to the Installment Date that is the Maturity Date, the principal amount then outstanding under the Series B Note as of such Installment Date (in each case, as any such Installment Amount may be reduced pursuant to the terms of the Series B
Note, whether upon conversion, redemption or otherwise), (B) any deferred amounts (as discussed below) included in such Installment Amount, (C) any Designated Specified Amount (as defined herein) included in the Installment Amount and
(D) in each case of clauses (A) through (C) above, the sum of any accrued and unpaid interest as of such Installment Date under the Series B Note and accrued and unpaid late charges, if any, under the Series B Note as of such
Installment Date.
The Company is required to pay the applicable Installment Amount on an Installment Date in shares of Common Stock, subject to the
satisfaction of the Equity Conditions. If the Company is not permitted to deliver shares of Common Stock with respect to an Installment Date due to a failure to satisfy any of the Equity Conditions, unless such failure is waived by holders of the
Series B Notes, the applicable Installment Conversion Amount will be deferred to the last Installment Date (or such other Installment Date as a holder may specify in writing).
5
If the Company satisfies the conditions to deliver payment of shares of Common Stock on an Installment Date, the
Installment Amount due on the Installment Date will be converted into shares of Common Stock at a per share price equal to the Installment Conversion Price. The Installment Conversion Price is the lowest of (i) the Series B
Conversion Price then in effect and (ii) 80% of the quotient of (A) the sum of the volume weighted average price of the Common Stock for each trading day during the five consecutive trading day period ending and including the trading day
immediately prior to the such Installment Date, divided by (B) five. All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any such measuring period.
Acceleration and Deferral of Amortization Amounts for Series B Notes
The holder of a Series B Note may, at the holders election by giving notice to the Company, defer the payment of the Installment Amount due on any
Installment Date to another Installment Date, in which case the amount deferred will become part of such subsequent Installment Date and will continue to accrue interest.
On any day during the period commencing on an Installment Date ( a Current Installment Date), and ending on the trading day prior to prior to the
next Installment Date (Installment Period), the holder of a Series B Note may, at its election, convert other Installment Amounts (each, an Acceleration), in whole or in part, at the Installment Conversion Price in effect on
the Current Installment Date. Notwithstanding the foregoing, with respect to any given Installment Period, a holder may not elect to effect any Acceleration during such Installment Period if the sum of (x) the Installment Conversion with
respect to such Installment Date and (y) the sum of all Accelerations of the Holder during such Installment Period exceeds the applicable Maximum Acceleration Amount.
With respect to any applicable Installment Date, the Maximum Acceleration Amount is the amount set forth in the table below opposite the
applicable average volume (the 5-Day Volume) calculated as the quotient of (x) the aggregate daily trading volume (as reported on Bloomberg) of the Common Stock on NASDAQ Capital Market on each trading day during the five trading
day period ending on the trading day immediately preceding such Installment Date, divided by (y) five:
|
|
|
|
|
5-Day Volume |
|
Maximum Acceleration Amount |
|
|
|
Less than or equal to 100,000 |
|
$ |
200,000 |
|
|
|
Greater than 100,000, but less than or equal to 150,000 |
|
$ |
233,000 |
|
|
|
Greater than 150,000, but less than or equal to 200,000 |
|
$ |
266,000 |
|
|
|
Greater than 200,000 |
|
$ |
300,000 |
|
Monthly Amortization Payment Procedures for Series B Notes
Installment Notices
Promptly following the close of the
NASDAQ Capital Market (or other principal market in which the Common Stock is trading) on the trading day prior to each Installment Date, the Company is required to
6
deliver a written notice (each an Installment Notice, and such date, the Installment Notice Due Date) to each holder of the Series B Notes, which Installment Notice shall
(i) specify the applicable Installment Amount of such holders Series B Note to be converted pursuant to an Installment Conversion, (ii) specify the applicable Installment Conversion Price, (iii) specify the number of shares of
Common Stock to be issued to the holder in such Installment Conversion and (iv) certify that either (A) there is not then an Equity Conditions Failure (as defined herein) as of the applicable Installment Notice Date or (B) if there is
an Equity Conditions Failure as of the applicable Installment Notice Date, unless the holder waives such Equity Conditions Failure, no Installment Conversion shall occur on such Installment Date and the applicable Installment Conversion Amount shall
be deferred to the last Installment Date (or such other Installment Date as the holder may elect in writing to the Company). An Equity Conditions Failure means that on any day during the period commencing twenty trading days prior to the
applicable Installment Notice Date through the later of the applicable Installment Date and the date on which the applicable shares of Common Stock are actually delivered to a holder of the Series B Notes, the Equity Conditions have not been
satisfied (or waived in writing by the holder). Each Installment Notice shall be irrevocable. If the Company does not timely deliver an Installment Notice with respect to a particular Installment Date, then the Company shall be deemed to have
delivered an Installment Notice on the applicable Installment Notice Date with a certification that there is not then an Equity Conditions Failure in connection with such Installment Conversion.
Blocker Deferral Rights
If any holder of Series B Notes
is unable to receive shares of Common Stock due to the Note Blocker (as defined herein) with respect to all or the portion of the applicable Installment Amount (the Designated Specified Amount), the Installment Amount of the holder for
such Current Installment Date shall be automatically reduced by such Designated Specified Amount and the Installment Amount of the holder for the last Installment Date (or such other Installment Date as specified in writing by the holder) (the
Designated Specified Deferral Installment Date) shall be automatically increased by such Designated Specified Amount and, at the holders option, at any time prior to the next Installment Date, (A) the holder may reduce the
Designated Specified Amount of shares of Common Stock covered by the applicable Blocker Notice (as defined in the Series B Notes), in whole or in part, by delivery of one or more written notices to the Company (each, a Withdrawal Notice)
and elect to convert the Designated Specified Amount (or such lesser amount as set forth in such Withdrawal Notice) at the Installment Conversion Price with respect to the applicable Installment Date (each, a Withdrawn Designated Specified
Amount), (B) the Company shall convert each Withdrawn Designated Specified Amount and (C) the applicable Designated Specified Deferral Installment Date shall be decreased by the applicable Withdrawn Designated Specified Amount.
Equity Conditions
The Company may pay interest on the
Series A Notes in shares of Common Stock, and is required to pay an Installment Amount on the Series B Notes in shares of Common Stock, only if all of the following equity conditions are satisfied (or waived by the holders of the applicable
series of Notes), which are referred to in this report as the Equity Conditions:
|
|
|
on each day during the period beginning thirty calendar days prior to such applicable date of determination and ending on and including such
applicable date of determination (the Equity Conditions Measuring Period) either (x) one or more registration statements shall be effective and the prospectus contained therein shall be available on such applicable date of
determination (with, for the avoidance of doubt, any shares of Common Stock previously sold pursuant to such prospectus deemed unavailable) for the issuance to the holder or resale by the holder, as applicable, of all shares of Common Stock to be
issued in connection with the event requiring this determination (each, a Required Minimum Securities Amount) without any restrictive legend, or the applicable Required Minimum Securities Amount of shares of Common Stock shall be
|
7
|
eligible for either (A) issuance to the holder without any restrictive legend or (B) resale by the holder pursuant to Rule 144, in either case, without the need for registration under
any applicable federal or state securities laws and no current information failure exists or is continuing; |
|
|
|
the applicable Required Minimum Securities Amount of shares of Common Stock may be issued to the holder in full without violating the Note Blocker or the Exchange Blocker (as defined herein); |
|
|
|
the Company shall have no knowledge of any fact that would reasonably be expected to cause (x) any registration statement required to be filed pursuant to the Registration Rights Agreement (as defined herein) to
not be effective or the prospectus contained therein to not be available for the issuance to the holder or resale by the holder, as applicable, of the applicable Required Minimum Securities Amount of shares of Common Stock or (y) the applicable
Required Minimum Securities Amount of shares of Common Stock to not be eligible for either (A) issuance to the holder without any restrictive legend or (B) resale by the holder pursuant to Rule 144, in either case, without the need for
registration under any applicable federal or state securities and no current information failure exists or is continuing; |
|
|
|
the holder shall not be in (and no other holder of the Notes shall be in) possession of any material, non-public information provided to any of them by the Company, any of its subsidiaries or any of their respective
affiliates, employees, officers, representatives, agents or the like; |
|
|
|
on each day during the Equity Conditions Measuring Period, the Company otherwise shall have been in compliance with each, and shall not have breached any representation or warranty in any material respect (other than
representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any covenant or other term or condition of any other transaction document, including, without limitation, the Company shall
not have failed to timely make any payment pursuant to any transaction document; |
|
|
|
on the applicable date of determination (A) no Authorized Share Failure (as defined in the Notes) shall exist or be continuing and the applicable Required Minimum Securities Amount of shares of Common Stock are
available under the certificate of incorporation and reserved by the Company to be issued pursuant to the Notes and (B) the applicable Required Minimum Securities Amount of shares of Common Stock may be issued in full without resulting in an
Authorized Share Failure; |
|
|
|
on each day during the Equity Conditions Measuring Period, there shall not have occurred and there shall not exist an event of default or an event that with the passage of time or giving of notice would constitute an
event of default; and |
|
|
|
no Material Adverse Change (as defined in the Notes) then exists. |
Redemption of Series B Notes at
Holders Option
At any time the Company sells any Restricted Assets, each holder of a Series B Note shall have the right, in their sole
discretion, to require the Company to redeem up to an aggregate Conversion Amount of the Series B Note equal to 83 1⁄3% of the Available Holder Optional
Redemption Amount by delivering a Holder Optional Redemption Notice stating (i) the portion of the Conversion Amount that is being redeemed (the Holder Optional Redemption Amount) and (ii) the date on which the Holder Optional
Redemption shall occur which date shall be not less than five business days from the date of delivery of the Holder Optional Redemption Notice. The portion of the Series B Note subject to redemption will be redeemed by the Company in cash at a price
equal to 120% of the Holder Optional Redemption Amount. The Available Holder Optional Redemption Amount means, with respect to sales of Restricted Assets, the difference of (x) the holders pro rata amount of the aggregate net
proceeds of all such sales of Restricted Assets, less (y) the aggregate Holder Optional Redemption Amount previously redeemed by
8
the Company; provided, that the foregoing shall not apply to the initial $0.75 million of the aggregate gross proceeds of any sales of Restricted Assets to the extent the Company uses such
proceeds for certain working capital purposes. The Supplemental Indentures limit the Companys ability to pay interest and other amounts in cash with respect to each series of Notes. See Limits on Cash Payments, below.
For the purposes of the Series B Notes, Restricted Assets mean all assets of the Company and its subsidiaries, other than
(i) advertising inventory on the website of the Company or any of its Subsidiaries sold in the ordinary course of business (consistent with past practices), (ii) licenses of software products by the Company or any of its Subsidiaries in
the ordinary course of business (consistent with past practices) and (iii) inventory of the Company or any of its Subsidiaries sold in the ordinary course of business (consistent with past practices). Conversion Amount means the sum
of (x) portion of the principal to be converted, redeemed or otherwise with respect to which this determination is being made, (y) all accrued and unpaid interest with respect to such portion of the principal amount and accrued and unpaid
late charges with respect to such portion of such principal and such interest, if any, and (z) if elected by the holder in a writing to the Company, subordinated payment amounts.
Events of Default
Under the terms of the respective
Supplemental Indentures, the events of default contained in the Base Indenture shall not apply to the Series A Notes and the Series B Notes, respectively. Rather, each of the following events contained in the respective series of Notes will
constitute an event of default under the respective series of Notes:
|
|
|
the failure of the applicable registration statement (as defined in the Registration Rights Agreement) to be filed with the Securities and Exchange Commission (the SEC) on or prior to the date that is five
days after the applicable Filing Deadline (as defined in the Registration Rights Agreement) or the failure of the applicable registration statement to be declared effective by the SEC on or prior to the date that is ten trading days after the
applicable Effectiveness Deadline (as defined in the Registration Rights Agreement); provided that to the extent such failure of the applicable registration statement to be declared effective by the SEC was caused by the Companys failure to
satisfy the SEC on the relevant registration statement or any document incorporated by reference therein and the Company and its counsel have timely and in good faith responded to comments by the SEC as required by the Registration Rights Agreement,
no Event of Default shall be deemed to occur for an additional five trading day period; |
|
|
|
while the applicable registration statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement, the effectiveness of the applicable registration statement lapses for any
reason (including, without limitation, the issuance of a stop order) or such registration statement (or the prospectus contained therein) is unavailable to any holder of Registrable Securities (as defined in the Registration Rights Agreement) for
sale of all of such holders Registrable Securities in accordance with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of five consecutive trading days or for more than an aggregate of ten
trading days in any 365-day period (excluding days during an Allowable Grace Period (as defined in the Registration Rights Agreement)); |
|
|
|
the suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on one of several eligible market for a period of five consecutive trading days; |
|
|
|
the Companys (A) failure to cure a Conversion Failure (other than a Conversion Failure with respect to which a Conversion Notice has been
withdrawn by the holder) or a Delivery Failure (as defined in the Warrants) by delivery of the required number of shares of Common Stock within five trading days after the applicable conversion date or exercise date (as the case may be)
|
9
|
or (B) notice, written or oral, to any holder of the Notes or Warrants, including, without limitation, by way of public announcement or through any of its agents, at any time, of its
intention not to comply, as required, with a request for conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions of the Notes, other than pursuant to the Note Blocker or the Exchange Blocker, or a
request for exercise of any Warrants for shares of Common Stock in accordance with the provisions of the Warrants; |
|
|
|
subject to certain exceptions, at any time following the tenth consecutive day that the holders Authorized Share Allocation (as defined in the Notes) is less than the number of shares of Common Stock that the
holder would be entitled to receive upon a conversion of the full Conversion Amount of the Notes; |
|
|
|
the Companys failure to pay to the holder any amount of principal, interest, late charges or other amounts when and as due under the Notes (including, without limitation, its failure to pay any redemption payments
or amounts hereunder) or any other Transaction Document (as defined in the Purchase Agreement) or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby, except,
in the case of a failure to pay interest and late charges when and as due, in which case only if such failure remains uncured for a period of at least five trading days; |
|
|
|
the Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the holder upon conversion or exercise (as the case may be) of any securities acquired by the holder under
the Purchase Agreement as and when required by such securities or the Purchase Agreement, unless otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five trading days; |
|
|
|
the occurrence of any default under, redemption of or acceleration prior to maturity of at least an aggregate of $0.25 million of Indebtedness (as defined in the Purchase Agreement) of the Company or any of its
Subsidiaries (as defined in the Purchase Agreement), other than with respect to any Other Notes (as defined in the Notes); |
|
|
|
bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against the Company or any subsidiary and, if instituted against the Company or
any subsidiary by a third party, shall not be dismissed within forty-five days of their initiation; |
|
|
|
the commencement by the Company or any subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company or any subsidiary in an involuntary case or proceeding under any applicable
federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization
or relief under any applicable federal, state or foreign law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts, or the occurrence of any other similar federal,
state or foreign proceeding, or the admission by it in writing of its inability to pay its debts generally as they become due, the taking of corporate action by the Company or any subsidiary in furtherance of any such action or the taking of any
action by any Person to commence a Uniform Commercial Code foreclosure sale or any other similar action under federal, state or foreign law, except, solely with respect to any involuntary case or proceeding, that is not dismissed within forty-five
days of their initiation; |
10
|
|
|
the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any subsidiary of a voluntary or involuntary case or proceeding under any applicable federal, state or
foreign bankruptcy, insolvency, reorganization or other similar law, (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or insolvent, or approving as properly filed a petition seeking
liquidation, reorganization, arrangement, adjustment or composition of or in respect of the Company or any subsidiary under any applicable federal, state or foreign law or (iii) a decree, order, judgment or other similar document appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of
any such decree, order, judgment or other similar document or any such other decree, order, judgment or other similar document unstayed and in effect for a period of forty-five consecutive days; |
|
|
|
a final judgment, judgments, any arbitration or mediation award or any settlement of any litigation or any other satisfaction of any claim made by any person pursuant to any litigation, as applicable, (each a
Judgment, and collectively, the Judgments) with respect to the payment of cash, securities and/or other assets with an aggregate fair value in excess of $0.25 million are rendered against, agreed to or otherwise accepted by,
the Company and/or any of its subsidiaries and which Judgments are not, within thirty days after the entry thereof, bonded, discharged, settled or stayed pending appeal, or are not discharged within thirty days after the expiration of such stay;
provided, however, any Judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $0.25 million amount set forth above so long as the Company provides evidence, reasonably satisfactory
to the holder, that such Judgment is covered by insurance or an indemnity and the Company or such subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty days of the issuance of such Judgment;
|
|
|
|
the Company and/or any subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace period, any payment with respect to any Indebtedness in excess of $0.25 million
due to any third party (other than, with respect to unsecured Indebtedness only, payments contested by the Company and/or such subsidiary (as the case may be) in good faith by proper proceedings and with respect to which adequate reserves have been
set aside for the payment thereof in accordance with GAAP) or is otherwise in breach or violation of any agreement for monies owed or owing in an amount in excess of $0.25 million, which breach or violation permits the other party thereto to declare
a default or otherwise accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or event that would, with or without the passage of time or the giving of notice, result in a default or event of default under any
agreement binding the Company or any Subsidiary, which default or event of default would or is likely to have a material adverse effect on the business, assets, operations (including results thereof), liabilities, properties, condition (including
financial condition) or prospects of the Company or any of its Subsidiaries, individually or in the aggregate; |
|
|
|
other than as specifically set forth in this list of events of default, the Company or any subsidiary breaches any representation or warranty in any material respect (other than representations or warranties subject to
material adverse effect or materiality limitations, which may not be breached in any respect) or any covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or condition that is
curable, only if such breach remains uncured for a period of five consecutive trading days; |
|
|
|
an intentionally false or inaccurate certification by the Company that either (A) the Equity Conditions are satisfied, (B) the Optional Redemption Equity Conditions (as defined in the Series A Notes) are
satisfied, (C) there has been no Equity Conditions Failure, (D) there has been no Optional Redemption Equity Conditions Failure (as defined in the Series A Notes) or (E) as to whether any Event of Default has occurred;
|
11
|
|
|
any breach or failure in any respect by the Company of any Subsidiary to comply with any covenant contained in the Notes or the Indenture (to the extent applicable to the Notes), and only in the case of a breach of a
covenant or other term or condition that is curable, only if such breach remains uncured for a period of five consecutive trading days; |
|
|
|
any provision of any Transaction Document shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against the parties thereto, or the validity
or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Company or any subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or
unenforceability thereof, or the Company or any subsidiary shall deny in writing that it has any liability or obligation purported to be created under any Transaction Document to which it is a party; |
|
|
|
any Material Adverse Change occurs; or |
|
|
|
any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes. |
If an event of
default occurs, any holder of Notes may force the Company to redeem all or any portion of such Notes (including all accrued and unpaid interest thereon), in cash, at a price equal to the greater of (i) 125% of the Conversion Amount being
redeemed and (ii) the product of (a) the Conversion Rate (as defined below) multiplied (b) 125% of the Conversion Amount being redeemed, depending on the nature of the default, multiplied by the highest closing sale price of the
Company Common Stock during the period beginning on the date immediately before the event of default and ending on the date of redemption. The Conversion Rate is determined by dividing the amount being converted or redeemed by the
applicable Conversion Price. If the Company fails to make the cash redemption payment, at the holders option upon delivery of a notice voiding the redemption notice, the Conversion Price of the Notes shall be automatically adjusted with
respect to each conversion effected thereafter to the lowest of (A) the Conversion Price as in effect on the date on which the applicable redemption notice is voided, (B) 70% of the lowest closing bid price of the Common Stock during the period
beginning on and including the date on which the applicable redemption notice is delivered to the Company and ending on and including the date on which the applicable redemption notice is voided and (C) 70% of the quotient of (I) the sum of the five
lowest volume weighted average prices of the Common Stock during the twenty consecutive trading day period ending and including the trading day immediately preceding the applicable conversion date divided by (II) five.
Fundamental Transactions
Each series of Notes prohibit
the Company from entering into specified transactions involving a change of control, unless the successor entity is a publicly traded company whose Common Stock is quoted on or listed for trading on an eligible market and the successor entity
assumes in writing all of the Companys obligations under each series of Notes under a written agreement acceptable to the holders of each series of Notes. In the event of transactions involving a change of control, the holders of each series
of Notes will have the right to force the Company to redeem all or any portion of the Notes (including all accrued and unpaid interest thereon).
Covenants
Each series of Notes contain a variety of
obligations of the Company not to engage in specified activities, which are typical for transactions of this type, as well as the following covenants:
|
|
|
the Company will initially reserve from its authorized and unissued Common Stock such number of shares equal to 125% of the maximum number of shares of its Common Stock issuable upon conversion of all Notes as of the
Closing Date, which reservation amount will be increased to 150% of the maximum number of shares of its Common Stock issuable upon conversion of all of the Notes follow the date specified in the Purchase Agreement; |
12
|
|
|
the Company shall not, and it shall cause each of its subsidiaries to not, directly or indirectly, incur or guarantee, assume or suffer to exist any other indebtedness, except for permitted indebtedness;
|
|
|
|
the Company shall not, and it shall cause each of its subsidiaries to not, directly or indirectly, incur any liens, except for permitted liens; |
|
|
|
the Company shall not, and it shall cause each of its subsidiaries to not, directly or indirectly, make any payments in respect of any indebtedness while an event of default under either series of Notes has occurred and
is continuing, except with respect to permitted senior indebtedness (including its bank credit facility, limited to $12.0 million aggregate principal amount) and the other series of Notes; |
|
|
|
the Company shall not, and it shall cause each of its subsidiaries to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on its capital stock or its subsidiaries
capital stock; |
|
|
|
the Company and its subsidiaries will not sell, lease, assign, transfer or otherwise dispose of any of its assets or any assets of any subsidiaries, except for certain permitted dispositions (including sales in the
ordinary course of business) and the sale of the assets of its Krillion local shopping platform and certain intellectual property assets at a fair market price; |
|
|
|
the Company shall sell (x) the assets of its Krillion local shopping platform by no later than June 30, 2015 and (y) certain intellectual property assets by no later than December 31, 2015;
|
|
|
|
commencing prior to a specified date, so long as the Note remains outstanding, the Company shall engage an investment bank, reasonably satisfactory to the holders of the Notes, to explore strategic alternatives with the
Company; and |
|
|
|
if the Company receives any written notice by NASDAQ Capital Market that it has failed to satisfy the minimum trading price requirements of NASDAQ Capital Market and, as of the compliance deadline required by NASDAQ
Capital Market in such written notice (each, a Principal Market Deadline), the Company still fails to satisfy such minimum trading price requirement, it will be required to, no later than such Principal Market Deadline, consummate a
reverse stock split such that, after giving effect to such reverse stock split, it shall then be in compliance with the minimum trading price requirements of NASDAQ Capital Market. |
Limitations on Conversion and Issuance
Subject to
certain waiver rights, a Note may not be converted and shares of Common Stock may not be issued under the Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99%
of the Companys outstanding shares of Common Stock ( the Note Blocker).
A Note may not be converted and shares of Common Stock may not
be issued under the Notes if the sum of the number of shares of Common Stock to be issued plus the number of shares of Common Stock issued under all of the Notes and the Warrants would exceed the number of shares of Common Stock that the Company may
issue without breaching NASDAQ Listing Rule 5635(d), unless the Company has obtained either (i) stockholder approval pursuant to NASDAQ Listing Rule 5635(d) for the issuance of more than 4,658,906 shares of its Common Stock under the Notes and
the Warrants or (ii) an opinion from legal counsel that more than 4,658,906 shares of its Common Stock may be issued under the Notes and the Warrants under Rule 5635(d) (the Exchange Blocker).
13
Limits on Cash Payments
Each of the Supplemental Indentures limit the Companys ability to pay interest and other amounts in cash with respect to each series of Notes. The
Company is prohibited from paying any holder of any Notes in cash, and each holder of Notes is prohibited from accepting any cash amount from the Company in satisfaction of any amount owed under the Notes, provided, that the foregoing restriction
does not apply (i) at any time that Square 1 Bank no longer holds any of the Companys permitted senior indebtedness, (ii) at any time that a successor lender holds the Companys permitted senior indebtedness, provided that after
giving effect to the applicable cash payment, the Company and its subsidiaries, on a consolidated basis, have at least $0.50 million in cash and cash equivalents (excluding cash held in a collection account for the permitted senior indebtedness
or another account subject to daily cash sweep) and no event of default under the permitted senior indebtedness has occurred and is continuing. If at any time a payment under the Notes is due at a time that the Company is unable to satisfy the
Equity Conditions precedent to making such payment in Common Stock but the Indenture prevents the Company from making such payment in cash, an event of default under the Notes would likely occur.
Changes to the Supplemental Indentures
Subject to the
provisions in each Supplemental Indenture requiring that none of the securities issued under such Supplemental Indenture shall be represented by global securities, each Supplemental Indenture may be amended by the written consent of the Company and
the holders of a majority of the aggregate principal amount of the respective series of Notes then outstanding. Subject to the provisions in each Supplemental Indenture requiring that none of the securities issued under such Supplemental Indenture
shall be represented by global securities, no provision of such Supplemental Indenture may be waived other than in writing signed by the party against whom enforcement is sought.
Changes to the Notes
No Note of either series may be
amended or changed without the prior written consent of the holder of such Note and the trustee (if such amendment adversely affects the rights, privileges and immunities of the trustee).
Reports
So long as Notes of either series are
outstanding, the Company will be required to deliver to the trustee, within fifteen calendar days after having filed with the SEC copies of its annual reports and of the information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may from time to time by rules and regulations prescribe) which it is required to file with the SEC pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange
Act). Documents filed by the Company with the SEC via its EDGAR system (or any successor thereto) will be deemed to be filed with the trustee as of the time such documents are so filed. In the event the Company is at any time no longer subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act, so long as any of the Notes of either series are outstanding it must continue to
14
file with the SEC, in accordance with the rules and regulations prescribed from time to time by the SEC, such of the supplementary and periodic information, documents and reports which may be
required under Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations (unless the SEC will not accept such a filing)
and make such information available to the trustee, the holders of each series of Notes, securities analysts and prospective investors.
Certain
Stockholder Rights for Holders of Notes
Holders of Notes will be entitled to receive such dividends paid and distributions made to the holders of the
Companys Common Stock to the same extent as if the holders of the Notes had converted their Notes into Common Stock (without regard to any limitations on conversion contained in the Notes) and had held such shares of Common Stock on the record
date for such dividends and distributions. To the extent a holders right to participate in any such dividend or distribution would result in the holder beneficially owning more than the Note Blocker, then the holder will not be entitled to
participate in such dividend or distribution to such extent and such dividend or distribution to such extent will be held in abeyance for the benefit of the holder until such time, if ever, as its right thereto would not result in the holder
exceeding the Note Blocker.
Excluded Provisions of the Base Indenture
The Company has elected, through the respective Supplemental Indentures, that none of the following provisions of the Base Indenture shall be applicable to
either series of Notes and any analogous provisions (including definitions related thereto) of each Supplemental Indenture shall govern:
|
|
|
The following definitions in Section 101: |
|
|
|
Section 112 (Legal Holidays); |
|
|
|
Section 203 (Securities Issuable in Global Form); |
|
|
|
Section 302 (Denominations); |
|
|
|
Section 304 (Temporary Securities); |
15
|
|
|
Section 306 (Mutilated, Destroyed, Lost and Stolen Securities); |
|
|
|
Section 307 (Payment of Interest; Interest Rights Preserved); |
|
|
|
Section 310 (Computation of Interest); |
|
|
|
Section 401 (Satisfaction and Discharge of Indenture); |
|
|
|
Section 402 (Application of Trust Funds); |
|
|
|
Section 502 (Acceleration of Maturity; Rescission and Annulment); |
|
|
|
Section 507 (Limitation on Suits); |
|
|
|
Section 901 (Supplemental Indentures Without Consent of Holders); |
|
|
|
Section 902 (Supplement Indentures with Consent of Holders); |
|
|
|
Section 1004 (Existence); |
|
|
|
Section 1005 (Maintenance of Properties); |
|
|
|
Section 1006 (Insurance); |
|
|
|
Section 1009 (Waiver of Certain Covenants); |
|
|
|
Article Eight (Consolidation, Merger, Sale, Lease or Conveyance); |
|
|
|
Article Eleven (Redemption of Securities); |
|
|
|
Article Twelve (Sinking Funds); |
|
|
|
Article Thirteen (Repayment at the Option of Holders); |
|
|
|
Article Fourteen (Defeasance and Covenant Defeasance); and |
|
|
|
Article Seventeen (Conversion of Securities). |
Only the events of default contained in each series of Notes
shall be applicable to the such series of Notes. In addition, the subordination provisions contained in the Base Indenture will be qualified by the subordination provisions contained in the respective Supplemental Indentures.
Warrants
The Warrants will entitle holders of the
Warrants to purchase, in the aggregate, up to 7,708,091 shares of the Companys Common Stock. The Warrants will expire on the fifth anniversary of the Closing Date. The Warrants will initially be exercisable at an exercise price equal to
$0.6510. The exercise price is subject to certain adjustments, including the same anti-dilution adjustments for issuance of Common Stock as described above under Conversion above. The exercise price of the Warrants is also subject
to adjustment for stock splits, combinations or similar events, and, in this event, the number of shares issuable upon the exercise of the Warrant, will also be adjusted so that the aggregate exercise price shall be the same immediately before and
immediately after the adjustment. The exercise price of the Warrants is also subject to reset in the same manner as the Series A Conversion Price in March 2016.
16
Limitations on Exercise
The Warrants are also subject to the same limitations on conversions and issuance of Common Stock as the Notes. See Limitations on Conversion and
Issuance.
Fundamental Transactions
The
Warrants prohibit the Company from entering into specified transactions involving a change of control, unless the successor entity assumes all of the Companys obligations under the Warrants under a written agreement before the transaction is
completed. When there is a transaction involving a permitted change of control, a holder of a Warrant will have the right to require the Company to repurchase the holders Warrant for a purchase price in cash equal to the Black Scholes value
(as calculated under the Warrants) of the then unexercised portion of the Warrant.
Registration Rights Agreement
In connection with the Purchase Agreement, the Company will enter into a Registration Rights Agreement with each of the Investors (the Registration
Rights Agreement), which provides for the registration of the Common Stock issuable upon conversion of the Series A Notes and upon exercise of the Warrants. The Company has an obligation to file a Form S-3 Registration Statement within 30 days
of the Closing, to have such registration statement declared effective within 120 days of the closing (140 days if the registration statement is subject to review by the SEC), and to maintain the effectiveness of such registration statement for so
long as the Series A Notes, Warrants or shares of Common Stock issued pursuant to the Series A Notes or Warrants are held by the Investors or their permitted assignees. The Registration Rights Agreement also provides that if there is not an
effective registration statement for all of the Registrable Securities (as defined in the Registration Rights Agreement) covered by the agreement, the Investors will also have piggyback rights to include their shares in any registration statements
filed by the Company with the SEC, other than registration statements covering Common Stock issuable under stock-based compensation plans, registration statements relating to Common Stock issuable in business combination transactions, and certain
other registrations. The Company may become responsible for certain specified damages, including buy-in payments, if it fails to meet its obligations under the Registration Rights Agreement.
New Credit Facility
On March 9, 2015, the Company
entered into a Financing and Security Agreement, amended on March 9, 2015, with Fast Pay Partners LLC (Fast Pay) creating an accounts receivable-based credit facility (the Fast Pay Agreement).
Under the terms of the Fast Pay Agreement, Fast Pay may, at its sole discretion, purchase the Companys eligible accounts receivables. Upon any
acquisition of accounts receivable, Fast Pay will advance to the Company up to 80% of the gross value of the purchased accounts, up to a maximum of $10.0 million in advances. Each account receivable purchased by Fast Pay will be subject to a
factoring fee rate specified in the Fast Pay Agreement calculated as a percentage of the gross value of the account outstanding and additional fees for accounts outstanding over thirty days. The all-in interest cost to the Company under the Fast Pay
Agreement will not exceed the limit on the Companys permitted senior indebtedness under the Notes. The Company will be obligated to repurchase accounts remaining uncollected after a specified deadline, and Fast Pay will generally have full
recourse against the Company in the event of nonpayment of any purchased accounts. The Companys obligations under the credit facility are secured by substantially all of the Companys assets.
The Fast Pay Agreement contains covenants that are customary for agreements of this type and are primarily related to accounts receivable and audit rights.
The failure to satisfy covenants under the Fast Pay Agreement or the occurrence of other specified events that constitute an event of default could result in the termination of the Fast Pay Agreement and/or the acceleration of the obligations of the
Company. The Fast Pay Agreement contains provisions relating to events of default that are customary for agreements of this type and also include a cross default provision with respect to the Notes.
The Fast Pay Agreement has an initial term ending April 9, 2016 and automatically renews for successive one-year terms thereafter, subject to earlier
termination by written notice by the Company, provided that all obligations are paid and the payment of an early termination fee.
The Company intends to
use cash available from the credit facility to repay its line of credit with Square 1 Bank and to support its operations and growth plans.
The foregoing
description of the Fast Pay Agreement is not complete and is qualified in its entirety by reference to the full text of the Agreement, a copy of which is available at the Company.
Amendment of Principal Credit Facility
On March 9,
2015, the Company and its subsidiaries Krillion, Inc. and Screamin Media Group, Inc. entered into the Tenth Amendment (the Tenth Amendment) to Loan and Security Agreement with Square 1 Bank (the Square 1 Agreement).
Pursuant to the Tenth Amendment, Square 1 Bank consented to the Companys issuance of the Notes pursuant to the Purchase Agreement and to the Companys redemption of its 7% Subordinated Notes due 2015 (the 7% Notes) using the
proceeds of issuance of the Notes as described in Item 1.02 below. In addition, the Company agreed to maintain Minimum Adjusted EBITDA (as defined in the Square 1 Agreement) as set forth therein, and that its capital expenditures for the
year ending December 31, 2015 would not exceed $3.5 million. As noted above, the Company has entered into the Fast Pay Agreement, pursuant to which the Company expects to repay all amounts due and owing Square 1 prior to the maturity date
of the Square 1 Agreement.
Forward-Looking Statement
The foregoing was intended to provide a summary of the terms of the agreements and securities described above. This summary is qualified in its entirety by
reference to the full text of the agreements, each of which is either attached as an exhibit to this Current Report on Form 8-K or available at the Company, as applicable. Readers should review those agreements for a complete understanding of the
terms and conditions associated with these transactions. This current report on Form 8-K does not constitute an offer to sell or the solicitation of an offer to buy the Notes, the Warrants or the shares of the Companys Common Stock issuable
upon conversion or exercise, as applicable, of the Notes and Warrants.
The foregoing also includes forward-looking statements, which are based on current
expectations and are subject to risks and uncertainties that could cause actual results to differ materially. More information about factors that potentially could affect the Companys actual results is included in the Companys filings
with the SEC, including its most recent Annual Report on Form 10-K for the year ended December 31, 2013, its quarterly reports on Form 10-Q and other subsequent filings.
Item 1.02. |
Termination of a Material Definitive Agreement |
On the Closing Date of the Notes Offering, the Company
will use approximately $6.1 million of the net proceeds of the offering to redeem all $5.0 million aggregate principal amount of the Companys 7% Notes at a redemption price of 120% plus accrued and unpaid interest to the date of redemption.
The terms of the transaction providing for redemption of the 7% Notes are described in Item 1.01 of this Report, which is incorporated
17
herein by reference. For a description of the 7% Notes, including the identity of the holders of such notes, see the Companys Report on Form 8-K filed with the SEC on April 11, 2013.
In connection with such redemption, holders of the 7% Notes will release their security interest in all of the assets of the Company and the guarantees by Krillion, Inc. and Screamin Media Group, Inc., the Companys wholly-owned subsidiaries,
of the Companys obligations under the 7% Notes and related obligations undertaken by the Company in connection with the issuance of the 7% Notes will be released.
Item 2.03. |
Creation of a Direct Financial Obligation or an Off-Balance Sheet Arrangement of a Registrant |
On
March 9, 2015, the Company entered into the Purchase Agreement pursuant to which it agreed to sell, subject to certain conditions, Series B Notes in the aggregate principal amount of $4,750,000 and Series A Notes in the aggregate principal
amount of $4,568,056. The description of the Notes Offering in Item 1.01 of this Current Report on Form 8-K is incorporated in its entirety by this reference into this Item 2.03.
On March 9, 2015, the Company also entered into the Fast Pay Agreement that provides the Company with a new accounts receivable-based credit facility. The
Company intends to use cash available from the credit facility to repay its line of credit under the Square 1 Agreement, which agreement was also amended on March 9, 2015 by the Tenth Amendment. The descriptions of the Fast Pay Agreement and the
Tenth Amendment in Item 1.01 of this Current Report on Form 8-K are incorporated in their entirety by this reference into this Item 2.03.
Item 3.02. |
Unregistered Sales of Equity Securities |
As part of the Notes Offering described in Item 1.01, the
Company will issue $4,568,056 aggregate principal amount of Series A Notes (including up to 8,255,266 shares of the Companys Common Stock initially issuable upon conversion or otherwise under the Series A Notes) and Warrants to purchase
up to 7,708,091 shares of the Company Common Stock. The information regarding the Companys issuance and sale of the Series A Notes and the Warrants described in Item 1.01 is incorporated herein by reference. The Series A Notes and
Warrants were issued pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D thereunder.
Item 7.01. |
Regulation FD Disclosure |
On March 10, 2015, the Company issued a press release announcing the
pricing of the offering. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01. |
Financial Statements and Exhibits |
The following Exhibits are being filed with this Current Report on
Form 8-K:
|
|
|
Exhibit No. |
|
Description |
|
|
1.1 |
|
Securities Purchase Agreement, dated March 9, 2015, between Local Corporation and the Investors named therein.(*) |
|
|
4.1 |
|
Form of Base Indenture between Local Corporation and U.S. Bank National Association (*) |
|
|
4.2 |
|
Form of First Supplemental Indenture and Second Supplemental Indenture (*) |
|
|
4.3 |
|
Form of Series A Notes and Series B Notes (*) |
|
|
10.1 |
|
Form of Warrant (*) |
|
|
10.2 |
|
Form of Registration Rights Agreement (*) |
|
|
10.3 |
|
Tenth Amendment, dated March 9, 2015, to Loan and Security Agreement, dated August 3, 2011, by and among Local Corporation, Krillion, Inc.,
Screamin Media Group, Inc. and Square 1 Bank (*) |
|
|
99.1 |
|
Press Release |
18
(*) |
Certain of the agreements filed as exhibits to this report contain representations and warranties made by the parties thereto. The assertions embodied in such representations and warranties are not necessarily
assertions of fact, but a mechanism for the parties to allocate risk. Accordingly, investors should not rely on the representations and warranties as characterizations of the actual state of facts or for any other purpose at the time they were made
or otherwise. |
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
|
|
|
|
|
|
Dated: March 10, 2015 |
|
|
|
LOCAL CORPORATION |
|
|
|
|
|
|
|
|
By: |
|
/s/ Kenneth S. Cragun |
|
|
|
|
|
|
Chief Financial Officer and Secretary |
20
EXHIBIT INDEX
|
|
|
Exhibit No. |
|
Description |
|
|
1.1 |
|
Securities Purchase Agreement, dated March 9, 2015, between Local Corporation and the Investors named therein.(*) |
|
|
4.1 |
|
Form of Base Indenture between Local Corporation and U.S. Bank National Association (*) |
|
|
4.2 |
|
Form of First Supplemental Indenture and Second Supplemental Indenture (*) |
|
|
4.3 |
|
Form of Series A Notes and Series B Notes (*) |
|
|
10.1 |
|
Form of Warrant (*) |
|
|
10.2 |
|
Form of Registration Rights Agreement (*) |
|
|
10.3 |
|
Tenth Amendment, dated March 9, 2015, to Loan and Security Agreement, dated August 3, 2011, by and among Local Corporation, Krillion, Inc.,
Screamin Media Group, Inc. and Square 1 Bank (*) |
|
|
99.1 |
|
Press Release |
(*) |
Certain of the agreements filed as exhibits to this report contain representations and warranties made by the parties thereto. The assertions embodied in such representations and warranties are not necessarily
assertions of fact, but a mechanism for the parties to allocate risk. Accordingly, investors should not rely on the representations and warranties as characterizations of the actual state of facts or for any other purpose at the time they were made
or otherwise. |
21
Exhibit 1.1
EXECUTION VERSION
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the Agreement), dated as of March 9, 2015, is by and among Local
Corporation, a Delaware corporation with offices located at 7555 Irvine Center Drive, Irvine CA 92618 (the Company), and each of the investors listed on the Schedule of Buyers attached hereto (individually, a
Buyer and collectively, the Buyers).
RECITALS
A. The Company and each Buyer desire to enter into this transaction to purchase (i) Series A Notes (as defined below) and Warrants (as
defined below) in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the 1933 Act, and Rule 506(b) of Regulation D (Regulation D) as promulgated by the United States Securities and
Exchange Commission (the SEC) under the Securities Act of 1933, as amended (the 1933 Act) and (ii) Series B Notes (as defined below) pursuant to a currently effective shelf registration statement on Form
S-3, which has sufficient availability for the issuance of the RD Securities (as defined below) on the Closing Date (as defined below) (Registration Number 333-196429) (the Registration Statement) and has been declared effective
in accordance with the 1933 Act, by the SEC.
B. The Company has authorized the issuance of (i) Series A Senior Subordinated
Convertible Notes, in the form attached as Exhibit I to the Series A Supplemental Indenture (as defined below) (the Series A Notes), which Series A Notes shall be convertible into shares of Common Stock (as defined
below)(the Series A Notes, as converted, collectively, together with any shares of Common Stock issuable as interest or otherwise pursuant to such Series A Notes, the Series A Conversion Shares) and (ii) Series B Senior
Subordinated Convertible Notes, in the form attached as Exhibit I to the Series B Supplemental Indenture (the Series B Notes, and together with the Series A Notes, the Notes), which Series B Notes
shall be convertible into shares of Common Stock (as defined below) (the Series B Notes, as converted, collectively, together with any shares of Common Stock issuable as interest or otherwise pursuant to such Series B Notes, the Series B
Conversion Shares, and together with the Series A Conversion Shares, the Conversion Shares), in each case, in accordance with, and issued pursuant to and by, the provisions of (x) an Indenture dated as of the
Closing Date, by and between the Company and U.S. Bank National Association, as trustee (the Trustee), in substantially the form attached hereto as Exhibit A-1 (as amended and/or supplemented from time to time,
including, without limitation, by any Supplemental Indenture (as defined below), the Indenture), (y) a supplemental indenture with respect to the Series A Notes in the form attached hereto as Exhibit A-2 (the
Series A Supplemental Indenture) and (z) a supplemental indenture with respect to the Series B Notes in the form attached hereto as Exhibit A-3 (the Series B Supplemental Indenture, and
together with the Series A Supplemental Indenture, the Supplemental Indentures).
C. Each Buyer wishes to
purchase, and the Company wishes to sell at the Closing (as defined below), upon the terms and conditions stated in this Agreement, as specified on the Schedule of Buyers: (a) a Series A Note in the aggregate original principal amount set forth
opposite such Buyers name in column (3) on the Schedule of Buyers (which aggregate principal amount for all Buyers shall not exceed $4,568,056.00), (b) a Series B Note in the
aggregate original principal amount set forth opposite such Buyers name in column (4) on the Schedule of Buyers (which aggregate principal amount for all Buyers shall not exceed $4.75 million) and/or (c) a warrant to acquire up to
that aggregate number of additional shares of Common Stock set forth opposite such Buyers name in column (5) on the Schedule of Buyers, in the form attached hereto as Exhibit B (the Warrants) (as
exercised, collectively, the Warrant Shares).
D. Concurrently with the Closing, the Company desires to
purchase, and certain Buyers designated as such on the signature page of such Buyer (the Redemption Buyers) desire to sell to the Company, such aggregate principal amount of 7% senior convertible notes of the Company together with
any accrued and unpaid interest thereon and such other amounts payable thereunder (the Redemption Notes), as set forth opposite the name of the applicable Redemption Buyer in column (6) on the Schedule of Buyers (each, a
Redemption Note Amount) for such aggregate purchase price as set forth opposite the name of such Redemption Buyer in column (9) of the Schedule of Buyers (the Redemption Price).
E. At the Closing, the parties hereto shall execute and deliver a Registration Rights Agreement, in the form attached hereto as
Exhibit C (the Registration Rights Agreement), pursuant to which the Company has agreed to provide certain registration rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement),
under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws.
F. The
Series A Notes, the Series A Conversion Shares, the Warrants and the Warrant Shares are collectively referred to herein as the PIPE Securities. The Series B Notes and the Series B Conversion Shares are collectively referred to
herein as the RD Securities. The PIPE Securities and the RD Securities are collectively referred to herein as the Securities.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:
1. |
PURCHASE AND SALE OF NOTES AND WARRANTS. |
(a) Notes and Warrants. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, shall purchase from the Company on the Closing Date (as defined below) a Note
in the original principal amount as is set forth opposite such Buyers name in column (3) on the Schedule of Buyers along with Warrants to initially acquire up to that aggregate number of Warrant Shares as is set forth opposite such
Buyers name in column (4) on the Schedule of Buyers.
(b) Closing. The closing (the
Closing) of the purchase of the Notes and the Warrants by the Buyers shall occur at the offices of Kelley Drye & Warren LLP, 101 Park Avenue, New York, NY 10178. The date and time of the Closing (the Closing
Date) shall be
2
10:00 a.m., New York time, on the first (1st) Business Day on which the conditions to the Closing set forth in Sections 6 and 7 below are satisfied or waived (or such other date as is
mutually agreed to by the Company and each Buyer). As used herein Business Day means any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to remain
closed.
(c) Purchase Price. The aggregate purchase price for the Notes and the Warrants to be purchased by each Buyer (the
Purchase Price) shall be the amount set forth opposite such Buyers name in column (7) on the Schedule of Buyers, which shall be net funded in accordance with the Flow of Funds Letter (as defined below) to reflect the
cash amount to be paid by such Buyer set forth opposite such Buyers name in column (8) on the Schedule of Buyers (the Cash Purchase Price) and, if applicable, the Redemption Price to be credited to such Buyer as set
forth opposite such Buyers name in column (9) on the Schedule of Buyers. Each Buyer and the Company agree that the Notes and the Warrants constitute an investment unit for purposes of Section 1273(c)(2) of the Internal
Revenue Code of 1986, as amended (the Code). Each Buyer shall pay approximately $1,000 for each $1,000 of principal amount of Notes and related Warrants to be purchased by such Buyer at the Closing. The Buyers and the Company
mutually agree that the allocation of each dollar of the issue price of such investment unit between the Notes and the Warrants solely for the purposes of Section 1273(c)(2) of the Code and Treasury Regulation Section 1.1273-2(h) shall be
an aggregate amount of $0.07 allocated to the Warrants and the balance of the Purchase Price allocated to the Notes, and neither the Buyers nor the Company shall take any position inconsistent with such allocation in any tax return or in any
judicial or administrative proceeding in respect of taxes.
(d) Form of Payment; Purchase and Cancellation of Redemption Notes. On
the Closing Date, (i) each Buyer shall pay its respective Purchase Price (less, in the case of any Buyer, the amounts withheld pursuant to Section 4(j)) to the Company for the Notes and the Warrants to be issued and sold to such Buyer at
the Closing, by wire transfer of the Cash Purchase Price by wire transfer of immediately available funds in accordance with the Flow of Funds Letter (as defined below) and, as applicable, delivery of the Redemption Notes to the Company (or its
designee) for purchase and cancellation and (ii) the Company shall (x) purchase and cancel each Redemption Note and (y) deliver to each Buyer, to the extent purchased by such Buyer at the Closing, (A) a Series A Note in the
aggregate original principal amount as is set forth opposite such Buyers name in column (3) of the Schedule of Buyers, (B) a Series B Note in the aggregate original principal amount as is set forth opposite such Buyers name in
column (4) of the Schedule of Buyers and/or (B) a Warrant pursuant to which such Buyer shall have the right to initially acquire up to such aggregate number of Warrant Shares as is set forth opposite such Buyers name in column
(5) of the Schedule of Buyers, in all cases, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.
(e) Rank. Each Buyer acknowledges that the Series A Notes and the Series B Notes shall rank pari passu with each other and shall be
subordinated in right of payment to the Permitted Senior Indebtedness as provided in the Supplemental Indenture.
(f) Release of
Liens. Effective as of the Closing Date and the Redemption Buyers receipt (or deemed receipt and payment of the Purchase Price) of the Redemption Purchase
3
Price, the Redemption Buyers hereby authorize the Company or its designee (including, without limitation, Fast Pay Partners LLC or its affiliates) to file a UCC-3 with respect to any security
interest granted to the Redemption Buyers (but not any other Person).
2. |
BUYERS REPRESENTATIONS AND WARRANTIES. |
Each Buyer, severally and not jointly,
represents and warrants to the Company with respect to only itself that, as of the date hereof and as of the Closing Date:
(a) No
Public Sale or Distribution. Such Buyer (i) is acquiring its Series A Note and Warrants, (ii) upon conversion of its Series A Note will acquire the Series A Conversion Shares issuable upon conversion thereof, and (iv) upon
exercise of its Warrants will acquire the Warrant Shares issuable upon exercise thereof, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of
applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the representations herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an available exemption from registration under the 1933 Act. Such Buyer does not
presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities in violation of applicable securities laws.
(b) Accredited Investor or Other Qualified Status. Such Buyer (other than any Buyer designated on the signature page of such Buyer as a
Management Investor) is a qualified institutional investor as defined in Rule 144A of the 1933 Act, an institutional accredited investor of a type listed in subsection (1), (2), (3), (7) or (8) of Rule 501(a)
of Regulation D, with a substantive, pre-existing relationship with the Company, or a Qualified Investor within the meaning of Directive 2003/71/EC of the European Parliament and of the Council of November 4, 2003 (as amended to
date, the Prospectus Directive, including any implementing legislation in the United Kingdom), and/or a person who is (a) an investment professional falling within articles 19(5) of the Financial Services and Markets Act 2000
(FSMA) (Financial Promotion) Order 2005, as amended (the Order); (b) a person falling within article 49(2)(a) to (d) high net worth companies, unincorporated associations etc. of the Order;
or (c) a person to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA in connection with the issue or sale of any securities may otherwise be lawfully communicated or caused to
be communicated. In the case of a Buyer situated in a member state of the European Economic Area (EEA), such Buyer is a person to whom an offer of the Securities may be made without registration or delivery of a prospectus under
an applicable exception under the national legislation of the relevant member state of the EEA implementing the Prospectus Directive. Each Management Investor that is purchasing more than $10,000 aggregate principal amount of Notes is a
director, an executive officer, or both, of the Company, as those terms are defined in Rule 405 under the 1933 Act. Each Management Investor, and each other Buyer that is a natural person, is an accredited
investor as defined in subsection (5) or subsection (6) of Rule 501(a) of Regulation D in that such Buyer either (i) has an individual net worth, or joint net worth with such Buyers spouse, exceeding $1,000,000 (excluding
the value of such Buyers principal residence) or (ii) had an individual income in
4
excess of $200,000 in each of the two most recent years or joint income with such Buyers spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the
same income level in the current year.
(c) Reliance on Exemptions. Such Buyer understands that the PIPE Securities are being
offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyers compliance
with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the PIPE Securities.
(d) Information. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the Securities that have been requested by such Buyer. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or
its representatives shall modify, amend or affect such Buyers right to rely on the Companys representations and warranties contained herein. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the
Company. Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to
its acquisition of the Securities.
(e) No Governmental Review. Such Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the
merits of the offering of the Securities.
(f) Access to Information. Such Buyer acknowledges that it has had the opportunity to
review the Transaction Documents (including all exhibits and schedules thereto) and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the investment.
(g) Transfer or Resale. Such Buyer understands
that except as provided in the Registration Rights Agreement and Section 4(k) hereof: (i) the PIPE Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale,
sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company (if requested by the Company) an opinion of counsel to such Buyer, in a form reasonably acceptable to the
Company, to the effect that such
5
PIPE Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with
reasonable assurance that such PIPE Securities can be sold, assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act (or a successor rule thereto) ( Rule 144); (ii) any sale of the PIPE Securities made in
reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the PIPE Securities under circumstances in which the seller (or the Person (as defined below) through whom the
sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the
Company nor any other Person is under any obligation to register the PIPE Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the PIPE
Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the PIPE Securities and such pledge of PIPE Securities shall not be deemed to be a transfer, sale or assignment of the PIPE
Securities hereunder, and no Buyer effecting a pledge of PIPE Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document (as
defined in Section 3(b)), including, without limitation, this Section 2(g).
(h) Validity; Enforcement. This Agreement
and the Registration Rights Agreement has been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with
their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors rights and remedies.
(i) No Conflicts. The execution, delivery and performance by such
Buyer of this Agreement and the Registration Rights Agreement and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer, or
(ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture
or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses
(ii) and (iii) above, for such conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations
hereunder.
(j) Receipt of Prospectus Supplement. Such Buyer acknowledges receipt of the Companys Prospectus Supplement
relating to the offering of the RD Securities, which Prospectus Supplement is required to be delivered to such Buyer pursuant to Section 4(c) below. Such Buyer acknowledges that it has had an opportunity to review the Prospectus Supplement
prior to committing to purchase any of the RD Securities.
6
(k) Ownership of Redemption Notes. Solely with respect to any Holder holding Redemption
Notes to be redeemed at the Closing, such Holder owns such Redemption Notes free and clear of any liens (other than the obligations pursuant to this Agreement, the Transaction Documents and applicable securities laws) and, upon delivery of such
Redemption Notes to the Company at the Closing, the Company will acquire such Redemption Notes free and clear of any adverse claim.
(l)
Certain Trading Activities. Such Buyer has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Buyer, engaged in any transactions in the securities of the Company (including, without
limitation, any Short Sales (as defined below) involving the Companys securities) during the period commencing as of the later of (x) January 14, 2015 and (y) the time that such Buyer was first contacted by the Company or the
Placement Agent (as defined below), as applicable, regarding the specific investment in the Company contemplated by this Agreement and ending immediately prior to the execution of this Agreement by such Buyer. Short Sales means all
short sales as defined in Rule 200 promulgated under Regulation SHO under the 1934 Act (as defined below) (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock). Such Buyer is aware that
Short Sales and other hedging activities may be subject to applicable federal and state securities laws, rules and regulations and such Buyer acknowledges that the responsibility of compliance with any such federal or state securities laws, rules
and regulations is solely the responsibility of such Buyer.
3. |
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. |
The Company represents and warrants to
each of the Buyers that, as of the date hereof and as of the Closing Date:
(a) Organization and Qualification. Each
of the Company and each of its Subsidiaries are entities duly organized and validly existing and in good standing under the laws of Delaware, and have the requisite power and authority to own their properties and to carry on their respective
businesses as now being conducted and as presently proposed to be conducted. Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership
of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement,
Material Adverse Effect means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any
Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of their
respective obligations under any of the Transaction Documents (as defined below). Other than the Persons (as defined below) set forth on Schedule 3(a) the Company has no Subsidiaries. Subsidiaries means any Person in
which the Company, directly or indirectly, (I) owns a majority of the outstanding capital stock having voting power or holds a majority of any equity or similar interest of such Person or (II) otherwise controls or operates the business,
operations or administration of such Person, and each of the foregoing, is individually referred to herein as a Subsidiary.
7
(b) Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of
this Agreement and the other Transaction Documents by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes and the reservation for issuance and
issuance of the Conversion Shares and the issuance of the Warrants and the reservation for issuance and issuance of the Warrant Shares) have been duly authorized by the Companys board of directors and (other than (i) the filing with the
SEC of (A) one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, (B) a Form D, (C) the 8-K Filing (as defined below), (D) a prospectus supplement in connection with the
Closing as required by the Registration Statement pursuant to Rule 424(b) under the 1933 Act (the Prospectus Supplement) supplementing the base prospectus forming part of the Registration Statement (the
Prospectus), (E) preliminary and definitive proxy materials for the solicitation of proxies with respect to the Stockholder Approval (as defined below), (F) the Indenture (and/or any amendment or supplement
thereto), (G) a Form T-1, and (H) upon acquisition by the Company of the Redemption Notes, a post-effective amendment to the Companys registration statement on Form S-3 (Registration No. 333-188383) to deregister the remaining
common stock issuable upon conversion of the Redemption Notes, (ii) the Stockholder Approval (as defined below), (iii) the filing of a supplemental listing application with Nasdaq, and (iv) any other filings as may be required by any
state securities agencies (collectively, the Required Approvals) no further filing, consent or authorization is required by the Company, its Subsidiaries, their respective boards of directors or their stockholders or other
governing body. This Agreement has been, and the other Transaction Documents to which it is a party will be prior to the Closing, duly executed and delivered by the Company, and each constitutes the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally, the enforcement of applicable creditors rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law and public policy, and the
remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. Transaction Documents
means, collectively, this Agreement, the Registration Rights Agreement, the Notes, the Warrants, the Indenture, the Supplemental Indentures, the Irrevocable Transfer Agent Instructions (as defined below) and each of the other agreements and
instruments entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.
(c) Issuance of Securities; Registration Statement. The issuance of the Notes and the Warrants are duly authorized and upon issuance in
accordance with the terms of the Transaction Documents shall be validly issued and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security
8
interests and other encumbrances (collectively Liens) with respect to the issuance thereof. As of the Closing, the Company shall have initially reserved from its duly
authorized capital stock not less than 125% of the sum of (i) the maximum number of Conversion Shares issuable upon conversion of the Notes (assuming for purposes hereof that (x) the Notes are convertible at the initial Conversion Price
(as defined in the Notes), (y) interest on the Notes shall accrue through April 11, 2017, the Company does not elect to pay such interest in cash and such interest will be converted in shares of Common Stock at an interest conversion price
equal to the Interest Conversion Price (as defined in the Notes) assuming an Interest Date (as defined in the Note) as of the date hereof and (z) any such calculation shall not take into account any limitations on the conversion of the Notes
set forth in the Notes), and (ii) the maximum number of Warrant Shares initially issuable upon exercise of the Warrants (without taking into account for purposes of the calculation only any limitations on the exercise of the Warrants set forth
therein). When issued upon conversion of the Notes in accordance with their terms or upon exercise of the Warrants in accordance with their terms (as the case may be) and, in the case of exercise of the Warrants other than by means of a
Cashless Exercise (as defined in the Warrants), upon payment of the exercise price, the Conversion Shares and the Warrant Shares, respectively, when issued, will be validly issued, fully paid and nonassessable and free from all
preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Subject to the accuracy of the representations and warranties of the Buyers in this
Agreement, the offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act. Common Stock means (i) the Companys shares of common stock, $0.00001 par value per share, and
(ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock. The issuance by the Company of the RD Securities has been registered under the 1933 Act,
the RD Securities are being issued pursuant to the Registration Statement and all of the RD Securities are freely transferable and freely tradable by each of the Buyers without restriction, whether by way of registration or some exemption therefrom.
The Registration Statement is effective and available for the issuance of the RD Securities thereunder and the Company has not received any notice that the SEC has issued or intends to issue a stop-order with respect to the Registration Statement or
that the SEC otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened in writing to do so. The Plan of Distribution section under the
Registration Statement (including the Prospectus Supplement) permits the issuance and sale of the RD Securities hereunder and as contemplated by the other Transaction Documents. Upon receipt of the RD Securities, each of the Buyers will have acquire
ownership of the RD Securities free of any adverse claim. The Registration Statement and any prospectus included therein, including the Prospectus and the Prospectus Supplement, complied in all material respects with the requirements of the 1933
Act, and the documents incorporated by reference into the Registration Statement when filed, complied in all material respects with the requirements of the 1934 Act and, in each case, with the rules and regulations of the SEC promulgated under the
1933 Act or the 1934 Act, as the case may be. At the time the Registration Statement and any amendments thereto became effective the Registration Statement and any amendments thereto complied and, upon the filing of the Prospectus Supplement after
the date of this Agreement the Registration Statement will comply. in all material respects with the requirements of the 1933 Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact
9
required to be stated therein or necessary to make the statements therein not misleading. The Prospectus and any amendments or supplements thereto, at the time the Prospectus or any amendment or
supplement thereto was issued and the Prospectus Supplement at the Closing Date, complied and will comply, as the case may be, in all material respects with 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 to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company meets all of the requirements of General Instruction I.B.6 for
the use of Form S-3 under the 1933 Act for the offering and sale of the RD Securities contemplated by this Agreement and the other Transaction Documents, 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. The Registration Statement meets the requirements set forth in Rule 415(a)(1)(x) under the 1933 Act. At the earliest time after the filing of the Registration Statement that the
Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the 1933 Act) relating to any of the RD Securities, the Company was not and is not an Ineligible Issuer (as defined in Rule 405
under the 1933 Act). The Company (i) has not distributed any offering material in connection with the offer or sale of any of the RD Securities and (ii) until no Buyer holds any of the RD Securities, shall not distribute any offering
material in connection with the offer or sale of any of the RD Securities to, or by, any of the Buyers (if required), in each case, other than the Registration Statement, the Prospectus or the Prospectus Supplement. The offering of the RD Securities
has been registered with the SEC on Form S-3 under the 1933 Act, and the RD Securities are being offered pursuant to Rule 415 promulgated under the 1933 Act.
(d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and its
Subsidiaries and the consummation by the Company and its Subsidiaries of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes, the Warrants, the Conversion Shares and Warrant Shares and the
reservation for issuance of the Conversion Shares and the Warrant Shares) will not (i) result in a violation of the Certificate of Incorporation (as defined below) (including, without limitation, any certificate of designation contained
therein) or other organizational documents of the Company or any of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries or Bylaws (as defined below) of the Company or any of its Subsidiaries, (ii) conflict with,
breach, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to
which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities laws and regulations and the rules and regulations
of the Nasdaq Capital Market (the Principal Market) and including all applicable foreign, federal and state laws, rules and regulations) applicable to the Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected except, in the case of clause (ii) or (iii) above, to the extent such violations that could not reasonably be expected to have a Material Adverse Effect and, in the case of clause
(iii) above, assuming the truth and accuracy of, and each Buyers compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth in Section 2.
10
(e) Consents. Neither the Company nor any Subsidiary is required to obtain
any consent from, authorization or order of, or make any filing or registration (other than the Required Approvals) with any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its respective obligations under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. Except as set forth on Schedule 3(e), all consents,
authorizations, orders, filings and registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date, and neither the Company nor any of its
Subsidiaries are aware of any facts or circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. Except for the
price of the Common Stock, which on the date of this Agreement is and has been below the minimum price set forth in the continuing listing standards, and assuming receipt of the Stockholder Approval (as defined below), the Company is not in
violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future. Governmental Entity
means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority
or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization or any of the foregoing.
(f) Acknowledgment Regarding Buyers Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely
in the capacity of an arms length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries,
(ii) except as set forth on Schedule 3(f), an affiliate (as defined in Rule 144) of the Company or any of its Subsidiaries or (iii) except as set forth on Schedule 3(f), to its knowledge, a beneficial
owner of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the 1934 Act)). The Company further acknowledges that no Buyer is acting as a
financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyers purchase of the Securities. The Company further represents to each Buyer that the
Companys decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.
(g) No General Solicitation; Placement Agents Fees. Neither the Company, nor any of its Subsidiaries or affiliates, nor any
Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the
11
payment of any placement agents fees, financial advisory fees, or brokers commissions (other than for Persons engaged by any Buyer or its investment advisor) relating to or
arising out of the transactions contemplated hereby, including, without limitation, placement agent fees payable to H.C. Wainwright & Co., as placement agent (the Placement Agent) in connection with the sale of the
Securities. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorneys fees and out-of-pocket expenses) arising in connection with any such claim. The Company
acknowledges that it has engaged the Placement Agent in connection with the sale of the Securities. Other than the Placement Agent, neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the
offer or sale of the Securities.
(h) No Integrated Offering. Other than with respect to the RD Securities and as
contemplated by the Registration Rights Agreement, none of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on 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 require registration of any of the Securities under the 1933 Act, whether through integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of
stockholders of the Company under any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed
or designated for quotation. None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that would require registration of the issuance of the Series A Notes or Warrants under the 1933
Act or cause the offering of any of the Securities to be integrated with other offerings of securities of the Company.
(i) Dilutive
Effect. The Company understands and acknowledges that the number of Conversion Shares and Warrant Shares will increase in certain circumstances. The Company further acknowledges that its obligation to issue the Conversion Shares upon conversion
of the Notes in accordance with this Agreement and the Notes and the Warrant Shares upon exercise of the Warrants in accordance with this Agreement, the Notes and the Warrants is, absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other stockholders of the Company.
(j) Application of Takeover Protections;
Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, interested stockholder, business combination, poison pill (including, without
limitation, any distribution under a rights agreement), stockholder rights plan or other similar anti-takeover provision under the Certificate of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its
incorporation or otherwise which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Companys issuance of the Securities and any Buyers ownership
of the Securities. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of shares of
Common Stock or a change in control of the Company or any of its Subsidiaries.
12
(k) SEC Documents; Financial Statements. During the two
(2) years prior to the date hereof, the Company has timely filed all reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all
of the foregoing filed prior to the date hereof and all exhibits and appendices included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the SEC
Documents). The Company has delivered or has made available to the Buyers or their respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, 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. As of their respective dates, the financial statements of the Company included in the SEC Documents complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect
thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles (GAAP), consistently applied, during the periods involved (except (i) as
may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements for each of the quarters ended March 31,
2014, June 30, 2014 and September 30, 2014, to normal year-end audit adjustments which will not be material, either individually or in the aggregate). No other information provided by or on behalf of the Company to any of the Buyers
which is not included in the SEC Documents (including, without limitation, information referred to in Section 4(l) of this Agreement) contains any untrue statement of a material fact or omits to state any material fact necessary in order to
make the statements therein not misleading, in the light of the circumstance under which they are or were made. The Company is not currently contemplating to amend or restate any of the financial statements (including, without limitation, any notes
or any letter of the independent accountants of the Company with respect thereto) included in the SEC Documents (the Financial Statements), nor is the Company currently aware of facts or circumstances which would require the
Company to amend or restate any of the Financial Statements, in each case, in order for any of the Financial Statements to be in compliance with GAAP and the rules and regulations of the SEC. The Company has not been informed by its independent
accountants that they recommend that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate any of the Financial Statements. Assuming consummation of the transactions contemplated
by this Agreement and the refinancing of the Indebtedness outstanding under the Companys principal credit facility, the Company is not aware of any facts or events that would cause the report of the Companys independent auditors on the
Companys audited financial statements for the year ended December 31, 2014 to contain disclosure raising substantial doubt about the Companys ability to continue as a going concern.
13
(l) Absence of Certain Changes. Except as set forth in Schedule 3(l), since the
date of the Companys most recent audited financial statements contained in a Form 10-K, there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties, operations (including
results thereof), condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries. Except as set forth in Schedule 3(l), since the date of the Companys most recent audited financial statements contained in a
Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course of business or (iii) made any capital
expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency,
reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so. Assuming consummation of the transactions contemplated by this Agreement and the refinancing of the Indebtedness outstanding under the Companys principal credit facility,
the Company and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For
purposes of this Section 3(l), Insolvent means, (I) with respect to the Company and its Subsidiaries, on a consolidated basis, (i) the present fair saleable value of the Companys and its
Subsidiaries assets is less than the amount required to pay the Companys and its Subsidiaries total Indebtedness (as defined below), (ii) the Company and its Subsidiaries are unable to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (iii) the Company and its Subsidiaries intend to incur or believe that they will incur debts that would be beyond their ability to pay as such
debts mature; and (II) with respect to the Company and each Subsidiary, individually, (i) the present fair saleable value of the Companys or such Subsidiarys (as the case may be) assets is less than the amount required to pay its
respective total Indebtedness, (ii) the Company or such Subsidiary (as the case may be) is unable to pay its respective debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or
(iii) the Company or such Subsidiary (as the case may be) intends to incur or believes that it will incur debts that would be beyond its respective ability to pay as such debts mature. Neither the Company nor any of its Subsidiaries has engaged
in any business or in any transaction, and is not about to engage in any business or in any transaction, for which the Companys or such Subsidiarys remaining assets constitute unreasonably small capital.
(m) No Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred or
exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial or
otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has
not been publicly disclosed, or (ii) except as set forth on Schedule 3(m)(ii), could have a material adverse effect on any Buyers investment hereunder or a Material Adverse Effect.
14
(n) Conduct of Business; Regulatory Permits. Neither the Company nor any of its
Subsidiaries is in violation of any term of or in default under their respective certificates of incorporation, any certificate of designation, preferences or rights of any outstanding series of preferred stock of the Company or any of its
Subsidiaries, or their respective organizational charters, certificates of formation, or certificates of incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, except in all cases for possible violations which could not, individually or in the aggregate, have a Material Adverse Effect. Except as set forth on
Schedule 3(n), without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances that could reasonably
lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. Since January 1, 2013, (i) the Common Stock has been listed or designated for quotation on the Principal Market, (ii) trading in
the Common Stock has not been suspended by the SEC or the Principal Market and (iii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock from
the Principal Market. The Company and each of its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to
possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
(o) Foreign Corrupt Practices. Neither the Company nor any
Subsidiary or, to the knowledge of the Company, any director, officer, agent, employee, or any other person acting for or on behalf of the foregoing (individually and collectively, a Company Affiliate) have violated the U.S.
Foreign Corrupt Practices Act (the FCPA) or any other applicable anti-bribery or anti-corruption laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given,
promised to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official capacity for any Governmental Entity to any political party or official thereof or to any candidate for political
office (individually and collectively, a Government Official) or to any person under circumstances where such Company Affiliate knew or was aware of a high probability that all or a portion of such money or thing of value would be
offered, given or promised, directly or indirectly, to any Governmental Official, for the purpose of:
(i) (A) influencing
any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing
such Government Official to influence or affect any act or decision of any Governmental Entity, or
(ii) assisting the
Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company or its Subsidiaries.
15
(p) Sarbanes-Oxley Act. The Company and each Subsidiary is in compliance with all
applicable requirements of the Sarbanes-Oxley Act of 2002, and all applicable rules and regulations promulgated by the SEC thereunder.
(q) Transactions With Affiliates. Except as disclosed in a periodic or other report or proxy statement filed by the Company under the
1934 Act, none of the officers, directors or employees or affiliates of the Company or any of its Subsidiaries is presently a party to any transaction with the Company or any of its Subsidiaries (other than for ordinary course services as employees,
officers or 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 such
officer, director, employee or affiliate or, to the knowledge of the Company or any of its Subsidiaries, any corporation, partnership, trust or other Person in which any such officer, director, employee or affiliate has a substantial interest or is
an employee, officer, director, affiliate, trustee or partner.
(r) Equity Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 65,000,000 shares of Common Stock, of which, 23,306,184 are issued and outstanding and 6,619,657 shares are reserved for issuance pursuant to Convertible Securities (as defined below) (other than the
Notes and the Warrants) and (ii) 10,000,000 shares of preferred stock, of which no shares are issued and outstanding. No shares of Common Stock are held in treasury. All of such outstanding shares are duly authorized and have been, or upon
issuance will be, validly issued and are fully paid and nonassessable. 3,198,456 shares of the Companys issued and outstanding Common Stock on the date hereof are as of the date hereof owned by Persons who are affiliates (as
defined in Rule 405 of the 1933 Act and calculated based on the assumption that only officers, directors and holders of at least 10% of the Companys issued and outstanding Common Stock are affiliates without conceding that any such
Persons are affiliates for purposes of federal securities laws) of the Company or any of its Subsidiaries. Except as disclosed on Schedule 3(r), to the Companys knowledge, no Person owns 10% or more of the
Companys issued and outstanding shares of Common Stock (calculated based on the assumption that all Convertible Securities (as defined below), whether or not presently exercisable or convertible, have been fully exercised or
converted (as the case may be) taking account of any limitations on exercise or conversion (including blockers) contained therein without conceding that such identified Person is a 10% stockholder for purposes of federal securities
laws). (i) except as disclosed in Schedule 3(r)(i), none of the Companys or any Subsidiarys capital stock is subject to preemptive rights or any other similar rights or Liens suffered or permitted by the Company or any
Subsidiary (other than restrictions on disposition under the 1933 Act and the rules and regulations thereunder); (ii) except as disclosed in Schedule 3(r)(ii), there are no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries; (iii) except as disclosed in Schedule 3(r)(iii), there are
no financing statements securing obligations in
16
any amounts filed in connection with the Company or any of its Subsidiaries; (iv) except as disclosed in Schedule 3(r)(iv), there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except pursuant to the Registration Rights Agreement (as defined below and except for securities covered by the
Registration Statement on Form S-3 (Registration No. 333-188383) declared effective by the SEC on July 24, 2013); (v) except as disclosed in Schedule 3(r)(v), there are no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a
security of the Company or any of its Subsidiaries; (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (vii) neither the Company nor any
Subsidiary has any stock appreciation rights or phantom stock plans or agreements or any similar plan or agreement; and (viii) neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be
disclosed in the SEC Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Companys or its Subsidiaries respective businesses and which, individually or in the aggregate, do
not or could not have a Material Adverse Effect. The Company has furnished to the Buyers true, correct and complete copies of the Companys Certificate of Incorporation, as amended and as in effect on the date hereof (the Certificate
of Incorporation), and the Companys bylaws, as amended and as in effect on the date hereof (the Bylaws), and the terms of all Convertible Securities and the material rights of the holders thereof in respect
thereto.
(s) Indebtedness and Other Contracts. Neither the Company nor any of its Subsidiaries, (i) except as
disclosed on Schedule 3(s), has any outstanding Indebtedness (as defined below), outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the
Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound, (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to
such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) is in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness, except
where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the
judgment of the Companys officers, has or is expected to have a Material Adverse Effect. For purposes of this Agreement: (x) Indebtedness of any Person means, without duplication (A) all indebtedness for borrowed
money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, capital leases in accordance with GAAP, but other than trade payables entered into in
the ordinary course of business consistent with past practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under
17
such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection
with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become
liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; (y) Contingent
Obligation means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the
Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss with respect thereto; and (z) Person means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and any Governmental Entity or any department or agency thereof.
(t)
Litigation. Except as disclosed on Schedule 3(t), there is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court, public board, other Governmental Entity, self-regulatory organization
or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Companys or its Subsidiaries officers or directors , whether of a civil or
criminal nature or otherwise, in their capacities as such, except as set forth in Schedule 3(t). No director, officer or employee of the Company or any of its subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation
in reasonable anticipation of litigation. Without limitation of the foregoing, there has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company, any of its Subsidiaries
or any current or former director or officer of the Company or any of its Subsidiaries. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the 1933 Act or the
1934 Act.
(u) Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Except as set forth on Schedule 3(v), neither the
Company nor any such Subsidiary has been refused any insurance coverage sought or applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable 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 at a cost that would not have a Material Adverse Effect.
(v) Employee Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs
any member of a union. Nothing has come to the attention of the Company that would cause the Company to believe that the Companys and
18
its Subsidiaries relations with their employees are other than good. No executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company or
any of its Subsidiaries has notified the Company or any such Subsidiary in writing that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officers employment with the Company or any such Subsidiary.
No executive officer or other key employee of the Company or any of its Subsidiaries is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer or other key employee (as the case may be) does not subject the Company or any of its Subsidiaries
to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits,
terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(w) Real Property. Each of the Company and its Subsidiaries holds good title to all real property, leases in real property, or other
interests in real property owned or held by the Company or any of its Subsidiaries (the Real Property) owned by the Company or any of its Subsidiaries, as applicable. The Real Property is free and clear of all Liens and is not
subject to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except for (a) Liens for current taxes not yet due, and (b) zoning laws and other land use restrictions that do not
impair the present or anticipated use of the property subject thereto.
(x) Personal Property. Each of the Company and its
Subsidiaries, as applicable, has good title to, or a valid leasehold interest in, the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are used by the Company or its Subsidiary in
connection with the conduct of its business (the Company Fixtures and Equipment). The Company Fixtures and Equipment are structurally sound, are in good operating condition and repair, are adequate for the uses to which they are
being put, are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient for the conduct of the Companys and/or its Subsidiaries businesses, as applicable, in the manner as conducted
prior to the Closing. Except as set forth on Schedule 3(x), each of the Company and its Subsidiaries owns all of its Company Fixtures and Equipment free and clear of all Liens except for (a) Liens for current taxes not yet due, and
(b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto.
(y) Intellectual Property Rights. The Company and its Subsidiaries own or possess proper rights or
licenses to use all trademarks, trade names, service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and
other intellectual property rights and all applications and registrations therefor (Intellectual Property Rights) necessary to conduct their respective businesses as now conducted. Each of patents owned by the Company or any of
its Subsidiaries is listed on Schedule 3(y)(i). None of the Companys Intellectual Property Rights have expired or terminated or have been abandoned or are expected to expire or terminate or are expected to be abandoned, within three
years from the date of this
19
Agreement. Except as set forth in Schedule 3(y)(ii), the Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property Rights of
others and there is no claim, action or proceeding being made or brought, or to the knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding its Intellectual Property Rights.
Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which could reasonably be expected to give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have
taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.
(z)
Environmental Laws. (i) The Company and its Subsidiaries (A) are in compliance with all Environmental Laws (as defined below), (B) have received all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (C) are in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (A), (B) and (C), the failure to so comply
could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The term Environmental Laws means all federal, state, local or foreign laws relating to pollution or protection of human health or
the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, Hazardous Materials) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated
or approved thereunder.
(ii) No Hazardous Materials:
(A) have been disposed of or otherwise released from any real property or leasehold interest of the Company or any of its
Subsidiaries in violation of any Environmental Laws by the Company or any of its Subsidiaries (or any of their representatives or agents); or
(B) to the Companys knowledge, are present on, over, beneath, in or upon any such leasehold interest or any portion
thereof in quantities that would constitute a violation of any Environmental Laws.
(iii) Neither the Company nor any of
its Subsidiaries knows of any other person who or entity which has stored, treated, recycled, disposed of or otherwise located on any Interest any Hazardous Materials, including, without limitation, such substances as asbestos and polychlorinated
biphenyls.
(iv) To the Companys knowledge, no real property or leasehold interest presently held by the Company or
any Subsidiary is on any federal or state Superfund list or Liability Information System (CERCLIS) list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental
related Liens.
20
(aa) Subsidiary Rights. The Company or one of its Subsidiaries has the unrestricted right
to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary.
(bb) Tax Status. The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely 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, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all 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 and its Subsidiaries know of no basis for any such claim. The Company is
not operated in such a manner as to qualify as a passive foreign investment company, as defined in Section 1297 of the Code. The net operating loss carryforwards (NOLs) for United States federal income tax purposes of the
consolidated group of which the Company is the common parent, if any, shall not be adversely effected by the transactions contemplated hereby. The transactions contemplated hereby do not constitute an ownership change within the meaning
of Section 382 of the Code, thereby preserving the Companys ability to utilize such NOLs.
(cc) Internal Accounting and
Disclosure Controls. The Company and each of its Subsidiaries maintains internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, including that (i) transactions are executed in accordance with managements
general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence
of liabilities is permitted only in accordance with managements general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals
and appropriate action is taken with respect to any difference. The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that information required to be
disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Companys management, including its principal executive
officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. Neither the Company nor any of its Subsidiaries has received any notice or correspondence from any
accountant or other Person or any
21
Governmental Authority relating to any potential material weakness or significant deficiency in any part of the internal controls over financial reporting of the Company or any of its
Subsidiaries.
(dd) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company
or any of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material
Adverse Effect.
(ee) Investment Company Status. The Company is not, and upon consummation of the sale of the Securities will not
be, an investment company, an affiliate of an investment company, a company controlled by an investment company or an affiliated person of, or promoter or principal underwriter
for, an investment company as such terms are defined in the Investment Company Act of 1940, as amended.
(ff)
Acknowledgement Regarding Buyers Trading Activity. It is understood and acknowledged by the Company that (i) following the public disclosure of the transactions contemplated by the Transaction Documents, in accordance with the
terms thereof, none of the Buyers have been asked by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company or any of its Subsidiaries, to desist from effecting any transactions in or with respect to (including,
without limitation, purchasing or selling, long and/or short) any securities of the Company, or derivative securities based on securities issued by the Company or to hold any of the Securities for any specified term; (ii) any Buyer,
and counterparties in derivative transactions to which any such Buyer is a party, directly or indirectly, presently may have a short position in the Common Stock which was established prior to such Buyers knowledge of
the transactions contemplated by the Transaction Documents; and (iii) each Buyer shall not be deemed to have any affiliation with or control over any arms length counterparty in any derivative transaction. The Company further
understands and acknowledges that following the public disclosure of the transactions contemplated by the Transaction Documents pursuant to the Press Release (as defined below) one or more Buyers may engage in hedging and/or trading activities at
various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value and/or number of the Warrant Shares or Conversion Shares, as applicable, deliverable with respect to the Securities
are being determined and such hedging and/or trading activities, if any, can reduce the value of the existing stockholders equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted. The
Company acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Notes, the Warrants or any other Transaction Document or any of the documents executed in connection herewith or
therewith.
(gg) Manipulation of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company,
no Person acting on their behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company or any of its Subsidiaries 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 the Placement Agent), (iii) paid or agreed to pay to any Person any
22
compensation for soliciting another to purchase any other securities of the Company or any of its Subsidiaries or (iv) paid or agreed to pay any Person for research services with respect to
any securities of the Company or any of its Subsidiaries.
(hh) U.S. Real Property Holding Corporation. Neither the Company nor any
of its Subsidiaries is, or has ever been, and so long as any of the Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning of Section 897 of the Code, and the Company and each
Subsidiary shall so certify upon any Buyers request.
(ii) Registration Eligibility. The Company is eligible to register the
PIPE Securities for resale by the Buyers using Form S-3 promulgated under the 1933 Act.
(jj) Transfer Taxes. On the Closing Date,
all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance, sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will have been, fully paid or
provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(kk) Bank Holding Company
Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the BHCA) and to regulation by the Board of Governors of the Federal Reserve System (the Federal
Reserve). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent
(25%) or more of the total equity of a bank or any equity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or affiliates exercises a controlling influence over the management
or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(ll) Shell Company
Status. The Company is not, and has never been, an issuer identified in, or subject to, Rule 144(i).
(mm) Illegal or Unauthorized
Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the best of the Companys knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents or
other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment,
contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or
appointive public office except for personal political contributions not involving the direct or indirect use of funds of the Company or any of its Subsidiaries.
(nn) Money Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act
of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, but not limited to, the laws,
23
regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not limited, to (i) Executive Order 13224 of
September 23, 2001 entitled, Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle
B, Chapter V.
(oo) Management. Except as set forth in Schedule 3(oo) hereto, during the past five year period, no
current or former officer or director or, to the knowledge of the Company, no current ten percent (10%) or greater stockholder of the Company or any of its Subsidiaries has been the subject of:
(i) a petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver,
fiscal agent or similar officer for such Person, or any partnership in which such person was a general partner at or within two years before the filing of such petition or such appointment, or any corporation or business association of which such
person was an executive officer at or within two years before the time of the filing of such petition or such appointment;
(ii) a conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations
that do not relate to driving while intoxicated or driving under the influence);
(iii) any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining any such person from, or otherwise limiting, the following activities:
(1) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor
broker, leverage transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or
as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
(2) Engaging in any type of business practice; or
(3) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any
violation of securities laws or commodities laws;
(iv) any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any authority barring, suspending or otherwise limiting for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph, or to be associated with persons engaged in
any such activity;
24
(v) a finding by a court of competent jurisdiction in a civil action or by the
SEC or other authority to have violated any securities law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently reversed, suspended or vacated; or
(vi) a finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have
violated any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or vacated.
(pp) Stock Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable
stock option plan of the Company and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under
the Companys stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no policy or practice of the Company to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant
of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
(qq) No Disagreements with Accountants and Lawyers. Except as set forth on Schedule 3(qq), there are no material disagreements
of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants or between the Company and its lawyers, in either case, formerly or presently employed by the Company and the Company is
current with respect to any fees owed to its accountants and lawyers which could affect the Companys ability to perform any of its obligations under any of the Transaction Documents. In addition, on or prior to the date hereof, the Company had
discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions, the Company has no reason to believe that it will need to restate any such financial statements or any part thereof.
(rr) No Disqualification Events. With respect to PIPE Securities to be offered and sold hereunder in reliance on Rule 506(b) under the
1933 Act (Regulation D Securities), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any
beneficial owner of 20% or more of the Companys outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity
at the time of sale (each, an Issuer Covered Person and, together, Issuer Covered Persons) is subject to any of the Bad Actor disqualifications described in Rule 506(d)(1)(i) to (viii) under the
1933 Act (a Disqualification Event), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a
Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.
25
(ss) Other Covered Persons. The Company is not aware of any Person (other than the
Placement Agent) that has been or will be paid (directly or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation D Securities.
(tt) No Additional Agreements. The Company does not have any agreement or understanding with any Buyer with respect to the transactions
contemplated by the Transaction Documents other than as specified in the Transaction Documents.
(uu) Public Utility Holding Act.
None of the Company nor any of its Subsidiaries is a holding company, or an affiliate of a holding company, as such terms are defined in the Public Utility Holding Act of 2005.
(vv) Federal Power Act. None of the Company nor any of its Subsidiaries is subject to regulation as a public utility under
the Federal Power Act, as amended.
(ww) Ranking of Notes. Other than Permitted Senior Indebtedness (as defined in the Notes) and
the Redemption Notes (prior to the redemption of such Redemption Notes at the Closing), no Indebtedness of the Company, at the Closing, will be senior to, or pari passu with, the Notes in right of payment, whether with respect to payment or
redemptions, interest, damages, upon liquidation or dissolution or otherwise.
(xx) Disclosure. Other than as set forth in the 8-K
Filing or the Prospectus Supplement, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to
constitute material, non-public information concerning the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Transaction Documents. The Company understands and confirms that
each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company and its Subsidiaries, their businesses and the transactions
contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or any of its Subsidiaries is true and correct 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 the light of the circumstances under which they were made, not misleading. All of the written information furnished after the date hereof by or on behalf of the Company or any of its
Subsidiaries to each Buyer pursuant to or in connection with this Agreement and the other Transaction Documents, taken as a whole, will be true and correct in all material respects as of the date on which such information is so provided and will 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 the light of the circumstances under which they were made, not misleading. Other than as set forth in the
8-K Filing or the Prospectus Supplement, no event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, liabilities, prospects, operations (including results
thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has not been so publicly disclosed. The
26
Company acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in
Section 2.
(a) Best Efforts. Each Buyer shall use its best efforts to timely
satisfy each of the conditions to be satisfied by it as provided in Section 6 of this Agreement. The Company shall use its best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Section 7 of this
Agreement.
(b) Amendments to the Registration Statement; Prospectus Supplements; Free Writing Prospectuses.
(i) Except as provided in this Agreement and other than periodic reports required to be filed pursuant to the 1934 Act, the
Company shall not file with the SEC any amendment to the Registration Statement that relates to the Buyer, this Agreement, the Indenture, the Notes, the Warrants or the transactions contemplated hereby or thereby or file with the SEC any Prospectus
Supplement that relates to the Buyer, this Agreement, the Indenture, the Notes, the Warrants or the transactions contemplated hereby or thereby with respect to which (a) the Buyer shall not previously have been advised, (b) the Company
shall not have given due consideration to any comments thereon received from the Buyer or its counsel, or (c) the Buyer shall reasonably object after being so advised, unless the Company reasonably has determined that it is necessary to amend
the Registration Statement or make any supplement to the Prospectus to comply with the 1933 Act or any other applicable law or regulation, in which case the Company shall promptly (but in no event later than 24 hours) so inform the Buyer, the Buyer
shall be provided with a reasonable opportunity to review and comment upon any disclosure relating to the Buyer and the Company shall expeditiously furnish to the Buyer an electronic copy thereof. In addition, for so long as, in the reasonable
opinion of counsel for the Buyer, the Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the 1933 Act) is required to be delivered in connection with any acquisition or sale of RD Securities by the Buyer, the Company shall
not file any Prospectus Supplement with respect to the RD Securities without delivering or making available a copy of such Prospectus Supplement, together with the Prospectus, to the Buyer promptly.
(ii) The Company has not made, and agrees that unless it obtains the prior written consent of the Buyer it will not
make, an offer relating to the RD Securities that would constitute an issuer free writing prospectus as defined in Rule 433 promulgated under the 1933 Act (an Issuer Free Writing Prospectus) or that would otherwise
constitute a free writing prospectus as defined in Rule 405 promulgated under the 1933 Act (a Free Writing Prospectus) required to be filed by the Company or the Buyer with the SEC or retained by the Company or the
Buyer under Rule 433 under the 1933 Act. The Buyer has not made, and agrees that unless it obtains the prior written consent of the Company it will not make, an offer relating to the RD Securities that would constitute a Free Writing Prospectus
required to be filed by the Company with the SEC or
27
retained by the Company under Rule 433 under the 1933 Act. Any such Issuer Free Writing Prospectus or other Free Writing Prospectus consented to by the Buyer or the Company is referred to in this
Agreement as a Permitted Free Writing Prospectus. The Company agrees that (x) it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus and (y) it has
complied and will comply, as the case may be, with the requirements of Rules 164 and 433 under the 1933 Act applicable to any Permitted Free Writing Prospectus, including in respect of timely filing with the SEC, legending and record keeping.
(c) Prospectus Delivery. Immediately prior to execution of this Agreement, the Company shall have delivered to the Buyer, and as soon
as practicable after execution of this Agreement the Company shall file, Prospectus Supplements with respect to the RD Securities to be issued on the Closing Date, as required under, and in conformity with, the 1933 Act, including Rule 424(b)
thereunder. The Company shall provide the Buyer a reasonable opportunity to comment on a draft of each Prospectus Supplement and any Issuer Free Writing Prospectus, shall give due consideration to all such comments and, subject to the provisions of
Section 4(b) hereof, shall deliver or make available to the Buyer, without charge, an electronic copy of each form of Prospectus Supplement, together with the Prospectus, and any Permitted Free Writing Prospectus on the Closing Date. The
Company consents to the use of the Prospectus (and of any Prospectus Supplements thereto) in accordance with the provisions of the 1933 Act and with the RD Securities or blue sky laws of the jurisdictions in which the RD Securities may
be sold by the Buyer, in connection with the offering and sale of the RD Securities and for such period of time thereafter as the Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the 1933 Act) is required by the 1933 Act
to be delivered in connection with sales of the RD Securities. If during such period of time any event shall occur that in the judgment of the Company and its counsel is required to be set forth in the Registration Statement or the Prospectus or any
Permitted Free Writing Prospectus or should be set forth therein in order to make the statements made therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading, or if it is necessary to amend
the Registration Statement or supplement or amend the Prospectus or any Permitted Free Writing Prospectus to comply with the 1933 Act or any other applicable law or regulation, the Company shall forthwith prepare and, subject to Section 4(b)
above, file with the SEC an appropriate amendment to the Registration Statement or Prospectus Supplement to the Prospectus (or supplement to the Permitted Free Writing Prospectus) and shall expeditiously furnish or make available to the Buyer an
electronic copy thereof
(d) Stop Orders. The Company shall advise the Buyer promptly (but in no event later than 24 hours) and
shall confirm such oral or written advice in writing: (i) of the Companys receipt of notice of any request by the SEC for amendment of or a supplement to the Registration Statement, the Prospectus, any Permitted Free Writing Prospectus or
for any additional information; (ii) of the Companys receipt of notice of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or prohibiting or suspending the use of the Prospectus or any
Prospectus Supplement, or of the suspension of qualification of the RD Securities for offering or sale in any jurisdiction, or the initiation or contemplated initiation of any proceeding for such purpose; (iii) of the Company becoming aware of
the happening of any event, which makes any statement of a material fact made in the Registration Statement, the
28
Prospectus or any Permitted Free Writing Prospectus untrue or which requires the making of any additions to or changes to the statements then made in the Registration Statement, the Prospectus or
any Permitted Free Writing Prospectus in order to state a material fact required by the 1933 Act to be stated therein or necessary in order to make the statements then made therein (in the case of the Prospectus, in light of the circumstances under
which they were made) not misleading, or of the necessity to amend the Registration Statement or supplement the Prospectus or any Permitted Free Writing Prospectus to comply with the 1933 Act or any other law or (iv) if at any time following
the date hereof the Registration Statement is not effective or is not otherwise available for the issuance of the RD Securities or any Prospectus contained therein is not available for use for any other reason. Thereafter, the Company shall promptly
notify such holders when the Registration Statement, the Prospectus, any Permitted Free Writing Prospectus and/or any amendment or supplement thereto, as applicable, is effective and available for the issuance of the RD Securities. If at any time
the SEC shall issue any stop order suspending the effectiveness of the Registration Statement or prohibiting or suspending the use of the Prospectus or any Prospectus Supplement, the Company shall use reasonable best efforts to obtain the withdrawal
of such order at the earliest possible time. So long as any Series B Notes remain outstanding, the Company shall use its best efforts to maintain the continuous effectiveness of the Registration Statement under the 1933 Act.
(e) Blue Sky. The Company shall file a Form D with respect to the PIPE Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities for sale
to the Buyers at the Closing pursuant to this Agreement under applicable securities or Blue Sky laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so
taken to the Buyers on or prior to the Closing Date. Without limiting any other obligation of the Company under this Agreement, the Company shall timely make all filings and reports relating to the offer and sale of the Securities required under all
applicable securities laws (including, without limitation, all applicable federal securities laws and all applicable Blue Sky laws), and the Company shall comply with all applicable federal, state and local laws, statutes, rules,
regulations and the like relating to the offering and sale of the Securities to the Buyer.
(f) Reporting Status. Until the date on
which the Buyers shall have sold, converted or exercised all of the Securities and/or all the Securities shall have been redeemed (the Reporting Period), the Company shall timely file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such
termination. The Company shall take all actions necessary to maintain its eligibility to register the Registrable Securities for resale by the Buyers on Form S-3.
(g) Use of Proceeds. The Company will use the proceeds from the sale of the Securities as disclosed on Schedule 4(g) attached
hereto, but not, directly or indirectly, (except as set forth on Schedule 4(g) or with respect to the Redemption Notes) for (i), the satisfaction of any indebtedness of the Company or any of its Subsidiaries, (ii) the redemption or
repurchase of any securities of the Company or any of its Subsidiaries, or (iii) the settlement of any outstanding litigation.
29
(h) Financial Information. The Company agrees to send the following to each holder of
Notes, Warrants and Registrable Securities (each, an Investor) during the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system, within one
(1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any interim reports or any consolidated balance sheets, income statements, stockholders equity
statements and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K and any registration statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the following are either
filed with the SEC through EDGAR or are otherwise widely disseminated via a recognized news release service (such as PR Newswire), on the same day as the release thereof, facsimile copies of all press releases issued by the Company or any of its
Subsidiaries and (iii) unless the following are filed with the SEC through EDGAR, copies of any notices and other information made available or given to the stockholders of the Company generally, contemporaneously with the making available or
giving thereof to the stockholders.
(i) Listing. The Company shall promptly secure the listing or designation for quotation (as
the case may be) of all of the Underlying Securities (as defined below) upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated for quotation (as the case may be)
(subject to official notice of issuance) and shall maintain such listing or designation for quotation (as the case may be) of all Underlying Securities from time to time issuable under the terms of the Transaction Documents on such national
securities exchange or automated quotation system. The Company shall maintain the Common Stocks listing or authorization for quotation (as the case may be) on the Principal Market or another Eligible Market (as defined in the Notes). Neither
the Company nor any of its Subsidiaries shall take any action which could be reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible Market. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 4(i). Underlying Securities means (i) the Conversion Shares, (ii) the Warrant Shares and (iii) any capital stock of the Company issued or issuable with respect to
the Conversion Shares, the Warrant Shares, the Indenture, the Notes or the Warrants, respectively, including, without limitation, (1) as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise and
(2) shares of capital stock of the Company into which the shares of Common Stock are converted or exchanged and shares of capital stock of a Successor Entity (as defined in the Warrants) into which the shares of Common Stock are converted or
exchanged, in each case, without regard to any limitations on conversion of the Notes or exercise of the Warrants.
(j) Fees. The
Company shall reimburse the lead Buyer for all costs and expenses incurred by it or its affiliates in connection with the structuring, documentation, negotiation and closing of the transactions contemplated by the Transaction Documents (including,
without limitation, as applicable, all reasonable legal fees of outside counsel and disbursements of Kelley Drye & Warren LLP, counsel to the lead Buyer, any other reasonable fees and expenses in
30
connection with the structuring, documentation, negotiation and closing of the transactions contemplated by the Transaction Documents and due diligence and regulatory filings in connection
therewith) (the Transaction Expenses), which shall be withheld by the lead Buyer from its Purchase Price at the Closing in an aggregate amount not to exceed $100,000, less $25,000 previously paid by the Company to the lead
investor; provided, that the Company shall promptly reimburse Kelley Drye & Warren LLP on demand for all Transaction Expenses not so reimbursed through such withholding at the Closing. In addition upon Closing the Company shall pay $10,000
to Peter J. Weisman, P.C., counsel to The Tail Wind Fund, Ltd., as of for legal fees in connection with the Transaction Documents. The Company shall be responsible for the payment of any placement agents fees, financial advisory fees, transfer
agent fees, the fees and expenses of the Trustee (including any legal counsel to the Trustee), DTC (as defined below) fees or brokers commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions
contemplated hereby (including, without limitation, any fees payable to the Placement Agent, who is the Companys sole placement agent in connection with the transactions contemplated by this Agreement). The Company shall pay, and hold each
Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth in
the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyers.
(k) Pledge of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees
that the Securities may be pledged by a Buyer in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment
of the Securities hereunder, and no Buyer effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document,
including, without limitation, Section 2(g) hereof; provided that an Investor and its pledgee shall be required to comply with the provisions of Section 2(g) hereof in order to effect a sale, transfer or assignment of PIPE Securities to
such pledgee. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by a Buyer.
(l) Disclosure of Transactions and Other Material Information.
(i) Disclosure of Transaction. The Company shall, on or before 7:00 p.m., New York time, on the first (1st) Business Day
after the date of this Agreement, issue a press release (the Press Release) reasonably acceptable to the Buyers disclosing all the material terms of the transactions contemplated by the Transaction Documents. On or before 7:00
p.m., New York time, on the first (1st) Business Day after the date of this Agreement, the Company shall file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents in the
form required by the 1934 Act and attaching all the material Transaction Documents (including, without limitation, this Agreement (and all schedules to this Agreement), the Registration Rights Agreement, the Indenture, the form of each Supplemental
Indenture, the forms of the Warrants and the forms of the Notes) (including all
31
attachments, the 8-K Filing). From and after the filing of the 8-K Filing, the Company shall have disclosed all material, non-public information (if any) provided to any of the
Buyers 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. In addition, effective upon the filing of the 8-K
Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors,
affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate.
(ii) Limitations on Disclosure. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their
respective officers, directors, employees and agents not to, provide any Buyer with any material, non-public information regarding the Company or any of its Subsidiaries from and after the date hereof without the express prior written consent of
such Buyer (which may be granted or withheld in such Buyers sole discretion). In the event of a breach of any of the foregoing covenants, or any of the covenants or agreements contained in any other Transaction Document, by the Company, any of
its Subsidiaries, or any of its or their respective officers, directors, employees and agents (as determined in the reasonable good faith judgment of such Buyer), in addition to any other remedy provided herein or in the Transaction Documents, such
Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such breach or such material, non-public information, as applicable, without the prior approval by the Company, any of its
Subsidiaries, or any of its or their respective officers, directors, employees or agents. No Buyer shall have any liability to the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees, stockholders or
agents, for any such disclosure. To the extent that the Company delivers any material, non-public information to a Buyer without such Buyers consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of
confidentiality with respect to, or a duty not to trade on the basis of, such material, non-public information. Subject to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue any press releases or any other public
statements with respect to the transactions contemplated hereby; provided, however, the Company shall be entitled, without the prior approval of any Buyer, to make the Press Release and any press release or other public disclosure with respect to
such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted by
the Company in connection with any such press release or other public disclosure prior to its release). Without the prior written consent of the applicable Buyer (which may be granted or withheld in such Buyers sole discretion), the Company
shall not (and shall cause each of its Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing, announcement, release or otherwise, except as such disclosure may be required by applicable law including, without limitation,
in the 8-K filing and in one or more registration statements filed pursuant to the Registration Rights Agreement in order to identify the Buyers as selling stockholders. Notwithstanding anything contained in this Agreement to the contrary and
without implication that the contrary would otherwise be true, the Company expressly acknowledges and agrees that no Buyer has had, and no Buyer shall have (unless expressly agreed to by a particular Buyer after the date hereof in a written
definitive and binding agreement executed by the Company and such
32
particular Buyer (it being understood and agreed that no Buyer may bind any other Buyer with respect thereto)), any duty of confidentiality with respect to, or a duty not to trade on the basis
of, any material, non-public information regarding the Company or any of its Subsidiaries. Each Buyer further acknowledges that the Company shall not be deemed to violate this Section 4(l) by disclosing the name of any Buyer that beneficially
owns more than 4.99% of the Common Stock of the Company in accordance with the disclosure made by such Buyer in any Schedule 13D or Schedule 13G filed by such Buyer with the SEC.
(iii) Other Confidential Information. Disclosure Failures; Disclosure Delay Payments. In addition to other remedies set forth in this
Section 4(l), and without limiting anything set forth in any other Transaction Document, at any time after the Closing Date if the Company, any of its Subsidiaries, or any of their respective officers, directors, employees or agents, provides
any Buyer with material non-public information relating to the Company or any of its Subsidiaries (each, the Confidential Information, the Company shall, on or prior to the applicable Required Disclosure Date (as defined below),
publicly disclose such Confidential Information on a Current Report on Form 8-K or otherwise (each, a Disclosure). From and after such Disclosure, the Company shall have disclosed all Confidential Information provided to such
Buyer 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. In the event that the Company fails to effect such
Disclosure on or prior to the Required Disclosure Date and such Buyer shall have possessed Confidential Information for at least ten (10) consecutive Trading Days (each, a Disclosure Failure), then, as partial relief for the
damages to such Buyer by reason of any such delay in, or reduction of, its ability to buy or sell shares of Common Stock after such Required Disclosure Date (which remedy shall not be exclusive of any other remedies available at law or in equity),
the Company shall pay to such Buyer an amount in cash equal to the greater of (I) two percent (2%) of the aggregate Purchase Price and (II) the applicable Disclosure Restitution Amount, on each of the following dates (each, a
Disclosure Delay Payment Date): (i) on the date of such Disclosure Failure and (ii) on every thirty (30) day anniversary such Disclosure Failure until the earlier of (x) the date such Disclosure Failure is
cured and (y) such time as all such non-public information provided to such Buyer shall cease to be Confidential Information (as evidenced by a certificate, duly executed by an authorized officer of the Company to the foregoing effect) (such
earlier date, as applicable, a Disclosure Cure Date). Following the initial Disclosure Delay Payment for any particular Disclosure Failure, without limiting the foregoing, if a Disclosure Cure Date occurs prior to any thirty
(30) day anniversary of such Disclosure Failure, then such Disclosure Delay Payment (prorated for such partial month) shall be made on the third (3rd) Business Day after such Disclosure Cure Date. The payments to which an Investor shall be
entitled pursuant to this Section 4(l)(iii) are referred to herein as Disclosure Delay Payments. In the event the Company fails to make Disclosure Delay Payments in a timely manner in accordance with the foregoing, such
Disclosure Delay Payments shall bear interest at the rate of two percent (2%) per month (prorated for partial months) until paid in full.
(iv) For the purpose of this Agreement the following definitions shall apply:
(A) Disclosure Failure Market Price means, as of any Disclosure Delay Payment Date, the price
computed as the quotient of (I) the sum of the five (5)
33
highest VWAPs (as defined in the Warrants) of the Common Stock during the applicable Disclosure Restitution Period (as defined below), divided by (II) five (5) (such period, the
Disclosure Failure Measuring Period). All such determinations to be appropriately adjusted for any share dividend, share split, share combination, reclassification or similar transaction that proportionately decreases or increases
the Common Stock during such Disclosure Failure Measuring Period.
(B) Disclosure Restitution
Amount means, as of any Disclosure Delay Payment Date, the product of (x) difference of (I) the Disclosure Failure Market Price less (II) the lowest purchase price, per share of Common Stock, of any Common Stock issued or
issuable to such Buyer pursuant to this Agreement or any other Transaction Documents, multiplied by (y) 10% of the aggregate daily dollar trading volume (as reported on Bloomberg (as defined in the Warrants)) of the Common Stock on the
Principal Market for each Trading Day either (1) with respect to the initial Disclosure Delay Payment Date, during the period commencing on the applicable Required Disclosure Date through and including the Trading Day immediately prior to the
initial Disclosure Delay Payment Date or (2) with respect to each other Disclosure Delay Payment Date, during the period commencing the immediately preceding Disclosure Delay Payment Date through and including the Trading Day immediately prior
to such applicable Disclosure Delay Payment Date (such applicable period, the Disclosure Restitution Period).
(C) Required Disclosure Date means (x) if such Buyer authorized the delivery of such
Confidential Information, either (I) if the Company and such Buyer have mutually agreed upon a date (as evidenced by an e-mail or other writing) of Disclosure of such Confidential Information, such agreed upon date or (II) otherwise, the
seventh (7th) calendar day after the date such Buyer first received any Confidential Information or (y) if such Buyer did not authorize the delivery of such Confidential Information, the
first (1st) Business Day after such Buyers receipt of such Confidential Information.
(m) Additional Registration Statements. Until the Applicable Date (as defined below) and at any time thereafter while any Registration
Statement (as defined in the Registration Rights Agreement (as defined below)) is not effective or the prospectus contained therein is not available for use or any Current Public Information Failure (as defined in the Registration Rights Agreement)
exists, the Company shall not file a registration statement under the 1933 Act relating to securities that are not the Underlying Securities (other than a registration statement on Form S-8 or such supplements or amendments to registration
statements that are outstanding and have been declared effective by the SEC as of the date hereof (solely to the extent necessary to keep such registration statements effective and available and not with respect to any Subsequent Placement)).
Applicable Date means the earlier of (x) the first date on which the resale by the holders of the Registrable Securities required to be filed on the initial Registration Statement (as defined in the Registration Rights
Agreement) pursuant to the Registration Rights Agreement is declared effective by the SEC (and each prospectus contained therein is available for use on such date) or (y) the first date on which all of the Registrable Securities are eligible to
be resold by the holders of such Registrable Securities pursuant to Rule 144 (or, if a Current Public Information Failure (as defined in the Registration Rights Agreement) has occurred and is continuing, such later date after which the Company has
cured such Current Public Information Failure).
34
(n) Additional Issuance of Securities. During the period commencing on the date hereof and
ending on the date no Notes remain outstanding, the Company will not, without the prior written consent of Buyers holding a majority in aggregate principal amount of the Notes then outstanding, issue any Notes (other than to the Buyers as
contemplated hereby) and the Company shall not issue any other securities that would cause a breach or default under the Notes. The Company agrees that for the period commencing on the date hereof and ending on the date immediately following the
180th calendar day after the Applicable Date (the Restricted Period), neither the Company nor any of its Subsidiaries shall directly or indirectly issue, offer, sell, grant any option or right to purchase, or otherwise dispose of
(or announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of) any equity security or any equity-linked or related security (including, without limitation, any equity security (as that term is
defined under Rule 405 promulgated under the 1933 Act), any Convertible Securities (as defined below), any debt, any preferred stock or any purchase rights) (any such issuance, offer, sale, grant, disposition or announcement (whether occurring
during the Restricted Period or at any time thereafter) is referred to as a Subsequent Placement). Notwithstanding the foregoing, this Section 4(n) shall not apply in respect of the issuance of (i) shares of Common Stock
or standard options to purchase Common Stock to directors, officers or employees of the Company in their capacity as such pursuant to an Approved Stock Plan (as defined below), provided that (1) all such issuances (taking into account the
shares of Common Stock issuable upon exercise of such options) after the date hereof pursuant to this clause (i) do not, in the aggregate, in any two year period after the date hereof, exceed more than 3% of the Common Stock outstanding
immediately prior to the date hereof in any two year period and (2) except as provided for in accordance with the terms thereof in effect on the date hereof, the exercise price of any such options is not lowered, none of such options are
amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner that adversely affects any of the Buyers; (ii) shares of Common Stock issued
upon the conversion or exercise of Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior to the date hereof, provided that the
conversion, exercise or other method of issuance (as the case may be) of any such Convertible Security is made solely pursuant to the conversion, exercise or other method of issuance (as the case may be) provisions of such Convertible Security that
were in effect on the date immediately prior to the date of this Agreement, the conversion, exercise or issuance price of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (i) above) is not lowered (other than adjustments provided for in accordance with the terms of such Convertible Securities in effect on the date hereof), none of such Convertible Securities (other than standard
options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are otherwise materially changed in any manner that adversely affects any of the Buyers;
(iii) the Conversion Shares, (iv) the Warrant Shares and (v) a Subsequent Placement of Common Stock
35
(or units of shares of Common Stock and warrants to purchase Common Stock) with an aggregate purchase price not to exceed $1 million; and (vi) warrants to purchase 50,000 shares
of Common Stock, with an initial exercise price equal to the initial exercise price of the Warrants and not exercisable until after the Stockholder Approval Date, issued to the Placement Agent at the Closing (the Placement Agent
Warrants); provided that the exercise of the Placement Agent Warrants is made solely pursuant to the exercise provisions of the Placement Agent Warrants in effect as of the Closing, the exercise price of the Placement Agent Warrants is not
lowered (other than adjustments provided for in accordance with the terms of the Placement Agent Warrants in effect on the Closing Date), none of the Placement Agent Warrants are amended to increase the number of shares issuable thereunder and none
of the terms or conditions of the Placement Agent Warrants are otherwise materially changed in any manner that adversely affects any of the Buyers (each of the foregoing in clauses (i) through (vi), collectively the Excluded
Securities). Approved Stock Plan means any employee benefit plan which has been approved by the board of directors of the Company prior to or subsequent to the date hereof pursuant to which shares of Common Stock and
standard options to purchase Common Stock may be issued to any employee, officer or director for services provided to the Company in their capacity as such. Convertible Securities means any capital stock or other security of the
Company or any of its Subsidiaries that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock or other
security of the Company (including, without limitation, Common Stock) or any of its Subsidiaries.
(o) Reservation of
Shares. So long as any of the Notes or Warrants remain outstanding, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than (x) if on or prior to the Business Day
immediately following the Authorized Share Increase Stockholder Approval Date (Required Reservation Increase Date), 125%, or (y) if after the Required Reservation Increase Date, 150% of (i) the maximum number of shares
of Common Stock issuable upon conversion of all the Notes then outstanding (assuming for purposes hereof that (A) the Notes are convertible at the Conversion Price then in effect, (B) interest on the Notes shall accrue through
April 11, 2017 and will be converted into shares of Common Stock at an interest conversion price equal to the Interest Conversion Price assuming an Interest Date as of the applicable date of determination and (C) any such calculation shall
not take into account any limitations on the conversion of the Notes set forth in the Notes), and (ii) the maximum number of Warrant Shares issuable upon exercise of all the Warrants then outstanding (without taking into account for purposes of
the calculation only any limitations on the exercise of the Warrants set forth therein) (collectively, the Required Reserve Amount); provided that at no time shall the number of shares of Common Stock reserved pursuant to this
Section 4(o) be reduced other than proportionally in connection with any conversion, exercise and/or redemption, as applicable of Notes and Warrants. If at any time the number of shares of Common Stock authorized and reserved for issuance is
not sufficient to meet the Required Reserved Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of stockholders to
authorize additional shares to meet the Companys obligations pursuant to the Transaction Documents, in the case of an insufficient number of authorized shares, obtain stockholder approval of an increase in such authorized number of shares, and
voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares is sufficient to meet the Required Reserved Amount.
36
(p) Conduct of Business. The business of the Company and its Subsidiaries shall not be
conducted in violation of any law, ordinance or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.
(q) Variable Securities. So long as any Notes remain outstanding, the Company and each Subsidiary shall be prohibited from effecting or
entering into an agreement to effect any Subsequent Placement involving a Variable Rate Transaction. Variable Rate Transaction means a transaction in which the Company or any Subsidiary (i) issues or sells any Convertible
Securities either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such Convertible
Securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such Convertible Securities or upon the occurrence of specified or contingent events directly or
indirectly related to the business of the Company or the market for the Common Stock, other than pursuant to a customary weighted average anti-dilution provision or (ii) enters into any agreement (including, without limitation, an
equity line of credit or an at-the-market offering) whereby the Company or any Subsidiary may sell securities at a future determined price (other than standard and customary preemptive or participation rights).
Each Buyer shall be entitled to obtain injunctive relief against the Company and its Subsidiaries to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
(r) Dilutive Issuances. For so long as any Notes or Warrants remain outstanding, the Company shall not, in any manner, enter into or
affect any Dilutive Issuance (as defined in the Notes) if the effect of such Dilutive Issuance is to cause the Company to be required to issue upon conversion of any Notes or exercise of any Warrant any shares of Common Stock in excess of that
number of shares of Common Stock which the Company may issue upon conversion of the Notes and exercise of the Warrants without breaching the Companys obligations under the rules or regulations of the Principal Market.
(s) Qualification Under Trust Indenture Act. Prior to any issuance of Notes hereunder, the Company shall qualify or call cause or
arrange for the Trustee to qualify the Indenture under the Trust Indenture Act of 1939, as amended (the TIA) and enter into any necessary supplemental indentures in connection therewith and, so long as the Notes remain
outstanding, the Indenture shall be maintained in compliance with the TIA.
(t) Passive Foreign Investment Company. The Company
shall conduct its business, and shall cause its Subsidiaries to conduct their respective businesses, in such a manner as will ensure that the Company will not be deemed to constitute a passive foreign investment company within the meaning of
Section 1297 of the Code.
(u) Restriction on Redemption and Cash Dividends. So long as any Notes are outstanding, the Company
shall not, directly or indirectly, redeem, or declare or pay any cash
37
dividend or distribution on, any securities of the Company without the prior express written consent of the Buyers, except as required by Section 9 of the Series B Notes, subject to the
limitations set forth in the Supplemental Indentures.
(v) Corporate Existence. So long as any Buyer beneficially owns any Notes or
Warrants, the Company shall not be party to any Fundamental Transaction (as defined in the Notes) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes and the Warrants.
(w) Stock Splits. Until the Notes and all notes issued pursuant to the terms thereof are no longer outstanding, the Company shall not
effect any stock combination, reverse stock split or other similar transaction (or make any public announcement or disclosure with respect to any of the foregoing) without the prior written consent of the Required Holders (as defined below), except
as required by an Eligible Market to provide for the eligibility or continued eligibility of the Common Stock for listing or quotation on such market.
(x) Conversion and Exercise Procedures. Each of the form of Exercise Notice (as defined in the Warrants) included in the Warrants and
the form of Conversion Notice (as defined in the Notes) included in the Notes set forth the totality of the procedures required of the Buyers in order to exercise the Warrants or convert the Notes. No legal opinion or other information or
instructions shall be required of the Buyers to exercise their Warrants or convert their Notes. The Company shall honor exercises of the Warrants and conversions of the Notes and shall deliver the Conversion Shares and Warrant Shares in accordance
with the terms, conditions and time periods set forth in the Notes and Warrants.
(y) Regulation M. The Company will not take any
action prohibited by Regulation M under the 1934 Act, in connection with the distribution of the Securities contemplated hereby.
(z)
General Solicitation. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act) or any person acting on behalf of the Company or such affiliate will solicit any offer to buy or offer or sell the PIPE Securities
by means of any form of general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast
over television or radio; and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
(aa) Integration. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act), or any person acting on
behalf of the Company or such affiliate will sell, offer for sale, or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the 1933 Act) which will be integrated with the sale of the Securities in a manner which
would require the registration of the PIPE Securities under the 1933 Act or require stockholder approval under the rules and regulations of the Principal Market and the Company will take all action that is appropriate or necessary to assure that its
offerings of other securities will not be integrated for purposes of the 1933 Act or the rules and regulations of the Principal Market, with the issuance of PIPE Securities contemplated hereby.
38
(bb) Notice of Disqualification Events. The Company will notify the Buyers in writing,
prior to the Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Issuer Covered Person.
(cc) Stockholder Approval. The Company shall provide each stockholder entitled to vote at its annual meeting of stockholders of the
Company (the Stockholder Meeting), which shall be promptly called and held not later than June 30, 2015 (the Stockholder Meeting Deadline), a proxy statement, soliciting each such stockholders
affirmative vote at the Stockholder Meeting for approval of approval of resolutions (Stockholder Resolutions) providing for (I) an increase in the authorized shares of Common Stock of the Company from 65,000,000 to
200,000,000 (the Authorized Share Increase Resolution), (II) a reverse stock split of at least 6 to 1 (the Reverse Stock Split Resolution) and (II) the issuance of all of the Securities as described in the
Transaction Documents in accordance with applicable law and the rules and regulations of the Principal Market (the Principal Market Resolution) (such affirmative approval with respect to the Authorized Share Increase Resolution,
the Authorized Share Increase Stockholder Approval, and the date the Authorized Share Increase Stockholder Approval is obtained, the Authorized Share Increase Stockholder Approval Date, such affirmative approval
with respect to the Reverse Stock Split Resolution, the Reverse Stock Split Stockholder Approval, and the date the Authorized Share Increase Stockholder Approval is obtained, the Authorized Share Increase Stockholder
Approval Date and such affirmative approval with respect to the Principal Market Resolution, the Principal Market Stockholder Approval, and together with the Authorized Share Increase Stockholder Approval and the Reverse
Stock Split Stockholder Approval, the Stockholder Approval, and the date the Principal Market Stockholder Approval is obtained, the Principal Market Stockholder Approval Date, and the later of the Principal
Market Stockholder Approval Date, the Reverse Stock Split Stockholder Approval Date and the Authorized Share Increase Stockholder Approval Date, the Stockholder Approval Date), and the Company shall use its reasonable best efforts
to solicit its stockholders approval of such resolutions and to cause the Board of Directors of the Company to recommend to the stockholders that they approve such resolutions. The Company shall be obligated to seek to obtain the Stockholder
Approval by the Stockholder Meeting Deadline. If, despite the Companys reasonable best efforts the Stockholder Approval is not obtained on or prior to the Stockholder Meeting Deadline, the Company shall cause an additional Stockholder Meeting
to be held once in each of the three subsequent calendar quarters thereafter until such Stockholder Approval is obtained. If, despite the Companys reasonable best efforts the Stockholder Approval is not obtained after such subsequent
stockholder meetings, the Company shall cause an additional Stockholder Meeting to be held semi-annually thereafter until such Stockholder Approval is obtained.
(dd) No Short Sales. So long as any Notes remain outstanding, during any five (5) Trading Day period immediately preceding any
Interest Date (as defined in the Series A Notes) or any Installment Date (as defined in the Series B Notes), neither a Buyer nor any of its affiliates nor any entity managed or controlled by such Buyer nor any other Investor with respect to the
Notes and Warrants originally purchased by such Buyer hereunder (collectively, the Restricted Persons and each of the foregoing is referred to herein as a Restricted Person) shall, directly or indirectly, engage
in any Short Sales of the Common Stock (other than any
39
sale marked short exempt or any sale of shares deemed to be held long hereunder). For purposes hereof, Short Sales shall mean short sales as
defined in Rule 200 promulgated under Regulation SHO under the 1934 Act (other than any sale marked short exempt or any sale of shares deemed to be held long hereunder). Notwithstanding the foregoing, no Short
Sale or short position shall be deemed to exist as a result of any failure by the Company (or its agents) to deliver Conversion Shares upon conversion of the Notes or Warrant Shares upon exercise of the Warrants, as applicable, to
any Restricted Person converting such Notes or exercising such Warrant, as applicable. For purposes of determining whether a Restricted Person is deemed to have a long position in the Common Stock, at any given time of determination,
such Restricted Person shall be deemed to hold long all Common Stock that is either (i) then owned by such Restricted Person, if any, or (ii) issuable to such Restricted Person as Conversion Shares pursuant to the terms of the
Notes and/or Warrant Shares pursuant to the terms of the Warrants then held by such Restricted Person, if any, pursuant to a valid Conversion Notice and/or valid Exercise Notice delivered to the Company on or prior to the applicable time of
determination. Notwithstanding the foregoing, nothing contained herein shall (without implication that the contrary would otherwise be true) prohibit any Restricted Person from selling long (as defined under Rule 200 promulgated
under Regulation SHO under the 1934 Act) the Securities or any other Common Stock then owned by such Restricted Person.
(ee) Closing
Documents. On or prior to seven (7) calendar days after the Closing Date, the Company agrees to deliver, or cause to be delivered, to each Buyer and Kelley Drye & Warren LLP and Peter J. Weisman, P.C. executed copies (which may be
photocopies or pdf versions of executed copies) of the Transaction Documents, Securities and other document required to be delivered to any party pursuant to Section 7 hereof.
5. |
REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND. |
(a) Register. The Company shall
maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to each holder of Securities), a register for the Notes and the Warrants in which the Company shall record the name and address
of the Person in whose name the Notes and the Warrants have been issued (including the name and address of each transferee), the principal amount of the Notes held by such Person, the number of Conversion Shares issuable upon conversion of the Notes
and the number of Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company shall keep the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.
(b) Transfer Agent Instructions. The Company shall issue irrevocable instructions to the Transfer Agent in the form previously provided
to the Company (the Irrevocable Transfer Agent Instructions) to issue certificates or credit shares to the applicable balance accounts at DTC, registered in the name of each Buyer or its respective nominee(s), for the Conversion
Shares and the Warrant Shares in such amounts as specified from time to time by each Buyer to the Company upon conversion of the Notes or other issuance pursuant to the terms of the Notes or the exercise of the Warrants (as the case may be). The
Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b) will be given by the Company to the Transfer Agent with respect to the Underlying
40
Securities, and that on the Closing Date the Series B Conversion Shares and, on the Applicable Date, the Series A Conversion Shares and the Warrant Shares covered by such Registration Statement,
shall be freely transferable on the books and records of the Company. If a Buyer effects a sale, assignment or transfer of the Securities in compliance with this Agreement and the other applicable Transaction Documents, the Company shall permit the
transfer and shall also promptly instruct the Transfer Agent (x) if after the Closing Date, solely with respect to the Series B Conversion Shares and (y) if after the Applicable Date, solely with respect to the Conversion Shares and the
Warrant Shares, to credit such applicable Underlying Securities to the applicable balance accounts at DTC or, otherwise, to issue one or more certificates with respect to such Securities, in each case, in such name and in such denominations as
specified by such Buyer to effect such sale, transfer or assignment. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to each Buyer. Accordingly, the Company acknowledges that the remedy at law
for a breach of its obligations under this Section 5(b) will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5(b), that each Buyer shall be entitled, in addition to
all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required. The Company shall
cause its counsel to issue the legal opinion referred to in the Irrevocable Transfer Agent Instructions to the Transfer Agent to the extent required or requested by the Transfer Agent. Any fees (with respect to the Transfer Agent, counsel to the
Company or otherwise) associated with the issuance of such opinion shall be borne by the Company.
(c) Legends. Each Buyer
understands that the PIPE Securities have been issued (or will be issued in the case of the Series A Conversion Shares and the Warrant Shares) pursuant to an exemption from registration or qualification under the 1933 Act and applicable state
securities laws, and except as set forth below, the PIPE Securities shall bear any legend as required by the blue sky laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN] [THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE
HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
41
(d) No Legends on RD Securities; Removal of Legends on PIPE Securities. Certificates
evidencing RD Securities shall be unrestricted and shall not be required to contain any legend. Certificates evidencing PIPE Securities shall not be required to contain the legend set forth in Section 5(c) above or any other legend
(i) while a registration statement (including a Registration Statement) covering the resale of such PIPE Securities is effective under the 1933 Act, (ii) following any sale of such PIPE Securities pursuant to Rule 144 (assuming neither the
transferor nor the transferee is an affiliate of the Company), (iii) if such PIPE Securities are eligible to be sold, assigned or transferred under Rule 144 (provided that a Buyer provides the Company with reasonable assurances that such PIPE
Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of Buyers counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that such
Buyer provides the Company with an opinion of counsel to such Buyer, in a generally acceptable form, to the effect that such sale, assignment or transfer of the PIPE Securities may be made without registration under the applicable requirements of
the 1933 Act or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). With respect to RD Securities or, with
respect to PIPE Securities, if a legend is not required pursuant to the foregoing with respect to such PIPE Securities, the Company shall no later than three (3) Trading Days (or such earlier date as required pursuant to the 1934 Act or other
applicable law, rule or regulation for the settlement of a trade initiated on the date such Buyer delivers such legended certificate representing such Securities to the Company) following the delivery by a Buyer to the Company or the transfer agent
(with notice to the Company) of a certificate representing such RD Securities or a legended certificate representing such PIPE Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the
reissuance and/or transfer, if applicable), together with any other deliveries from such Buyer as may be required above in this Section 5(d), as directed by such Buyer, either: (A) provided that the Companys transfer agent is
participating in the DTC Fast Automated Securities Transfer Program and such Securities are Conversion Shares or Warrant Shares, credit the aggregate number of shares of Common Stock to which such Buyer shall be entitled to such Buyers or its
designees balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Companys transfer agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable
overnight courier) to such Buyer, a certificate representing such Securities that is free from all restrictive and other legends, registered in the name of such Buyer or its designee (the date by which such credit is so required to be made to the
balance account of such Buyers or such Buyers nominee with DTC or such certificate is required to be delivered to such Buyer pursuant to the foregoing is referred to herein as the Share Delivery Deadline). The Company
shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of Securities or the removal of any legends with respect to any Securities in accordance herewith.
(e) Failure to Timely Deliver; Buy-In. If the Company shall fail, for any reason or for no reason, to either (I) if the Transfer
Agent is not participating in the DTC Fast Automated Securities Transfer Program, to issue and deliver to a Buyer (or its designee) a certificate
42
representing the Securities so delivered to the Company by such Buyer that is free from all restrictive and other legends and registered on the Companys share register or, if the Transfer
Agent is participating in the DTC Fast Automated Securities Transfer Program, to credit the balance account of such Buyer or such Buyers designee with DTC for such number of Conversion Shares or Warrant Shares, as applicable, so delivered to
the Company or (II) if a Registration Statement covering the resale of for such number of Series A Conversion Shares or Warrant Shares, as applicable, so delivered to the Company (the Unavailable Shares) is not available for the
resale of such Unavailable Shares and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) so notify such Buyer and (y) deliver the Series A Conversion Shares or Warrant
Shares, as applicable, electronically without any restrictive legend by crediting such aggregate number of Series A Conversion Shares or Warrant Shares, as applicable, to such Buyers or its designees balance account with DTC through its
Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a Notice Failure and together with the event described in clause (I) above, a Delivery
Failure), then, in addition to all other remedies available to such Buyer, the Company shall pay in cash to such Buyer on each day after the Share Delivery Deadline and during such Delivery Failure an amount equal to 2% of the product of
(A) the sum of the number of shares of Common Stock not issued to such Buyer on or prior to the Share Delivery Deadline and to which such Buyer is entitled, and (B) any trading price of the Common Stock selected by such Buyer in writing as
in effect at any time during the period beginning on the date such Buyer delivered such Conversion Shares or Warrant Shares, as applicable, to the Company for legend removal and ending on the applicable Share Delivery Deadline. In addition to the
foregoing, if on or prior to the Share Delivery Deadline either a Delivery Failure or a Notice Failure occurs, and if on or after such Trading Day such Buyer purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Buyer of shares of Common Stock issuable upon such exercise that such Buyer anticipated receiving from the Company (a Buy-In), then the Company shall, within three (3) Trading Days after such
Buyers request and in such Buyers discretion, either (i) pay cash to such Buyer in an amount equal to such Buyers total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares
of Common Stock so purchased) (the Buy-In Price), at which point the Companys obligation to deliver such certificate or credit such Buyers balance account shall terminate and such shares shall be cancelled, or
(ii) promptly honor its obligation to so deliver to such Buyer a certificate or certificates or credit such Buyers DTC account representing such number of shares of Common Stock that would have been so delivered if the Company timely
complied with its obligations hereunder and pay cash to such Buyer in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Conversion Shares or Warrant Shares (as the case may be) that the
Company was required to deliver to such Buyer by the Share Delivery Deadline, multiplied by (B) the lowest Closing Sale Price (as defined in the Warrants) of the Common Stock on any Trading Day during the period commencing on the date of the
delivery by such Buyer to the Company of the applicable Conversion Shares or Warrant Shares (as the case may be) and ending on the date of such delivery and payment under this clause (ii). Nothing shall limit such Buyers right to pursue any
other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Companys failure to timely deliver certificates representing shares of
43
Common Stock (or to electronically deliver such shares of Common Stock) as required pursuant to the terms hereof. Notwithstanding anything herein to the contrary, with respect to any given Notice
Failure and/or Delivery Failure, this Section 5(e) shall not apply to the applicable Buyer the extent the Company has already paid such amounts in full to such Buyer with respect to such Notice Failure and/or Delivery Failure, as applicable,
pursuant to the analogous sections of the Note or Warrant, as applicable, held by such Buyer.
6. |
CONDITIONS TO THE COMPANYS OBLIGATION TO SELL. |
The obligation of the Company
hereunder to issue and sell the Notes and the related Warrants to each Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Companys
sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:
(a) Such Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.
(b) Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price (less, in the case of any Buyer, the amounts
withheld pursuant to Section 4(j)) for the Note and the related Warrants being purchased by such Buyer at the Closing by wire transfer of the Cash Purchase Price in immediately available funds in accordance with the by wire transfer of
immediately available funds in accordance with the Flow of Funds Letter and, as applicable, delivery of the Redemption Notes to the Company (or its designee) for purchase and cancellation.
(c) The representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the
Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and such 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 such Buyer at or prior to the Closing Date.
7. |
CONDITIONS TO EACH BUYERS OBLIGATION TO PURCHASE. |
The obligation of each Buyer
hereunder to purchase its Note and its related Warrants at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyers sole benefit and may
be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(a) The Company
and each Subsidiary (as the case may be) shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and the Company shall have duly executed and delivered to such Buyer the securities being
purchased by such Buyer at the Closing as follows: (i) a Series A Note (in such original principal amount as is set forth across from such Buyers name in column (3) of the Schedule of Buyers), (ii) a Series B
44
Note (in such original principal amount as is set forth across from such Buyers name in column (4) of the Schedule of Buyers), and/or (iii) Warrants (initially for such aggregate
number of Warrant Shares as is set forth across from such Buyers name in column (5) of the Schedule of Buyers) being purchased by such Buyer at the Closing pursuant to this Agreement.
(b) Such Buyer shall have received the opinion of Baker & McKenzie LLP, the Companys counsel, dated as of the Closing Date, in
the form acceptable to such Buyer.
(c) The Trustee shall have duly executed and delivered to the Company and such Buyer the Indenture and
the Supplemental Indentures. The Indenture and the Supplemental Indentures shall be qualified under the TIA.
(d) The Company shall have
delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form acceptable to such Buyer, which instructions shall have been delivered to and acknowledged in writing by the Companys transfer agent.
(e) The Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of its
Subsidiaries in each such entitys jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date within ten (10) days of the Closing Date.
(f) The Company shall have delivered to such Buyer a certificate evidencing (i) the Companys and each Subsidiarys
qualification as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of California, and (ii) the Companys qualification as a foreign corporation and good standing issued by the Secretary of
State (or comparable office) of Florida, in each case as of a date within ten (10) days of the Closing Date.
(g) The Company shall
have delivered to such Buyer a certified copy of the Certificate of Incorporation as certified by the Delaware Secretary of State within ten (10) days of the Closing Date.
(h) The Company and each Subsidiary shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Companys board of directors in a form reasonably acceptable to such Buyer, (ii) the Certificate
of Incorporation of the Company and the organizational documents of each Subsidiary and (iii) the Bylaws of the Company and the bylaws of each Subsidiary, each as in effect at the Closing.
(i) The representations and warranties of the Company that are qualified or limited by materiality shall be true and correct, and the
representations and warranties of the Company that are not so qualified shall be true and correct in all material respects, in each case as of the date when made and as of the Closing Date as though originally made at that time (except for
representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and
conditions required to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Such Buyer shall
45
have received a certificate, duly executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably
requested by such Buyer in the form acceptable to such Buyer.
(j) The Company shall have delivered to such Buyer a letter from the
Companys transfer agent certifying the number of shares of Common Stock outstanding on the Closing Date immediately prior to the Closing.
(k) The Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have
been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the Closing Date, either (I) in writing by the
SEC or the Principal Market or (II) by falling below the minimum maintenance requirements of the Principal Market.
(l) The Registration
Statement shall be effective and available for the issuance and sale of the RD Securities to be issued at the Closing hereunder and pursuant to the terms of the Series B Notes and the Indenture and the Company shall have delivered to such Buyer the
Prospectus and the Prospectus Supplement as required thereunder.
(m) The Company shall have obtained all governmental, regulatory or
third party consents and approvals, if any, necessary for the sale of the Securities, including without limitation, those required by the Principal Market, if any.
(n) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by
any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.
(o) Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a
Material Adverse Effect.
(p) The Company shall have obtained approval of the Principal Market to list or designate for quotation (as the
case may be) the Conversion Shares and the Warrant Shares.
(q) From the date hereof to the Closing Date, (i) trading in the Common
Stock shall not have been suspended by the SEC or the Principal Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and, (ii) 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 the
Principal 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 each Buyer, makes it impracticable or inadvisable to purchase the Securities at the Closing
46
(r) Each of the Redemption Buyers shall have executed and delivered to such Buyer and the Company
a payoff letter with respect to the Redemption Notes in the form attached hereto as Exhibit D.
(s) Such Buyer shall have
received a letter on the letterhead of the Company, duly executed by the Chief Executive Officer of the Company, setting forth the wire amounts of each Buyer and the wire transfer instructions of the Company (the Flow of Funds
Letter).
(t) Each Buyer desiring to do so shall have entered into a custody agreement with the Trustee relating to such
Buyers Notes on terms reasonably satisfactory to Wolverine Flagship Fund Trading Limited, provided, that no Buyer is obligated to enter into such agreement, and the condition set forth in this Section 7(t) may be waived or dispensed with by
any Buyer (solely with respect to such Buyer, and not with respect to any other Buyer) (such waiver to be conclusively evidenced by such Buyers purchase of the Notes and Warrants allocated to such Buyer on the Schedule of Buyers without
entering into any such agreement).
(u) The Company and its Subsidiaries shall have delivered to such Buyer such other documents,
instruments or certificates relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.
In the event that the Closing shall not have occurred with respect to a
Buyer within five (5) days of the date hereof, then such Buyer shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on such date without liability of such
Buyer to any other party; provided, however, (i) the right to terminate this Agreement under this Section 8 shall not be available to such Buyer if the failure of the transactions contemplated by this Agreement to have been consummated by
such date is the result of such Buyers breach of this Agreement and (ii) the abandonment of the sale and purchase of the Notes and the Warrants shall be applicable only to such Buyer providing such written notice, provided further that no
such termination shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the expenses described in Section 4(j) above. Nothing contained in this Section 8 shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or
the other Transaction Documents.
(a) Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company 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 under any of the other Transaction Documents or with any transaction contemplated hereby or thereby, 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
47
jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or
operate to preclude any Buyer from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Companys obligations to such Buyer or to enforce a judgment or other court ruling in favor of such
Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(b) Counterparts. This Agreement
may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any
signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page 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 signature page were an original thereof.
(c) Headings;
Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include
the masculine, feminine, neuter, singular and plural forms thereof. The terms including, includes, include and words of like import shall be construed broadly as if followed by the words without
limitation. The terms herein, hereunder, hereof and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(d) Severability; Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined to be
invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the
invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the
parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which
comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). Notwithstanding
48
anything to the contrary contained in this Agreement or any other Transaction Document (and without implication that the following is required or applicable), it is the intention of the parties
that in no event shall amounts and value paid by the Company and/or any of its Subsidiaries (as the case may be), or payable to or received by any of the Buyers, under the Transaction Documents (including without limitation, any amounts that would
be characterized as interest under applicable law) exceed amounts permitted under any applicable law. Accordingly, if any obligation to pay, payment made to any Buyer, or collection by any Buyer pursuant the Transaction Documents is
finally judicially determined to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed to have been made by mutual mistake of such Buyer, the Company and its Subsidiaries and such amount shall be
deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary, by reducing or
refunding, at the option of such Buyer, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid or actually paid to such Buyer under the Transaction Documents. For greater certainty, to the extent that
any interest, charges, fees, expenses or other amounts required to be paid to or received by such Buyer under any of the Transaction Documents or related thereto are held to be within the meaning of interest or another applicable term to
otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time to which they relate.
(e) Entire
Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the
Buyers, the Company, its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation, any transactions by any Buyer with respect to Common Stock or the Securities, and the other matters contained herein and
therein, and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein contain the entire understanding of the parties solely with respect to the matters
covered herein and therein; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements any Buyer has entered into with, or any instruments any
Buyer has received from, the Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Buyer in the Company or (ii) waive, alter, modify or amend in any respect any obligations of the Company
or any of its Subsidiaries, or any rights of or benefits to any Buyer or any other Person, in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Buyer, or any instruments any Buyer
received from the Company and/or any of its Subsidiaries prior to the date hereof, and all such agreements and instruments shall continue in full force and effect. Except as specifically set forth herein or therein, neither the Company nor any Buyer
makes any representation, warranty, covenant or undertaking with respect to such matters. For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an instrument in writing
signed by the Company and the Required Holders (as defined below), and any amendment to any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities, as
applicable, provided that no such amendment shall be effective to the extent that it (A) applies to less than all of the holders of the Securities then outstanding or (B) imposes any obligation or liability on any Buyer
49
without such Buyers prior written consent (which may be granted or withheld in such Buyers sole discretion). No waiver shall be effective unless it is in writing and signed by an
authorized representative of the waiving party, provided that the Required Holders may waive any provision of this Agreement, and any waiver of any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be
binding on all Buyers and holders of Securities, as applicable, provided that no such waiver shall be effective to the extent that it (1) applies to less than all of the holders of the Securities then outstanding (unless a party gives a waiver
as to itself only) or (2) imposes any obligation or liability on any Buyer without such Buyers prior written consent (which may be granted or withheld in such Buyers sole discretion). No consideration 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 also is offered to all of the parties to the Transaction Documents (other than any holder of Permitted Senior
Indebtedness (as defined in the Notes), solely in its capacity as such), all holders of the Series A Notes, all the holders of the Series B Notes or all holders of the Warrants (as the case may be). The Company has not, directly or indirectly, made
any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as
set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company, any Subsidiary or otherwise. As a material inducement for each Buyer to enter into this Agreement, the
Company expressly acknowledges and agrees that (x) no due diligence or other investigation or inquiry conducted by a Buyer, any of its advisors or any of its representatives shall affect such Buyers right to rely on, or shall modify or
qualify in any manner or be an exception to any of, the Companys representations and warranties contained in this Agreement or any other Transaction Document and (y) unless a provision of this Agreement or any other Transaction Document
is expressly preceded by the phrase except as disclosed in the SEC Documents, nothing contained in any of the SEC Documents shall affect such Buyers right to rely on, or shall modify or qualify in any manner or be an exception to
any of, the Companys representations and warranties contained in this Agreement or any other Transaction Document. Required Holders means (I) prior to the Closing Date, each Buyer entitled to purchase Notes at the
Closing and (II) on or after the Closing Date, holders of a majority of the Underlying Securities issuable pursuant to the Notes and/or the Warrants (excluding any Notes, Warrants or Underlying Securities held by the Company or any of its
Subsidiaries as of such time).
(f) Notices. Any notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party) or electronic mail; or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly
addressed to the party to receive the same. The addresses, facsimile numbers and e-mail addresses for such communications shall be:
If to
the Company:
Local Corporation
7555 Irvine Center Drive
Irvine, CA 92618
Telephone:
(949) 784-0800
Facsimile: (949) 784-0880
Attention: Chief Financial Officer
E-mail: kragun@local.com
50
With a copy (for informational purposes only) to:
Christopher M. Bartoli, Esq.
Baker & McKenzie LLP
300 East Randolph Street, Suite 5000
Chicago IL 60601
Telephone:
(312) 861-8676
Facsimile: (312) 861-2899
E-mail: Christopher.bartoli@bakermckenzie.com
If to the Transfer Agent:
Computershare Investor Services, Ltd.
211 Quality Circle
College
Station TX 77845-4470
Telephone: 1-800 962-42824
Telephone: (++ 781 575-3120 (outside the U.S.
Facsimile: 1-312 601-2312
Attention: Shareholder Services
E-Mail: Heather.obi@computershare.com
If to a
Buyer, to its address and e-mail address set forth on the Schedule of Buyers, with copies to such Buyers representatives as set forth on the Schedule of Buyers,
with a copy (for informational purposes only) to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY
10178
Telephone: (212) 808-7540
Facsimile: (212) 808-7897
Attention: Michael A. Adelstein, Esq.
E-mail: madelstein@kelleydrye.com
or to such
other address, facsimile number and/or e-mail address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change,
provided that Kelley Drye & Warren LLP
51
shall only be provided copies of notices sent to the lead Buyer. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the senders facsimile machine or e-mail containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of any of the Notes and Warrants. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Required Holders, including, without
limitation, by way of a Fundamental Transaction (as defined in the Warrants) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Warrants) or a Fundamental Transaction (as defined
in the Notes) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes). A Buyer may assign some or all of its rights hereunder in connection with any transfer of any of its
Securities without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.
(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than the Indemnitees referred to in Section 9(k).
(i) Survival. The representations, warranties, agreements and covenants shall survive the Closing. Each Buyer shall be responsible only
for its own representations, warranties, agreements and covenants hereunder.
(j) Further Assurances. Each party shall do and
perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k)
Indemnification.
(i) In consideration of each Buyers execution and delivery of the Transaction Documents and
acquiring the Securities thereunder and in addition to all of the Companys other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and each holder of any Securities and all
of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons agents or other representatives (including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the Indemnitees) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees,
52
liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including
reasonable attorneys fees and disbursements (the Indemnified Liabilities), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company or any Subsidiary in any of the Transaction Documents, (b) any breach of any covenant, agreement or obligation of the Company or any Subsidiary contained in any of the Transaction Documents, (c) any untrue
statement or alleged untrue statement of a material fact contained, or incorporated by reference, in the Registration Statement or any amendment thereto or any omission or alleged omission to state therein, or in any document incorporated by
reference therein, a material fact required to be stated therein or necessary to make the statements therein not misleading (other than an untrue statement or alleged untrue statement in, or omission or alleged omission from, the Prospectus or any
amendment or supplement thereto that is based on or contained in any information relating to a Buyer provided to the Company for use in the Prospectus), (d) any untrue statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Prospectus, any Issuer Free Writing Prospectus, or in any amendment thereof or supplement thereto, or in any issuer information (as defined in Rule 433 under the 1933 Act) of the Company, which
issuer information is required to be, or is, filed with the Commission or otherwise contained in any Free Writing Prospectus, or any amendment or supplement thereto, or any omission or alleged omission to state therein, or in any
document incorporated by reference therein, 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 (other than an untrue statement or
alleged untrue statement in, or omission or alleged omission from, the Prospectus or any amendment or supplement thereto that is based on or contained in any information relating to a Buyer provided to the Company for use in the Prospectus),
(e) any violation of United States federal or state securities laws or the rules and regulations of the Principal Market or any Eligible Market in connection with the transactions contemplated by this Agreement, the Warrants, the Indenture and
the Notes by the Company or any of its Subsidiaries, affiliates, officers, directors or employees, (f) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company or any Subsidiary) or (g) arising out of or resulting from (i) the execution, delivery, performance or enforcement of any of the Transaction Documents, (ii) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (iii) any disclosure properly made by such Buyer pursuant to Section 4(l), or (iv) the status of such Buyer or holder of the Securities
as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents or as a party to this Agreement (including, without limitation, as a party in interest or otherwise in any action or proceeding for injunctive or
other equitable relief). To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
53
(ii) Promptly after receipt by an Indemnitee under this Section 9(k) of
notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim in respect thereof is to be made against the Company under this
Section 9(k), deliver to the Company a written notice of the commencement thereof, and the Company shall have the right to participate in, and, to the extent the Company so desires, to assume control of the defense thereof with counsel mutually
satisfactory to the Company and the Indemnitee; provided, however, that an Indemnitee shall have the right to retain its own counsel with the fees and expenses of such counsel to be paid by the Company if: (i) the Company has agreed in writing
to pay such fees and expenses; (ii) the Company shall have failed promptly to assume the defense of such Indemnified Liability and to employ counsel reasonably satisfactory to such Indemnitee in any such Indemnified Liability; or (iii) the
named parties to any such Indemnified Liability (including any impleaded parties) include both such Indemnitee and the Company, and such Indemnitee shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnitee and the Company (in which case, if such Indemnitee notifies the Company in writing that it elects to employ separate counsel at the expense of the Company, then the Company shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the Company), provided further, that in the case of clause (iii) above the Company shall not be responsible for the reasonable fees and expenses of more than one (1) separate
legal counsel for such Indemnitee. The Indemnitee shall reasonably cooperate with the Company in connection with any negotiation or defense of any such action or Indemnified Liability by the Company and shall furnish to the Company all information
reasonably available to the Indemnitee which relates to such action or Indemnified Liability. The Company shall keep the Indemnitee reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.
The Company shall not be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the Company shall not unreasonably withhold, delay or condition its consent. The Company shall
not, without the prior written consent of the Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability in respect to such Indemnified Liability or litigation, and such settlement shall not include any admission as to fault on the part of the Indemnitee. Following indemnification as provided for hereunder,
the Company shall be subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the Company within a
reasonable time of the commencement of any such action shall not relieve the Company of any liability to the Indemnitee under this Section 9(k), except to the extent that the Company is materially and adversely prejudiced in its ability to
defend such action.
(iii) The indemnification required by this Section 9(k) 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 Indemnified Liabilities are incurred.
(iv) The indemnity agreement contained herein shall be in addition to (A) any cause of action or similar right of the
Indemnitee against the Company or others, and (B) any liabilities the Company may be subject to pursuant to the law.
54
(l) Construction. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality or applicability of a more general representation or
warranty. Each and every reference to share prices, shares of Common Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for any stock splits, stock dividends, stock combinations,
recapitalizations or other similar transactions that occur with respect to the Common Stock after the date of this Agreement. It is expressly understood and agreed that for all purposes of this Agreement, and without implication that the contrary
would otherwise be true, neither transactions nor purchases nor sales shall include the location and/or reservation of borrowable shares of Common Stock.
(m) Remedies. Each Buyer and in the event of assignment by Buyer of its rights and obligations hereunder, each holder of Securities,
shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law.
Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it or any Subsidiary fails to perform, observe, or discharge any or all of its or such Subsidiarys (as the case may be) obligations under the
Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek specific performance and/or temporary, preliminary and permanent injunctive or other
equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. The remedies provided in this Agreement and the other Transaction Documents
shall be cumulative and in addition to all other remedies available under this Agreement and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief).
(n) Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the Company or any Subsidiary does not timely perform its related obligations within the periods therein provided, then such
Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company or such Subsidiary (as the case may be), any relevant notice, demand or election in whole or in part without prejudice to its future actions
and rights.
(o) Payment Set Aside; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder or
pursuant to any of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently
55
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, foreign, 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. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and
the other Transaction Documents are in United States Dollars (U.S. Dollars), and all amounts owing under this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies
(if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. Exchange Rate means, in relation to any amount of currency to be converted into U.S. Dollars
pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.
(p) Judgment Currency.
(i) If for the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other
Transaction Document in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 9(p) referred to as the Judgment Currency) an amount due in
US Dollars under this Agreement, the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:
(1) the date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any
other jurisdiction that will give effect to such conversion being made on such date: or
(2) the date on which the foreign
court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the Judgment Conversion
Date).
(ii) If in the case of any proceeding in the court of any jurisdiction referred to in
Section 9(p)(i)(2) above, there is a change in the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay such adjusted amount as may be necessary to ensure
that the amount paid in the Judgment Currency, when converted at the Exchange Rate prevailing on the date of payment, will produce the amount of US Dollars which could have been purchased with the amount of Judgment Currency stipulated in the
judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(iii) Any amount due from the
Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Agreement or any other Transaction Document.
56
(q) Independent Nature of Buyers Obligations and Rights. The obligations of each
Buyer under the Transaction Documents are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document. Nothing
contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that the Buyers do not so constitute, a partnership, an
association, a joint venture or any other kind of group or entity, or create a presumption that the Buyers are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by the Transaction
Documents or any matters, and the Company acknowledges that the Buyers are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by the Transaction
Documents. The decision of each Buyer to purchase Securities pursuant to the Transaction Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other Buyer has acted as agent for such Buyer in
connection with such Buyer making its investment hereunder and that no other Buyer will be acting as agent of such Buyer in connection with monitoring such Buyers investment in the Securities or enforcing its rights under the Transaction
Documents. The Company and each Buyer confirms that each Buyer has independently participated with the Company and its Subsidiaries in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer
shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as
an additional party in any proceeding for such purpose. The use of a single agreement to effectuate the purchase and sale of the Securities contemplated hereby was solely in the control of the Company, not the action or decision of any Buyer, and
was done solely for the convenience of the Company and its Subsidiaries and not because it was required or requested to do so by any Buyer. It is expressly understood and agreed that each provision contained in this Agreement and in each other
Transaction Document is between the Company, each Subsidiary and a Buyer, solely, and not between the Company, its Subsidiaries and the Buyers collectively and not between and among the Buyers.
[signature pages follow]
57
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY: |
|
LOCAL CORPORATION |
|
|
By: |
|
/s/ Fred Thiel |
|
|
Name: Fred Thiel |
|
|
Title: Chairman/CEO |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.
|
|
|
BUYER AND REDEMPTION BUYER: |
|
WOLVERINE FLAGSHIP FUND TRADING LIMITED |
|
|
By: |
|
Wolverine Asset Management, LLC, its Investment
Manager |
|
|
By: |
|
/s/ Ken Nadel |
|
|
Name: Ken Nadel |
|
|
Title: Authorized Signatory |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 4.99%. |
x |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 9.99%. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as unlimited. |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.
|
|
|
BUYER AND REDEMPTION BUYER: |
|
THE TAIL WIND FUND LTD. |
By: |
|
CIM INVESTMENT MANAGEMENT LTD., as investment manager |
|
|
By: |
|
/s/ Daniel Nye |
|
|
Name: Daniel Nye |
|
|
Title: Portfolio Manager |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 4.99%. |
x |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 9.99%. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as unlimited. |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first written above.
|
|
|
BUYER: |
|
NEAL I. GOLDMAN |
|
/s/ Neil I. Goldman |
Name: |
|
Neal I. Goldman |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 4.99%. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 9.99%. |
x |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as unlimited. |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.
|
BUYER AND MANAGEMENT BUYER: |
|
/s/ Norman K. Farra, Jr. |
NORMAN K. FARRA, JR. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 4.99%. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 9.99%. |
x |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as unlimited. |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.
|
BUYER AND MANAGEMENT BUYER: |
|
/s/ John E. Rehfeld |
JOHN E. REHFELD |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 4.99%. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 9.99%. |
x |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as unlimited. |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.
|
BUYER AND MANAGEMENT BUYER: |
|
/s/ John Payne |
JOHN PAYNE |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 4.99%. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 9.99%. |
x |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as unlimited. |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.
|
BUYER AND MANAGEMENT BUYER: |
|
/s/ David Hughes |
DAVID HUGHES |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 4.99%. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 9.99%. |
x |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as unlimited. |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.
|
BUYER AND MANAGEMENT BUYER: |
|
/s/ Fred Thiel |
FRED THIEL |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 4.99%. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 9.99%. |
x |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as unlimited. |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.
|
BUYER AND MANAGEMENT BUYER: |
|
/s/ Kenneth Cragun |
KENNETH CRAGUN |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 4.99%. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 9.99%. |
x |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as unlimited. |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.
|
BUYER AND MANAGEMENT BUYER: |
|
/s/ Scott Reinke |
SCOTT REINKE |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 4.99%. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 9.99%. |
x |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as unlimited. |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.
|
BUYER AND MANAGEMENT BUYER: |
|
/s/ Carlos Caponera |
CARLOS CAPONERA |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 4.99%. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 9.99%. |
x |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as unlimited. |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.
|
BUYER AND MANAGEMENT BUYER: |
|
/s/ Eric Orrantia |
ERIC ORRANTIA |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 4.99%. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 9.99%. |
x |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as unlimited. |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.
|
BUYER AND MANAGEMENT BUYER: |
|
/s/ Joseph Lindsay |
JOSEPH LINDSAY |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 4.99%. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 9.99%. |
x |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as unlimited. |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above.
|
BUYER AND MANAGEMENT BUYER: |
|
/s/ Brian Singleton |
BRIAN SINGLETON |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 4.99%. |
¨ |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as 9.99%. |
x |
Check here if requesting the Maximum Percentage (as such term is used in the Notes and the Warrants) to be defined for the Buyer signatory above as unlimited. |
SCHEDULE OF BUYERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
(2) |
|
(3) |
|
|
(4) |
|
|
(5) |
|
(6) |
|
|
(7) |
|
|
(8) |
|
|
(9) |
|
|
(10) |
Buyer |
|
Address and Facsimile Number |
|
Original Principal Amount of Series A Notes |
|
|
Original Principal Amount of Series B Notes |
|
|
Aggregate
Number of Warrant Shares |
|
Redemption Note Amount |
|
|
Purchase Price |
|
|
Cash Purchase Price |
|
|
Redemption Price |
|
|
Legal Representatives
Address and Facsimile Number |
|
|
|
|
|
|
|
|
|
|
Wolverine Flagship Fund Trading Limited |
|
Address for notices:
c/o Wolverine Asset Management, LLC 175 W. Jackson Blvd., Suite
340 Chicago, Illinois 60604 Fax: (312) 884-4645
Attention: Michael Adamski
John Ziegelman
E-Mail: jziegelman@wolvefunds.com
notices@wolvefunds.com
Address for delivery of securities:
Deutsche Bank Securities
60 Wall Street, 13th Floor New York, NY 10005
Telephone: (212) 250-5571 Attention: Marc Scanlon
E-mail: marc.scanlon@db.com |
|
$ |
1,784,028 |
|
|
$ |
2,250,000 |
|
|
3,306,250 |
|
$ |
2,534,028 |
|
|
$ |
4,034,028 |
|
|
$ |
1,000,000 |
|
|
$ |
3,034,028 |
|
|
Kelley Drye & Warren LLP 101 Park
Avenue New York, NY 10178 Telephone: (212) 808-7540
Facsimile: (212) 808-7897 Attention: Michael A. Adelstein,
Esq. |
|
|
|
|
|
|
|
|
|
|
The Tail Wind Fund Ltd. |
|
c/o CIM Investment Management Ltd. Attn: Daniel
Nye 3 Yeomans Row London SW3 2AL
England Fax: 011-44-207-468-7630
Email: d.nye@ciminvest.com |
|
$ |
1,784,028 |
|
|
$ |
2,250,000 |
|
|
3,306,250 |
|
$ |
2,534,028 |
|
|
$ |
4,034,028 |
|
|
$ |
1,000,000 |
|
|
$ |
3,034,028 |
|
|
Peter J. Weisman, P.C. 419 Park Avenue South,
Suite 807 New York, N.Y. 10016 Tel: 212-581-2144
Fax: 212-581-2433
Email: pweisman@pweisman.com |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
(2) |
|
(3) |
|
|
(4) |
|
|
(5) |
|
(6) |
|
(7) |
|
|
(8) |
|
|
(9) |
|
(10) |
Buyer |
|
Address and Facsimile Number |
|
Original Principal Amount of Series A Notes |
|
|
Original Principal Amount of Series B Notes |
|
|
Aggregate
Number of Warrant Shares |
|
Redemption Note Amount |
|
Purchase Price |
|
|
Cash Purchase Price |
|
|
Redemption Price |
|
Legal Representatives
Address and Facsimile Number |
|
|
|
|
|
|
|
|
|
|
Neal I. Goldman |
|
c/o Goldman Capital Management Inc. 767 Third
Avenue New York, NY 10017 |
|
$ |
750,000 |
|
|
$ |
250,000 |
|
|
869,702 |
|
N/A |
|
$ |
1,000,000 |
|
|
$ |
1,000,000 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
Norman K. Farra, Jr., Director |
|
525 Mystic Lane West Grove, PA 19390 |
|
$ |
30,000 |
|
|
|
N/A |
|
|
27,107 |
|
N/A |
|
$ |
30,000 |
|
|
$ |
30,000 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
John E. Rehfeld, Director |
|
385 Bellaire St Del Mar, CA 92014 |
|
$ |
30,000 |
|
|
|
N/A |
|
|
27,107 |
|
N/A |
|
$ |
30,000 |
|
|
$ |
30,000 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
John Payne, Director |
|
255 Emerald Bay Laguna Beach, CA 92651 |
|
$ |
30,000 |
|
|
|
N/A |
|
|
27,107 |
|
N/A |
|
$ |
30,000 |
|
|
$ |
30,000 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
David Hughes, Director |
|
2607 Palm Ave Manhattan Beach, CA
90266 |
|
$ |
30,000 |
|
|
|
N/A |
|
|
27,107 |
|
N/A |
|
$ |
30,000 |
|
|
$ |
30,000 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
Fred Thiel, Chairman & CEO |
|
32511 Mediterranean Dana Point, CA
92629 |
|
$ |
50,000 |
|
|
|
N/A |
|
|
45,179 |
|
N/A |
|
$ |
50,000 |
|
|
$ |
50,000 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth Cragun, CFO |
|
3775 Chippewa Circle Corona, CA 92881 |
|
$ |
20,000 |
|
|
|
N/A |
|
|
18,071 |
|
N/A |
|
$ |
20,000 |
|
|
$ |
20,000 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
Scott Reinke, CLO |
|
4800 Benchmark Court Sarasota FL 34238 |
|
$ |
20,000 |
|
|
|
N/A |
|
|
18,071 |
|
N/A |
|
$ |
20,000 |
|
|
$ |
20,000 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
Carlos Caponera, SVP O&O |
|
21861 Via Del Lago Trabuco Canyon, Ca
92679 |
|
$ |
10,000 |
|
|
|
N/A |
|
|
9,035 |
|
N/A |
|
$ |
10,000 |
|
|
$ |
10,000 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
Eric Orrantia, VP of Network |
|
15 Flax Ct Trabuco Canyon CA 92679 |
|
$ |
10,000 |
|
|
|
N/A |
|
|
9,035 |
|
N/A |
|
$ |
10,000 |
|
|
$ |
10,000 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
Joseph Lindsay, VP of Technology |
|
5270 Crescent Dr Yorba Linda, CA 92887 |
|
$ |
10,000 |
|
|
|
N/A |
|
|
9,035 |
|
N/A |
|
$ |
10,000 |
|
|
$ |
10,000 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
(2) |
|
(3) |
|
|
(4) |
|
|
(5) |
|
(6) |
|
|
(7) |
|
|
(8) |
|
|
(9) |
|
|
(10) |
Buyer |
|
Address and Facsimile Number |
|
Original Principal Amount of Series A Notes |
|
|
Original Principal Amount of Series B Notes |
|
|
Aggregate
Number of Warrant Shares |
|
Redemption Note Amount |
|
|
Purchase Price |
|
|
Cash Purchase Price |
|
|
Redemption Price |
|
|
Legal Representatives
Address and Facsimile Number |
|
|
|
|
|
|
|
|
|
|
Brian Singleton, VP of Innovations |
|
38 Apache Dr. Trabuco Canyon, CA 92679 |
|
$ |
10,000 |
|
|
|
N/A |
|
|
9,035 |
|
|
N/A |
|
|
$ |
10,000 |
|
|
$ |
10,000 |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
|
$ |
4,568,056 |
|
|
$ |
4,750,000 |
|
|
7,708,091 |
|
$ |
5,068,056 |
|
|
$ |
9,318,056 |
|
|
$ |
3,250,000 |
|
|
$ |
6,068,056 |
|
|
|
Exhibit 4.1
LOCAL CORPORATION
TO
U.S. BANK NATIONAL ASSOCIATION
Trustee
Form of Indenture
Dated as of , 2015
Subordinated Debt Securities
TABLE OF CONTENTS
|
|
|
|
|
|
|
Page |
|
|
|
ARTICLE ONE - DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION |
|
|
1 |
|
SECTION 101. Definitions. |
|
|
1 |
|
SECTION 102. Compliance Certificates and Opinions. |
|
|
10 |
|
SECTION 103. Form of Documents Delivered to Trustee. |
|
|
10 |
|
SECTION 104. Acts of Holders. |
|
|
11 |
|
SECTION 105. Notices, etc., to Trustee and Company. |
|
|
12 |
|
SECTION 106. Notice to Holders; Waiver. |
|
|
13 |
|
SECTION 107. Counterparts; Effect of Headings and Table of Contents. |
|
|
14 |
|
SECTION 108. Successors and Assigns. |
|
|
14 |
|
SECTION 109. Severability Clause. |
|
|
14 |
|
SECTION 110. Benefits of Indenture. |
|
|
14 |
|
SECTION 111. Governing Law. |
|
|
14 |
|
SECTION 112. Legal Holidays. |
|
|
14 |
|
SECTION 113. Limited Liability; Immunity of Stockholders, Directors, Officers and Agents of the Company. |
|
|
14 |
|
SECTION 114. Conflict with Trust Indenture Act. |
|
|
15 |
|
|
|
ARTICLE TWO - SECURITIES FORMS |
|
|
15 |
|
SECTION 201. Forms of Securities. |
|
|
15 |
|
SECTION 202. Form of Trustees Certificate of Authentication. |
|
|
16 |
|
SECTION 203. Securities Issuable in Global Form. |
|
|
16 |
|
|
|
ARTICLE THREE - THE SECURITIES |
|
|
17 |
|
SECTION 301. Amount Unlimited; Issuable in Series. |
|
|
17 |
|
SECTION 302. Denominations. |
|
|
20 |
|
SECTION 303. Execution, Authentication, Delivery and Dating. |
|
|
20 |
|
SECTION 304. Temporary Securities. |
|
|
22 |
|
SECTION 305. Registration, Registration of Transfer, Conversion and Exchange. |
|
|
24 |
|
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. |
|
|
27 |
|
SECTION 307. Payment of Interest; Interest Rights Preserved. |
|
|
28 |
|
SECTION 308. Persons Deemed Owners. |
|
|
30 |
|
SECTION 309. Cancellation. |
|
|
30 |
|
SECTION 310. Computation of Interest. |
|
|
31 |
|
SECTION 311. CUSIP Numbers. |
|
|
31 |
|
|
|
ARTICLE FOUR - SATISFACTION AND DISCHARGE |
|
|
31 |
|
SECTION 401. Satisfaction and Discharge of Indenture. |
|
|
31 |
|
SECTION 402. Application of Trust Funds. |
|
|
32 |
|
|
|
ARTICLE FIVE - REMEDIES |
|
|
32 |
|
SECTION 501. Events of Default. |
|
|
32 |
|
SECTION 502. Acceleration of Maturity; Rescission and Annulment. |
|
|
34 |
|
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. |
|
|
35 |
|
SECTION 504. Trustee May File Proofs of Claim. |
|
|
35 |
|
SECTION 505. Trustee May Enforce Claims Without Possession of Securities or Coupons. |
|
|
36 |
|
SECTION 506. Application of Money Collected. |
|
|
36 |
|
SECTION 507. Limitation on Suits. |
|
|
37 |
|
(i)
|
|
|
|
|
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium or Make-Whole Amount, if any, and Interest. |
|
|
37 |
|
SECTION 509. Restoration of Rights and Remedies. |
|
|
37 |
|
SECTION 510. Rights and Remedies Cumulative. |
|
|
37 |
|
SECTION 511. Delay or Omission Not Waiver. |
|
|
38 |
|
SECTION 512. Control by Holders of Securities. |
|
|
38 |
|
SECTION 513. Waiver of Past Defaults. |
|
|
38 |
|
SECTION 514. Waiver of Usury, Stay or Extension Laws. |
|
|
38 |
|
SECTION 515. Undertaking for Costs. |
|
|
39 |
|
|
|
ARTICLE SIX - THE TRUSTEE |
|
|
39 |
|
SECTION 601. Notice of Defaults. |
|
|
39 |
|
SECTION 602. Certain Rights of Trustee. |
|
|
39 |
|
SECTION 603. Not Responsible for Recitals or Issuance of Securities. |
|
|
41 |
|
SECTION 604. May Hold Securities. |
|
|
42 |
|
SECTION 605. Money Held in Trust. |
|
|
42 |
|
SECTION 606. Compensation and Reimbursement. |
|
|
42 |
|
SECTION 607. Corporate Trustee Required; Eligibility; Conflicting Interests. |
|
|
42 |
|
SECTION 608. SECTION 608. Resignation and Removal; Appointment of Successor. |
|
|
43 |
|
SECTION 609. Acceptance of Appointment by Successor. |
|
|
44 |
|
SECTION 610. Merger, Conversion, Consolidation or Succession to Business. |
|
|
45 |
|
SECTION 611. Appointment of Authenticating Agent. |
|
|
45 |
|
SECTION 612. Certain Duties and Responsibilities of the Trustee. |
|
|
46 |
|
|
|
ARTICLE SEVEN - HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY |
|
|
48 |
|
SECTION 701. Disclosure of Names and Addresses of Holders. |
|
|
48 |
|
SECTION 702. Reports by Trustee. |
|
|
48 |
|
SECTION 703. Reports by Company. |
|
|
48 |
|
SECTION 704. Company to Furnish Trustee Names and Addresses of Holders. |
|
|
49 |
|
|
|
ARTICLE EIGHT - CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE |
|
|
49 |
|
SECTION 801. Consolidations and Mergers of Company and Sales, Leases and Conveyances Permitted Subject to Certain Conditions. |
|
|
49 |
|
SECTION 802. Rights and Duties of Successor Corporation. |
|
|
49 |
|
SECTION 803. Officers Certificate and Opinion of Counsel. |
|
|
50 |
|
|
|
ARTICLE NINE - SUPPLEMENTAL INDENTURES |
|
|
50 |
|
SECTION 901. Supplemental Indentures Without Consent of Holders. |
|
|
50 |
|
SECTION 902. Supplemental Indentures with Consent of Holders. |
|
|
51 |
|
SECTION 903. Execution of Supplemental Indentures. |
|
|
52 |
|
SECTION 904. Effect of Supplemental Indentures. |
|
|
52 |
|
SECTION 905. Conformity with Trust Indenture Act. |
|
|
52 |
|
SECTION 906. Reference in Securities to Supplemental Indentures. |
|
|
52 |
|
|
|
ARTICLE TEN - COVENANTS |
|
|
53 |
|
SECTION 1001. Payment of Principal, Premium or Make-Whole Amount, if any; and Interest. |
|
|
53 |
|
SECTION 1002. Maintenance of Office or Agency. |
|
|
53 |
|
SECTION 1003. Money for Securities Payments to Be Held in Trust. |
|
|
54 |
|
SECTION 1004. Existence. |
|
|
55 |
|
SECTION 1005. Maintenance of Properties. |
|
|
55 |
|
SECTION 1006. Insurance. |
|
|
56 |
|
(ii)
|
|
|
|
|
SECTION 1007. Payment of Taxes and Other Claims. |
|
|
56 |
|
SECTION 1008. Statement as to Compliance. |
|
|
56 |
|
SECTION 1009. Waiver of Certain Covenants. |
|
|
56 |
|
|
|
ARTICLE ELEVEN - REDEMPTION OF SECURITIES |
|
|
56 |
|
SECTION 1101. Applicability of Article. |
|
|
56 |
|
SECTION 1102. Election to Redeem; Notice to Trustee. |
|
|
56 |
|
SECTION 1103. Selection by Trustee of Securities to Be Redeemed. |
|
|
57 |
|
SECTION 1104. Notice of Redemption. |
|
|
57 |
|
SECTION 1105. Deposit of Redemption Price. |
|
|
58 |
|
SECTION 1106. Securities Payable on Redemption Date. |
|
|
58 |
|
SECTION 1107. Securities Redeemed in Part. |
|
|
59 |
|
|
|
ARTICLE TWELVE - SINKING FUNDS |
|
|
60 |
|
SECTION 1201. Applicability of Article. |
|
|
60 |
|
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities. |
|
|
60 |
|
SECTION 1203. Redemption of Securities for Sinking Fund. |
|
|
60 |
|
|
|
ARTICLE THIRTEEN - REPAYMENT AT THE OPTION OF HOLDERS |
|
|
60 |
|
SECTION 1301. Applicability of Article. |
|
|
60 |
|
SECTION 1302. Repayment of Securities. |
|
|
61 |
|
SECTION 1303. Exercise of Option. |
|
|
61 |
|
SECTION 1304. When Securities Presented for Repayment Become Due and Payable. |
|
|
61 |
|
SECTION 1305. Securities Repaid in Part. |
|
|
62 |
|
|
|
ARTICLE FOURTEEN - DEFEASANCE AND COVENANT DEFEASANCE |
|
|
62 |
|
SECTION 1401. Applicability of Article; Companys Option to Effect Defeasance or Covenant Defeasance. |
|
|
62 |
|
SECTION 1402. Defeasance and Discharge. |
|
|
63 |
|
SECTION 1403. Covenant Defeasance. |
|
|
63 |
|
SECTION 1404. Conditions to Defeasance or Covenant Defeasance. |
|
|
63 |
|
SECTION 1405. Deposited Money and Government Obligations to Be Held in Trust; Other Miscellaneous Provisions. |
|
|
65 |
|
|
|
ARTICLE FIFTEEN - MEETINGS OF HOLDERS OF SECURITIES |
|
|
66 |
|
SECTION 1501. Purposes for Which Meetings May Be Called. |
|
|
66 |
|
SECTION 1502. Call, Notice and Place of Meetings. |
|
|
66 |
|
SECTION 1503. Persons Entitled to Vote at Meetings. |
|
|
66 |
|
SECTION 1504. Quorum; Action. |
|
|
66 |
|
SECTION 1505. Determination of Voting Rights; Conduct and Adjournment of Meetings. |
|
|
67 |
|
SECTION 1506. Counting Votes and Recording Action of Meetings. |
|
|
68 |
|
|
|
ARTICLE SIXTEEN - SUBORDINATION OF SECURITIES |
|
|
68 |
|
SECTION 1601. Agreement to Subordinate. |
|
|
68 |
|
SECTION 1602. Payment Over of Proceeds upon Dissolution, Etc. |
|
|
69 |
|
SECTION 1603. No Payment When Senior Indebtedness in Default. |
|
|
69 |
|
SECTION 1604. Reliance by Senior Indebtedness on Subordination Provisions. |
|
|
70 |
|
SECTION 1605. Subrogation to Rights of Holders of Senior Indebtedness. |
|
|
71 |
|
SECTION 1606. Provisions Solely to Define Relative Rights. |
|
|
71 |
|
SECTION 1607. Trustee to Effectuate Subordination. |
|
|
71 |
|
SECTION 1608. No Waiver of Subordination Provisions. |
|
|
71 |
|
(iii)
|
|
|
|
|
SECTION 1609. Notice to Trustee. |
|
|
72 |
|
SECTION 1610. Reliance on Judicial Order or Certificate of Liquidating Agent. |
|
|
73 |
|
SECTION 1611. Trustee Not Fiduciary for Holders of Senior Indebtedness. |
|
|
73 |
|
SECTION 1612. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustees Rights. |
|
|
73 |
|
SECTION 1613. Article Applicable to Paying Agents. |
|
|
73 |
|
|
|
ARTICLE SEVENTEEN - CONVERSION OF SECURITIES |
|
|
73 |
|
SECTION 1701. Applicability of Article; Conversion Privilege and Conversion Price. |
|
|
73 |
|
SECTION 1702. Exercise of Conversion Privilege. |
|
|
74 |
|
SECTION 1703. Fractions of Shares. |
|
|
75 |
|
SECTION 1704. Adjustment of Conversion Price. |
|
|
75 |
|
SECTION 1705. Notice of Adjustments of Conversion Price. |
|
|
78 |
|
SECTION 1706. Notice of Certain Corporate Action. |
|
|
79 |
|
SECTION 1707. Company to Reserve Common Stock. |
|
|
79 |
|
SECTION 1708. Taxes on Conversion. |
|
|
79 |
|
SECTION 1709. Covenants as to Common Stock. |
|
|
79 |
|
SECTION 1710. Cancellation of Converted Securities. |
|
|
80 |
|
SECTION 1711. Provisions in Case of Consolidation, Merger or Sale of Assets; Special Distributions. |
|
|
80 |
|
SECTION 1712. Trustee Adjustment Disclaimer; Company Determination Final. |
|
|
81 |
|
SECTION 1713. When No Adjustment Required. |
|
|
81 |
|
SECTION 1714. Equivalent Adjustments. |
|
|
81 |
|
(iv)
LOCAL CORPORATION
Reconciliation and tie between the Trust Indenture Act of 1939, as amended (the Trust Indenture Act or TIA) and the
Indenture, dated as of , 2015.
|
|
|
Trust Indenture Act Section |
|
Indenture Section |
§ 310(a)(1) |
|
607 |
(a)(2) |
|
607 |
(b) |
|
607, 608 |
§ 312(c) |
|
701 |
§ 313(a) |
|
702 |
(c) |
|
702 |
§ 314(a) |
|
703 |
(a)(4) |
|
1008 |
(c)(1) |
|
102 |
(c)(2) |
|
102 |
(e) |
|
102 |
§ 315(b) |
|
601 |
§ 316(a) (last sentence) |
|
101(Outstanding) |
(a)(1)(A) |
|
502, 512 |
(a)(1)(B) |
|
513 |
(c) |
|
508 |
§ 317(a)(1) |
|
503 |
(a)(2) |
|
504 |
§ 318(a) |
|
111 |
(c) |
|
111 |
NOTE: This
reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.
Attention should also be directed to
Section 318(c) of the Trust Indenture Act, which provides that the provisions of Sections 310 to and including 317 of the Trust Indenture Act are a part of and govern every qualified indenture, whether or not physically contained therein.
(v)
INDENTURE, dated as of
, 2015, between LOCAL CORPORATION, a corporation organized under the laws of the State of Delaware (hereinafter called the
Company), having its principal office at 7555 Irvine Center Drive, Irvine, California 92618, and U.S. BANK NATIONAL ASSOCIATION, as Trustee hereunder (hereinafter called the Trustee), having a Corporate Trust Office at 633
West Fifth Street, 24th Floor, Los Angeles, California 90071, Attention: G. Thomas (Local Corporation).
RECITALS OF THE COMPANY
The
Company deems it necessary to issue from time to time for its lawful purposes subordinated debt securities (hereinafter called the Securities) evidencing its unsecured and subordinated indebtedness, and has duly authorized the execution
and delivery of this Indenture to provide for the issuance from time to time of the Securities, to be issued in one or more Series as provided in this Indenture.
This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended (the Trust Indenture Act or
TIA), that are deemed to be incorporated into this Indenture and shall, to the extent applicable, be governed by such provisions.
All things necessary to make this Indenture a valid and legally binding agreement of the Company, in accordance with its terms, have been
done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of a Series thereof, as follows:
ARTICLE ONE - DEFINITIONS AND
OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions. For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which
are defined in the TIA, either directly or by reference therein, have the meanings assigned to them therein, and the terms cash transactions and self-liquidating paper, as used in TIA Section 311, shall have the meanings
assigned to them in the rules of the Commission adopted under the TIA;
(3) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with GAAP;
(4) any reference to an Article or a
Section refers to an Article or Section, as the case may be, of this Indenture; and
(5) the words
herein, hereof and hereunder and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.
Act, when used with respect to any Holder, has the meaning specified in Section 104.
1
Affiliate of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, control when used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the
foregoing.
Authenticating Agent means any Person authorized by the Trustee pursuant to Section 611 hereof to act
on behalf of the Trustee to authenticate Securities of one or more Series.
Authorized Newspaper means a newspaper,
printed in the English language or in an official language of the country of publication, customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays, and of general circulation in each place in connection
with which the term is used or in the financial community of each such place. Whenever successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different Authorized
Newspapers in the same city meeting the foregoing requirements and in each case on any Business Day.
Bankruptcy Law
has the meaning specified in Section 501.
Bearer Security means any Security established pursuant to
Section 201 which is payable to the bearer.
Board of Directors when used with reference to the Company, means the
board of directors of the Company, or any committee of that board duly authorized to act hereunder, or any director or directors and/or officer or officers of the Company, to whom the board or committee shall have duly delegated its authority.
Board Resolution means a copy of (1) a resolution certified by the Secretary or an Assistant Secretary of the Company
to have been duly adopted by the Board of Directors or a duly authorized committee of the Board of Directors and to be in full force and effect on the date of such certification, or (2) a certificate signed by the director or directors and/or
officer or officers to whom the Board of Directors shall have duly delegated its authority, together with a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be
in full force and effect on the date of such certification authorizing such delegation, and, in each case, delivered to the Trustee.
Business Day, when used with respect to any Place of Payment or any other particular location referred to in this Indenture
or in the Securities, means, unless otherwise specified with respect to any Securities issued pursuant to Section 301, any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in that
Place of Payment or particular location are authorized or required by law, regulation or executive order to close.
Capital
Stock means, with respect to any Person, any capital stock (including preferred stock), shares, interests, participations or other ownership interests (however designated) of such Person and any rights (other than debt securities
convertible into or exchangeable for corporate stock), warrants or options to purchase any thereof.
Clearstream means
Clearstream Banking Luxembourg, société anonyme, or its successor.
Closing Price means the closing price
of a share of Common Stock of the Company as reported on the NASDAQ Global Market.
2
Code means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder.
Commission means the Securities and Exchange Commission, as from time to time constituted, created under
the Exchange Act, or, if at any time after execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date.
Common Depository has the meaning specified in Section 304.
Common Stock means, with respect to any Person, all shares of capital stock issued by such Person other than Preferred
Stock.
Company means the Person named as the Company in the first paragraph of this Indenture until a
successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Company shall mean such successor corporation.
Company Request and Company Order mean, respectively, a written request or order signed in the name of
the Company by its Chief Executive Officer, the President, or a Vice President, and by its Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee.
Constituent Person has the meaning specified in Section 1711.
Conversion Event means the cessation of use of (i) a Foreign Currency both by the government of the country which
issued such currency and for the settlement of transactions by a central bank or other public institutions of or within the international banking community, (ii) the ECU both within the European Monetary System and for the settlement of
transactions by public institutions of or within the European Communities or (iii) any currency unit (or composite currency) other than the ECU for the purposes for which it was established.
Conversion Price has the meaning specified in Section 1701.
Corporate Trust Office means the office of the Trustee at which, at any particular time, its corporate trust business shall
be principally administered, which office at the date hereof is located at 633 West Fifth Street, 24th Floor, Los Angeles, California 90071, Attention: G. Thomas (Local Corporation).
corporation includes corporations, associations, companies and business trusts.
coupon means any interest coupon appertaining to a Bearer Security.
Covenant Defeasance has the meaning specified in Section 1403.
Custodian has the meaning specified in Section 501.
Defaulted Interest has the meaning specified in Section 307.
Defeasance has the meaning specified in Section 1402.
Distribution Record Date has the meaning specified in Section 1711.
Dividend Record Date has the meaning specified in Section 1704.
3
Dollar or the sign $ means a dollar or other equivalent
unit in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts.
DTC means The Depository Trust Company and any successor to DTC in its capacity as depository for any Securities.
ECU means the European Currency Unit as defined and revised from time to time by the Council of the European Communities.
Euroclear means the operator of the Euroclear System.
European Communities means the European Economic Community, the European Coal and Steel Community and the European Atomic
Energy Community.
European Monetary System means the European Monetary System established by the Resolution of
December 5, 1978 of the Council of the European Communities.
Event of Default has the meaning specified in
Article Five.
Exchange Act means the Securities Exchange Act of 1934, as amended, as in force at the date as of which
this Indenture was executed; provided, however, that in the event the Exchange Act is amended after such date, Exchange Act means to the extent required by any such amendment, the Exchange Act as so amended.
Exchange Date has the meaning specified in Section 304.
FINRA means the Financial Industry Regulatory Authority, Inc.
Foreign Currency means any currency, currency unit or composite currency, including, without limitation, the ECU issued by
the government of one or more countries other than the United States of America or by any recognized confederation or association of such governments.
GAAP means, except as otherwise provided herein, generally accepted accounting principles, as in effect from time to time,
as used in the United States applied on a consistent basis.
Global Security means a Security evidencing all or a part
of a series of Securities issued to and registered in the name of the depository for such series, or its nominee, in accordance with Section 305, and bearing the legend prescribed in Section 203.
Government Obligations means (i) securities which are (A) direct obligations of the United States of America or
the government which issued the Foreign Currency in which the Securities of a particular series are payable, for the payment of which its full faith and credit is pledged or (B) obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States of America or such government which issued the Foreign Currency in which the Securities of such series are payable, the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or such other government, which, in either case, are not callable or redeemable at the option of the issuer thereof, and (iii) a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on or principal of any such Government Obligation held by such custodian for the account of the holder of a depository receipt, provided that (except as required by
law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of interest on or
principal of the Government Obligation evidenced by such depository receipt.
4
Guaranty by any Person means any Obligation, contingent or otherwise, of such
Person guaranteeing any Indebtedness of any other Person (the primary obligor) in any manner, whether directly or indirectly, and including, without limitation, every Obligation of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (ii) to purchase property, securities or services for the
purpose of assuring the holder of such Indebtedness of the payment of such Indebtedness or (iii) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; provided, however, that a Guaranty by any Person shall not include endorsements by such Person for collection or deposit, in either case in the ordinary course of business. The terms
Guaranteed, Guaranteeing and Guarantor shall have meanings correlative to the foregoing.
Holder means, in the case of a Registered Security, the Person in whose name a Security is registered in the Security
Register and, in the case of a Bearer Security, the bearer thereof and, when used with respect to any coupon, shall mean the bearer thereof.
Indebtedness means, with respect to any Person, without duplication, (i) any Obligation of such Person relating to any
indebtedness of such Person (A) for borrowed money (whether or not the recourse of the lender is to the whole of the assets, of such person or only to a portion thereof), (B) evidenced by notes, debentures or similar instruments (including
purchase money obligations) given in connection with the acquisition of any property or assets (other than trade accounts payable for inventory or similar property acquired in the ordinary course of business), including securities, for the payment
of which such Person is liable, directly or indirectly, or the payment of which is secured by a lien, charge or encumbrance on property or assets of such Person, (C) for goods, materials or services purchased in the ordinary course of business
(other than trade accounts payable arising in the ordinary course of business), (D) with respect to letters of credit or bankers acceptances issued for the account of such Person or performance, surety or similar bonds, (E) for the payment
of money relating to a capitalized lease Obligation or (F) under interest rate swaps, caps or similar agreements and foreign exchange contracts, currency swaps or similar agreements; (ii) any liability of others of the kind described in
the preceding clause (i), which such Person has Guaranteed or which is otherwise its legal liability; and (iii) any and all deferrals, renewals, extensions and refunding of, or amendments, modifications or supplements to, any liability of the
kind described in any of the preceding clauses (i) or (ii).
Indenture means this instrument as originally
executed or as it may be supplemented or amended from time to time by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, and shall include the terms of particular series of Securities established as
contemplated by Section 301; provided, however, that, if at any time more than one Person is acting as Trustee under this instrument, Indenture shall mean, with respect to any one or more series of Securities for which
such Person is Trustee, this instrument as originally executed or as it may be supplemented or amended from time to time by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the
terms of the or those particular series of Securities for which such Person is Trustee established as contemplated by Section 301, exclusive, however, of any provisions or terms which relate solely to other series of Securities for which such
Person is Trustee, regardless of when such terms or provisions were adopted, and exclusive of any provisions or terms adopted by means of one or more indentures supplemental hereto executed and delivered after such Person had become such Trustee but
to which such Person, as such Trustee, was not a party.
5
Indexed Security means a Security the terms of which provide that the
principal amount thereof payable at Stated Maturity may be more or less than the principal face amount thereof at original issuance.
Interest, when used with respect to an Original Issue Discount Security which by its terms bears interest only after
Maturity, shall mean interest payable after Maturity.
Interest Payment Date, when used with respect to any Security,
means the Stated Maturity of an installment of interest on such Security.
Make-Whole Amount, when used with respect to
any Security, means the amount, if any, in addition to principal (and accrued interest thereon, if any) which is required by a Security, under the terms and conditions specified therein or as otherwise specified as contemplated by Section 301,
to be paid by the Company to the Holder thereof in connection with any optional redemption or accelerated payment of such Security.
mandatory sinking fund payment has the meaning specified in Section 1201.
Market Value of the Distribution has the meaning specified in Section 1704.
Maturity, when used with respect to any Security, means the date on which the principal (or, if the context so requires, in
the case of an Original Issue Discount Security, or lesser amount or, in the case of an Indexed Security, an amount determined in accordance with the specified terms of that Security) of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, notice of redemption, notice of option to elect repayment or otherwise.
Obligation of any Person with respect to any specified Indebtedness means any obligation of such Person to pay principal,
premium, interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to such Person, whether or not a claim for such post-petition interest is allowed in such proceeding), penalties,
reimbursement or indemnification amounts, fees, expenses or other amounts relating to such Indebtedness.
Officers
Certificate means a certificate signed by the Chairman of the Board of Directors, the Chief Executive Officer, the President, or a Vice President (whether or not designated by a number or word or words added before or after the title
Vice President), and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee.
Opinion of Counsel means a written opinion of counsel who is reasonably acceptable to the Trustee, who may be counsel for
the Company or who may be an employee of or other counsel for the Company.
optional sinking fund payment has the
meaning specified in Section 1201.
Original Issue Discount Security means any Security which provides for an
amount (excluding any amounts attributable to accrued but unpaid interest thereon) less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502.
Outstanding, when used with respect to Securities, means, as of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
6
(ii) Securities, or portions thereof, for whose payment or redemption (including
repayment at the option of the Holder) money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Securities and any coupons appertaining thereto; provided, however, that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made;
(iii) Securities, except to the extent provided in Sections
1402 and 1403, with respect to which the Company has effected Defeasance and/or Covenant Defeasance as provided in Article Fourteen; and
(iv) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have
been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose
hands such Securities are valid obligations of the Company.
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder or are present at a meeting of Holders for quorum purposes, and for the purpose of making the calculations
required by TIA Section 313, (i) the principal amount of an Original Issue Discount Security that may be counted in making such determination or calculation and that shall be deemed to be Outstanding for such purpose shall be equal to the
amount of principal thereof that would be (or shall have been declared to be) due and payable, at the time of such determination, upon a declaration of acceleration of the maturity thereof pursuant to Section 502, (ii) the principal amount
of any Security denominated in a Foreign Currency that may be counted in making such determination or calculation and that shall be deemed Outstanding for such purpose shall be equal to the Dollar equivalent, determined pursuant to Section 301
as of the date such Security is originally issued by the Company, of the principal amount (or, in the case of an Original Issue Discount Security, the Dollar equivalent as of such date of original issuance of the amount determined as provided in
clause (i) above) of such Security, (iii) the principal amount of any Indexed Security that may be counted in making such determination or calculation and that shall be deemed outstanding for such purpose shall be equal to the principal
face amount of such Indexed Security at original issuance, unless otherwise provided with respect to such Security pursuant to Section 301, and (iv) Securities owned by the Company or any other obligor upon the Securities or any Affiliate
of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in making such calculation or in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities owned as provided in clause (iv) above which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgees right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor. In case of a dispute as to such right, and an Officers Certificate, Opinion of Counsel or the advice of counsel shall be full protection in respect of any decision made by the Trustee in
accordance with such advice.
Paying Agent means any Person authorized by the Company to pay the principal of (and
premium or Make-Whole Amount, if any) or interest on any Securities or coupons on behalf of the Company.
7
Payment Blockage Notice and Payment Blockage Period have
the respective meanings specified in Section 1603.
Person means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof, or any other entity or organization.
Place of Payment, when used with respect to the Securities of or within any series, means the place or places where the
principal of (and premium or Make-Whole Amount, if any) and interest on such Securities are payable as specified as contemplated by Sections 301 and 1002.
Predecessor Security of any particular Security means every previous Security evidencing all or a portion of the same debt
as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security or a Security to
which a mutilated, destroyed, lost or stolen coupon appertains shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security or the Security to which the mutilated, destroyed, lost or stolen coupon appertains.
Preferred Stock means, with respect to any Person, all capital stock issued by such Person that is entitled to a preference
or priority over any other capital stock issued by such Person with respect to any distribution of such Persons assets, whether by dividend or upon any voluntary or involuntary liquidation, dissolution or winding up.
Proceeding has the meaning specified in Section 1602.
Redemption Date, when used with respect to any Security to be redeemed, in whole or in part, means the date fixed for such
redemption by or pursuant to this Indenture.
Redemption Price, when used with respect to any Security to be redeemed,
means the price specified in the related Officers Certificate or supplemental indenture contemplated by and pursuant to Section 301, at which it is to be redeemed pursuant to this Indenture.
Reference Date has the meaning specified in Section 1704.
Registered Security shall mean any Security which is registered in the Security Register.
Regular Record Date for the interest payable on any Interest Payment Date on the Registered Securities of or within any
series means the date specified for that purpose as contemplated by Section 301, whether or not a Business Day.
Repayment
Date means, when used with respect to any Security to be repaid at the option of the Holder, the date fixed for such repayment by or pursuant to this Indenture.
Repayment Price means, when used with respect to any Security to be repaid at the option of the Holder, the price at which
it is to be repaid by or pursuant to this Indenture.
Responsible Officer, when used with respect to the Trustee, means
any Vice President (whether or not designated by a number or a word or words added before or after the title Vice President), Assistant Vice President, Trust Officer or Assistant Trust Officer working in its Corporate Trust Department,
or any other officer of the Trustee responsible for the administration of this Indenture, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such officers knowledge
and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.
8
Rights has the meaning specified in Section 1704.
Rights Record Date has the meaning specified in Section 1704.
Securities Payment has the meaning specified in Section 1602.
Security and Securities has the meaning stated in the first recital of this Indenture and, more
particularly, means any Security or Securities authenticated and delivered under this Indenture; provided, however, that, if at any time there is more than one Person acting as Trustee under this Indenture, Securities with
respect to the Indenture as to which such Person is Trustee shall have the meaning stated in the first recital of this Indenture and shall more particularly mean Securities authenticated and delivered under this Indenture, exclusive, however, of
Securities of any series as to which such Person is not Trustee.
Security Register and Security
Registrar have the respective meanings specified in Section 305.
Senior Indebtedness means Indebtedness
of the Company, whether outstanding on the date of this Indenture or thereafter created, incurred, assumed or guaranteed by the Company, other than the following: (1) any Indebtedness as to which, in the instrument evidencing such Indebtedness
or pursuant to which such Indebtedness was issued, it is expressly provided that such Indebtedness is subordinate in right of payment to all Indebtedness of the Company not expressly subordinated to such Indebtedness; (2) any Indebtedness which
by its terms refers explicitly to the Securities and states that such Indebtedness shall not be senior, shall be pari passu or shall be subordinated in right of payment to the Securities; and (3) with respect to any series of
Securities, any Indebtedness of the Company evidenced by Securities of the same or of another series. Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness shall not include: (a) Indebtedness of or amounts owed by the
Company for compensation to employees, or for goods, materials or services purchased in the ordinary course of business, or (b) Indebtedness of the Company to a Subsidiary of the Company.
A Series of Securities means all securities denoted as part of the same series authorized by or pursuant to a particular
Board Resolution. Short Term Rights has the meaning specified in Section 1704.
Significant Subsidiary
means any Subsidiary which is a significant subsidiary (as defined in Article I, Rule 1-02 of Regulation S-X, promulgated under the Securities Act of 1933, as amended) of the Company.
Special Record Date for the payment of any Defaulted Interest on the Registered Securities of or within any series means a
date fixed by the Company pursuant to Section 307.
Stated Maturity, when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified in such Security or a coupon representing such installment of interest as the fixed date on which the principal of such Security or such installment of principal or
interest is due and payable.
Subsidiary means, with respect to any Person, any corporation, limited liability company,
partnership or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests are owned, directly or indirectly, by such Person. For the purposes of this definition,
voting equity securities means equity securities having voting power for the election of directors, whether at all times or only so long as no senior class of security has such voting power by reason of any contingency.
9
Trading Day means any day on which the NASDAQ Global Market is open for
business. Trigger Events has the meaning specified in Section 1704.
Trust Indenture Act or
TIA has the meaning specified in the recitals hereto.
Trustee means the Person named as the
Trustee in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean or include each Person who is then a
Trustee hereunder; provided, however, that if at any time there is more than one such Person, Trustee as used with respect to the Securities of any series shall mean only the Trustee with respect to Securities of that
series.
Unadjusted Distribution has the meaning specified in Section 1704.
United States means, unless otherwise specified with respect to any Securities pursuant to Section 301, the United
States of America (including the states and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction.
United States Person means, unless otherwise specified with respect to any Securities pursuant to Section 301, an
individual who is a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States or an estate or trust the income of which is subject to United States Federal
income taxation regardless of its source.
Yield to Maturity means the yield to maturity, computed at the time of
issuance of a Security (or, if applicable, at the most recent redetermination of interest on such Security) and as set forth in such Security in accordance with generally accepted United States bond yield computation principles.
SECTION 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action
under any provision of this Indenture, the Company shall furnish to the Trustee an Officers Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and
an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically
stated to not be required by the applicable provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (including certificates
delivered pursuant to Section 1008) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein relating thereto;
(2) a brief statement as to the
nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such condition or covenant has been complied with; and
(4)
a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.
SECTION 103.
Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all
10
such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion
with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, or a
certificate or representations by counsel, unless such officer knows, or in the exercise of reasonable care should know, that the opinion, certificate or representations with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such Opinion of Counsel or certificate or representations may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the
information as to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
SECTION 104. Acts of
Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be
given or taken by Holders of the Outstanding Securities of all series or one or more series, as the case may be, may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents
duly appointed in writing. If Securities of a series are issuable as Bearer Securities, any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders of Securities
of such series may, alternatively, be embodied in and evidenced by the record of Holders of Securities of such series voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders of Securities of such
series duly called and held in accordance with the provisions of Article Fifteen, or a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or
instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the Act of the Holders signing such instrument or instruments or so voting at any such meeting. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a
Security, shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company and any agent of the Trustee or the Company, if made in the manner provided in this Section. The record of any meeting of Holders
of Securities shall be proved in the manner provided in Section 1506.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such
instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The
fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other reasonable manner which the Trustee deems sufficient.
11
(c) The ownership of Registered Securities shall be proved by the Security Register. As to any
matter relating to beneficial ownership interests in any Global Security, the appropriate depositorys records shall be dispositive for purposes of this Indenture.
(d) The ownership of Bearer Securities may be proved by the production of such Bearer Securities or by a certificate executed, as depository,
by any trust company, bank, banker or other depository, wherever situated, if such certificate shall be deemed by the Trustee to be satisfactory, showing that at the date therein mentioned such Person had on deposit with such depository, or
exhibited to it, the Bearer Securities therein described; or such facts may be proved by the certificate or affidavit of the Person holding such Bearer Securities, if such certificate or affidavit is deemed by the Trustee to be satisfactory. The
Trustee and the Company may assume that such ownership of any Bearer Security continues until (1) another certificate or affidavit bearing a later date issued in respect of the same Bearer Security is produced, or (2) such Bearer Security
is produced to the Trustee by some other Person, or (3) such Bearer Security is surrendered in exchange for a Registered Security, or (4) such Bearer Security is no longer Outstanding. The ownership of Bearer Securities may also be proved
in any other manner which the Trustee deems sufficient.
(e) If the Company shall solicit from the Holders of Registered Securities any
request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, in or pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. Notwithstanding TIA Section 316(c), such record date shall be the record date specified in or pursuant to such Board
Resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation of Holders generally in connection therewith and not later than the date such solicitation is completed. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes
of determining whether Holders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding
Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this
Indenture not later than eleven months after the record date.
(f) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or upon the conversion thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the Trustee, any Security Registrar, any Paying Agent, any Authenticating Agent or the Company in reliance thereon, whether or not notation of such action is made upon such
Security.
SECTION 105. Notices, etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at the Corporate Trust Office; or
12
(2) the Company by the Trustee or by any Holder shall be sufficient for every
purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this Indenture or at any
other address previously furnished in writing to the Trustee by the Company, Attention: [ ] or delivered electronically to the
Company at [ ]; or
(3) either the Trustee or the Company, by the other party or by any Holder, shall be sufficient for every purpose hereunder if
given by facsimile transmission, receipt confirmed by telephone followed by an original copy delivered by guaranteed overnight courier; if to the Trustee at facsimile number
[ ]; and if to the Company at facsimile number
[ ].
SECTION 106.
Notice to Holders; Waiver. Where this Indenture provides for notice of any event to Holders of Registered Securities by the Company or the Trustee, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, or sent by electronic transmission, to each such Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date, if any, and not earlier than the
earliest date, if any, prescribed for the giving of such notice. In any case where notice to Holders of Registered Securities is given by mail, neither the failure to mail or send such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to other Holders of Registered Securities or the sufficiency of any notice to Holders of Bearer Securities given as provided herein. Any notice mailed or sent to a Holder in
the manner herein prescribed shall be conclusively deemed to have been received by such Holder, whether or not such Holder actually receives such notice.
If by reason of the suspension of or irregularities in regular mail service or by reason of any other cause it shall be impracticable to give
such notice by mail, then such notification to Holders of Registered Securities as shall be made with the approval of the Trustee shall constitute a sufficient notification to such Holders for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise specified with respect to any Securities pursuant to Section 301, where this
Indenture provides for notice to Holders of Bearer Securities of any event, such notice shall be sufficiently given if published in an Authorized Newspaper in The City of New York and in such other city or cities as may be specified in such
Securities on a Business Day, such publication to be not later than the latest date, if any, and not earlier than the earliest date, if any, prescribed for the giving of such notice. Any such notice shall be deemed to have been given on the date of
such publication or, if published more than once, on the date of the first such publication.
If by reason of the suspension of
publication of any Authorized Newspaper or Authorized Newspapers or by reason of any other cause it shall be impracticable to publish any notice to Holders of Bearer Securities as provided above, then such notification to Holders of Bearer
Securities as shall be given with the approval of the Trustee shall constitute sufficient notice to such Holders for every purpose hereunder. Neither the failure to give notice by publication to any particular Holder of Bearer Securities as provided
above, nor any defect in any notice so published, shall affect the sufficiency of such notice with respect to other Holders of Bearer Securities or the sufficiency of any notice to Holders of Registered Securities given as provided herein.
Any request, demand, authorization, direction, notice, consent or waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the country of publication.
13
Where this Indenture provides for notice in any manner, such notice may be waived in writing by
the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
SECTION 107. Counterparts; Effect of Headings and Table of
Contents. This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Indenture. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
SECTION 108.
Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.
SECTION 109. Severability Clause. In case any provision in this Indenture or in any Security or coupon shall be held invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 110. Benefits of Indenture. Nothing in this Indenture or in the Securities or coupons, if any, express or implied, shall give
to any Person, other than the parties hereto, any Security Registrar, any Paying Agent, any Authenticating Agent and their successors hereunder and the Holders any benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 111. Governing Law. This Indenture and the Securities and coupons shall be governed by and construed in accordance with the
laws of the State of New York. This Indenture is subject to the provisions of the TIA that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions.
SECTION 112. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Repayment Date, sinking fund payment date,
Stated Maturity or Maturity of any Security or the last date on which a Holder has the right to convert or exchange a Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or any
Security or coupon other than a provision in the Securities of any series which specifically states that such provision shall apply in lieu hereof), payment of interest or principal (and premium or Make-Whole Amount, if any) or conversion or
exchange of such Security need not be made at such Place of Payment on such date, but (except as otherwise provided in the supplemental indenture with respect to such Security) may be made on the next succeeding Business Day at such Place of Payment
with the same force and effect as if made on the Interest Payment Date, Redemption Date, Repayment Date or sinking fund payment date, or at the Stated Maturity or Maturity, or on such last day for conversion or exchange, provided that no interest
shall accrue on the amount so payable for the period from and after such Interest Payment Date, Redemption Date, Repayment Date, sinking fund payment date, Stated Maturity or Maturity, as the case may be.
SECTION 113. Limited Liability; Immunity of Stockholders, Directors, Officers and Agents of the Company. Notwithstanding any other
provision of this Indenture or of the Securities of any series to the contrary, no recourse under or upon any obligation, covenant or agreement contained in this Indenture or in any Security, or for the payment of any sums due on account of any
indebtedness evidenced thereby, including without limitation principal, premium or interest, if any, or for any claim based on this Indenture or any Security or otherwise in respect of this Indenture or any Security, shall be had, whether by levy or
execution or otherwise, against (i) the Company, the Companys assets or against any past, present or future stockholder, employee, officer, director or agent, as such, of the Company or any
14
successor, either directly or through the Company or any successor, under any rule of law, statute, constitutional provision or by the enforcement of any assessment or penalty, or by any legal or
equitable proceeding or otherwise, nor shall any such parties be personally liable for any such amounts, obligations or claims, or liable for any deficiency judgment based thereon or with respect thereto, it being expressly understood that the sole
remedies hereunder or under any other document with respect to the Securities against such parties with respect to such amounts, obligations or claims shall be against the Company and that all such liability of and recourse against such parties is
expressly waived and released by the acceptance of the Securities by the Holders and as part of the consideration for the issue of the Securities.
SECTION 114. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof
which is required or deemed to be included in this Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be.
SECTION 115. USA PATRIOT Act. The parties hereto acknowledge that in accordance with Section 326 of the USA PATRIOT Act, the
Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or
opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the USA PATRIOT Act.
ARTICLE TWO - SECURITIES FORMS
SECTION 201. Forms of Securities. The Registered Securities, if any, of each series and the Bearer Securities, if any, of each series
and related coupons shall be substantially in the form of Exhibit A hereto or in such other form as shall be established in one or more indentures supplemental hereto or approved from time to time by or pursuant to a Board Resolution in
accordance with Section 301, shall have such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or any indenture supplemental hereto, and may have such letters, numbers or other
marks of identification or designation and such legends or endorsements placed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any over-the-counter market or securities exchange, on which the Securities may be quoted or listed, or to conform to usage.
Unless otherwise specified as contemplated by Section 301, Bearer Securities shall have interest coupons attached.
The definitive Securities and coupons shall be printed, lithographed or engraved or produced by any combination of these methods on a steel
engraved border or steel engraved borders or mechanically reproduced on safety paper or may be produced in any other manner, all as determined by the officers of the Company executing such Securities or coupons, as evidenced by their execution of
such Securities or coupons.
15
SECTION 202. Form of Trustees Certificate of Authentication. Subject to
Section 611, the Trustees certificate of authentication shall be in substantially the following form:
This is one of the
Securities of the series designated therein referred to in the within-mentioned Indenture.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
, |
|
|
|
|
|
|
as Trustee |
|
|
|
|
|
Dated: |
|
|
|
|
|
By: |
|
|
|
|
|
|
|
|
|
|
Authorized Signatory |
|
|
SECTION 203. Securities Issuable in Global Form. If Securities of or within a series are issuable in
the form of one or more Global Securities, then, notwithstanding clause (8) of Section 301 and the provisions of Section 302, any such Global Security or Securities may provide that it or they shall represent the aggregate amount of
all Outstanding Securities of such series (or such lesser amount as is permitted by the terms thereof) from time to time endorsed thereon and may also provide that the aggregate amount of Outstanding Securities of such series represented thereby may
from time to time be increased or decreased to reflect exchanges. Any endorsement of any Global Security to reflect the amount, or any increase or decrease in the amount, or changes in the rights of Holders thereof, of Outstanding Securities
represented thereby shall be made (or caused to be made) by the Trustee in such manner or by such Person or Persons as shall be specified therein or in the Company Order to be delivered to the Trustee pursuant to Section 303 or 304. Subject to
the provisions of Section 303 and, if applicable, Section 304, the Trustee shall deliver and redeliver any Global Security in permanent global form in the manner and upon instructions given by the Person or Persons specified therein or in
the applicable Company Order. If a Company Order pursuant to Section 303 or 304 has been, or simultaneously is, delivered, any instructions by the Company with respect to endorsement or delivery or redelivery of a Global Security shall be in
writing but need not comply with Section 102 and need not be accompanied by an Opinion of Counsel.
The provisions of the last
sentence of Section 303 shall apply to any Security represented by a Global Security if such Security was never issued and sold by the Company and the Company delivers to the Trustee the Global Security together with written instructions (which
need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) with regard to the reduction in the principal amount of Securities represented thereby, together with the written statement contemplated by the last sentence
of Section 303.
Notwithstanding the provisions of Section 307, unless otherwise specified as contemplated by Section 301,
payment of principal of and any premium or Make-Whole Amount, if any, and interest on any Global Security in permanent global form shall be made to the registered Holder thereof.
Notwithstanding the provisions of Section 308 and except as provided in the preceding paragraph, the Company, the Trustee and any agent
of the Company and the Trustee shall treat as the Holder of such principal amount of Outstanding Securities represented by a permanent Global Security (i) in the case of a permanent Global Security in registered form, the Holder of such
permanent Global Security in registered form, or (ii) in the case of a permanent Global Security in bearer form, Euroclear or Clearstream.
16
Any Global Security authenticated and delivered hereunder shall bear a legend in substantially
the following form:
This Security is a Global Security within the meaning set forth in the Indenture hereinafter referred to and is
registered in the name of a Depository1 or a nominee of a Depository. This Security is exchangeable for Securities registered in the name of a person other than the Depository or its nominee only
in the limited circumstances described in the Indenture, and may not be transferred except as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the
Depository or its nominee to a successor Depository or its nominee.
ARTICLE THREE - THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series, each of which shall be authorized
pursuant to Board Resolutions of the Company. There shall be established in one or more Board Resolutions or pursuant to authority granted by one or more Board Resolutions and, subject to Section 303, set forth in an Officers Certificate,
or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series:
(1) The
title of the Securities of the series, including CUSIP numbers (which shall distinguish the Securities of such series from all other series of Securities);
(2) Any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or upon conversion of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 304, 305, 306, 906, 1107 or 1305)
and the minimum authorized denominations with respect to the Securities of such series;
(3) The price (expressed as a
percentage of the principal amount thereof) at which such Securities will be issued and, if other than the principal amount thereof, the portion of the principal amount thereof payable upon declaration of acceleration of the maturity thereof or (if
applicable) the portion of the principal amount of such Securities that is convertible into Common Stock or Preferred Stock or the method by which any such portion shall be determined;
(4) If convertible, the terms on which such Securities are convertible, including the initial conversion price or rate and the
conversion period and any applicable limitations on the ownership or transferability of Common Stock or Preferred Stock receivable on conversion;
(5) The date or dates, or the method for determining such date or dates, on which the principal of such Securities will be
payable;
(6) The rate or rates (which may be fixed or variable), or the method by which such rate or rates shall be
determined, at which such Securities will bear interest, if any;
(7) The date or dates, or the method for determining such
date or dates, from which any such interest will accrue, the Interest Payment Dates on which any such interest will be payable, the Regular Record Dates for such Interest Payment Dates, or the method by which such dates shall be determined, the
Persons to whom such interest shall be payable, and the basis upon which interest shall be calculated if other than that of a 360-day year of twelve 30-day months;
1 |
NTD: Depository is not defined. |
17
(8) The Make-Whole Amount, if any, or method for determining the Make-Whole
Amount, if any, payable with respect to such Securities, and the terms upon which such amount, if any, will be payable;
(9) The place or places where the principal of (and premium or Make-Whole Amount, if any) and interest, if any, on such
Securities will be payable, where such Securities may be surrendered for registration of transfer or conversion or exchange and where notices or demands to or upon the Company in respect of such Securities and this Indenture may be served;
(10) The period or periods, if any, within which, the price or prices at which and the other terms and conditions upon which
such Securities may, pursuant to any optional or mandatory redemption provisions, be redeemed, as a whole or in part, at the option of the Company;
(11) The obligation, if any, of the Company to redeem, repay or purchase such Securities pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and the period or periods within which, the price or prices at which and the other terms and conditions upon which such Securities will be redeemed, repaid or purchased, as a whole or in
part, pursuant to such obligation;
(12) If other than Dollars, the currency or currencies in which such Securities are
denominated and payable, which may be a foreign currency or units of two or more foreign currencies or a composite currency or currencies, the manner of determining the equivalent thereof in Dollars for purposes of the definition of
Outstanding in Section 101, and the terms and conditions relating thereto;
(13) Whether the amount of
payments of principal of (and premium or Make-Whole Amount, if any, including any amount due upon redemption, if any) or interest on such Securities may be determined with reference to an index, formula or other method (which index, formula or
method may, but need not be, based on the yield on or trading price of other securities, including United States Treasury securities or on a currency, currencies, currency unit or units, or composite currency or currencies) and the manner in which
such amounts shall be determined;
(14) Whether the principal of (and premium or Make-Whole Amount, if any) or interest on
the Securities of the series are to be payable, at the election of the Company or a Holder thereof, in a currency or currencies, currency unit or units or composite currency or currencies other than that in which such Securities are denominated or
stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made, and the time and manner of, and identity of the exchange rate agent with responsibility for, determining the exchange rate
between the currency or currencies, currency unit or units or composite currency or currencies in which such Securities are denominated or stated to be payable and the currency or currencies, currency unit or units or composite currency or
currencies in which such Securities are to be so payable;
(15) Provisions, if any, granting special rights to the Holders
of Securities of the series upon the occurrence of such events as may be specified;
(16) Any deletions from, modifications
of or additions to the Events of Default or covenants of the Company with respect to Securities of the series, whether or not such Events of Default or covenants are consistent with the Events of Default or covenants set forth herein;
18
(17) Whether and under what circumstances the Company will pay any additional
amounts on such Securities in respect of any tax, assessment or governmental charge and, if so, whether the Company will have the option to redeem such Securities in lieu of making such payment;
(18) Whether Securities of the series are to be issuable as Registered Securities, Bearer Securities (with or without coupons)
or both, any restrictions applicable to the offer, sale or delivery of Bearer Securities and the terms upon which Bearer Securities of the series may be exchanged for Registered Securities of the series and vice versa (if permitted by applicable
laws and regulations), whether any Securities of the series are to be issuable initially in temporary global form and whether any Securities of the series are to be issuable in permanent global form with or without coupons and, if so, whether
beneficial owners of interests in any such permanent global Security may, or shall be required to, exchange such interests for Securities of such series and of like tenor of any authorized form and denomination and the circumstances under which any
such exchanges may, or shall be required to, occur, if other than in the manner provided in the Indenture, and, if Registered Securities of the series are to be issuable as a Global Security, the identity of the depository for such series;
(19) The date as of which any Bearer Securities of the series and any temporary Global Security representing outstanding
Securities of the series shall be dated if other than the date of original issuance of the first Security of the series to be issued;
(20) The Person to whom any interest on any Registered Security of the series shall be payable, if other than the Person in
whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest the manner in which, or the Person to whom, any interest on any Bearer Security of the series shall
be payable, if otherwise than upon presentation and surrender of the coupons appertaining thereto as they severally mature, and the extent to which, or the manner in which, any interest payable on a temporary Global Security on an Interest Payment
Date will be paid if other than in the manner provided herein; provided, however, in each case, that the manner of determining such Person or making such payment shall be acceptable to the Trustee (as not imposing on it any undue administrative
burden or risk of liability);
(21) The applicability, if any, of the Defeasance and Covenant Defeasance provisions of
Article Fourteen hereof to the Securities of the series;
(22) The obligation, if any, of the Company to permit the
conversion of the Securities of such series into Common Stock or Preferred Stock, as the case may be, and the terms and conditions upon which such conversion shall be effected (including, without limitation, the initial conversion price or rate, the
conversion period, any adjustment of the applicable conversion price and any requirements relative to the reservation of such shares for purposes of conversion);
(23) If the Securities of such series are to be issuable in definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, then the form and/or terms of such certificates, documents or conditions;
(24) Designation of the Trustee, if different from the Trustee under the Indenture, with respect to such series and the terms
applicable to such Trustee (which shall be accepted by such Trustee by its execution and delivery of a supplemental indenture as provided therein); and
(25) Any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture).
19
All Securities of any one series and the coupons appertaining to any Bearer Securities of such
series shall be substantially identical except, in the case of Registered Securities, as to denomination and except as may otherwise be provided in or pursuant to such Board Resolution (subject to Section 303) and set forth in such
Officers Certificate or in any such indenture supplemental hereto. All Securities of any one series need not be issued at the same time and, unless otherwise provided, a series may be reopened, without the consent of the Holders, for issuances
of additional Securities of such series.
If any of the terms of the Securities of any series are established by action taken pursuant to
one or more Board Resolutions, a copy of an appropriate record of such action(s) shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers Certificate
setting forth the terms of the Securities of such series.
SECTION 302. Denominations. The Securities of each series shall be
issuable in such denominations as shall be specified as contemplated by Section 301. With respect to Securities of any series denominated in Dollars, in the absence of any such provisions with respect to the Securities of any series, the
Securities of such series, other than Global Securities (which may be of any denomination), shall be issuable in minimum denominations of $1,000 and any integral multiple thereof or the equivalent amounts thereof in the case of Securities
denominated in the Foreign Currency or currency unit.
SECTION 303. Execution, Authentication, Delivery and Dating. The Securities
and any coupons appertaining thereto shall be executed on behalf of the Company by its Chief Executive Officer, its President, or one of its Vice Presidents and attested by its Secretary or one of its Assistant Secretaries. The signature of any of
these officers on the Securities and coupons may be manual or facsimile signatures of the present or any future such authorized officer and may be imprinted or otherwise reproduced on the Securities.
Securities and coupons bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities or coupons.
At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series,
together with any coupon appertaining thereto, executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities (accompanied by a copy of the Board Resolution and the
Officers Certificate or supplemental indenture contemplated by Section 301), and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities; provided, however, that, in connection with
its original issuance, no Bearer Security shall be mailed or otherwise delivered to any location in the United States; and provided further that, unless otherwise specified with respect to any series of Securities pursuant to
Section 301, a Bearer Security may be delivered in connection with its original issuance only if the Person entitled to receive such Bearer Security shall have furnished a certificate to Euroclear or Clearstream, as the case may be, in the form
set forth in Exhibit B-1 to this Indenture or such other certificate as may be specified by the Company with respect to any series of Securities pursuant to Section 301, dated no earlier than 15 days prior to the earlier of the date
on which such Bearer Security is delivered and the date on which any temporary Security first becomes exchangeable for such Bearer Security in accordance with the terms of such temporary Security and this Indenture. If any Security shall be
represented by a permanent Global Security, then, for purposes of this Section and Section 304, the
20
notation of a beneficial owners interest therein upon original issuance of such Security or upon exchange of a portion of a temporary Global Security shall be deemed to be delivery in
connection with its original issuance of such beneficial owners interest in such permanent Global Security. Except as permitted by Section 306, the Trustee shall not authenticate and deliver any Bearer Security unless all appurtenant
coupons for interest then matured have been detached and canceled.
If all the Securities of any series are not to be issued at one time
and if the Board Resolution or supplemental indenture establishing such series shall so permit, such Company Order may set forth procedures acceptable to the Trustee for the issuance of such Securities and determining the terms of particular
Securities of such series, such as interest rate or formula, maturity date, date of issuance and date from which interest shall accrue. In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation
to such Securities, the Trustee shall be entitled to receive, and (subject to TIA Section 315(a) through 315(d)) shall be fully protected in relying upon,
(i) an Opinion of Counsel stating that
(a) the form or forms of such Securities and any coupons have been established in conformity with the provisions of this
Indenture;
(b) the terms of such Securities and any coupons have been established in conformity with the provisions of
this Indenture; and
(c) such Securities, together with any coupons appertaining thereto, when completed by appropriate
insertions and executed and delivered by the Company to the Trustee for authentication in accordance with this Indenture, authenticated and delivered by the Trustee in accordance with this Indenture and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will constitute legal, valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization and other similar laws of general applicability relating to or affecting the enforcement of creditors rights generally and to general equitable principles; and
(ii) an Officers Certificate stating that all conditions precedent provided for in this Indenture relating to the
issuance of the Securities have been complied with and that, to the best of the knowledge of the signers of such certificate, that no Event of Default with respect to any of the Securities shall have occurred and be continuing.
If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities (or to enter into the
related supplemental indenture, if applicable) if the issue of such Securities pursuant to this Indenture will affect the Trustees own rights, duties, obligations or immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding paragraph, if
all the Securities of any series are not to be issued at one time, it shall not be necessary to deliver an Officers Certificate otherwise required pursuant to Section 301 or a Company Order, or an Opinion of Counsel or an Officers
Certificate otherwise required pursuant to the preceding paragraph at the time of issuance of each Security of such series, but such order, opinion and certificates, with appropriate modifications to cover such future issuances, shall be delivered
at or before the time of issuance of the first Security of such series.
21
Each Registered Security shall be dated the date of its authentication and each Bearer Security
shall be dated as of the date specified as contemplated by Section 301.
No Security or coupon shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears on such Security or Security to which such coupon appertains a certificate of authentication substantially in the form provided for herein duly executed by the Trustee
(subject to Section 611) by manual signature of an authorized signatory, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture. Notwithstanding the foregoing, if any Security (including a Global Security) shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver
such Security to the Trustee for cancellation as provided in Section 309 together with a written statement (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) stating that such Security has never
been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities.
(a) Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are
issued, in registered form, or, if authorized, in bearer form with one or more coupons or without coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine,
as conclusively evidenced by their execution of such Securities. In the case of Securities of any series, such temporary Securities may be in global form.
Except in the case of temporary Global Securities (which shall be exchanged as otherwise provided herein or as otherwise provided in or
pursuant to a Board Resolution or supplemental indenture pursuant to Section 301), if temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After
the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the
Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series (accompanied by any non-matured coupons appertaining thereto), the Company shall
execute (in accordance with a Company Order delivered at or prior to the authentication of the first definitive security to such series) and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive
Securities of the same series of authorized denominations; provided, however, that no definitive Bearer Security shall be delivered in exchange for a temporary Registered Security; and provided further that a definitive
Bearer Security shall be delivered in exchange for a temporary Bearer Security only in compliance with the conditions set forth in Section 303. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities of such series.
(b) Unless otherwise provided in or pursuant to a Board
Resolution or supplemental indenture pursuant to Section 301, the following provisions of this Section 304(b) shall govern the exchange of temporary Securities other than through the facilities of the DTC. If any such temporary Security is
issued in global form, then such temporary Global Security shall, unless otherwise provided therein, be delivered to the London office of a depository or common depository upon and pursuant to
22
written direction of the Company (the Common Depository), for the benefit of Euroclear and Clearstream, for credit to the respective accounts of the beneficial owners of such
Securities (or to such other accounts as they may direct).
Without unnecessary delay but in any event not later than the date specified
in, or determined pursuant to the terms of, any such temporary Global Security (the Exchange Date), the Company shall deliver to the Trustee definitive Securities, in aggregate principal amount equal to the principal amount of such
temporary Global Security, executed by the Company. On or after the Exchange Date, such temporary Global Security shall be surrendered by the Common Depository to the Trustee, as the Companys agent for such purpose, to be exchanged, in whole
or from time to time in part, for definitive Securities without charge, and the Trustee shall authenticate and deliver, in exchange for each portion of such temporary Global Security, an equal aggregate principal amount of definitive Securities of
the same series of authorized denominations and of like tenor as the portion of such temporary Global Security to be exchanged. The definitive Securities to be delivered in exchange for any such temporary Global Security shall be in bearer form,
registered form, permanent global bearer form or permanent global registered form, or any combination thereof, as specified as contemplated by Section 301, and, if any combination thereof is so specified, as requested by the beneficial owner
thereof (as directed by or pursuant to information provided by the Common Depository); provided, however, that, unless otherwise specified in such temporary Global Security, upon such presentation by the Common Depository, such
temporary Global Security shall be accompanied by a certificate dated the Exchange Date or a subsequent date and signed by Euroclear as to the portion of such temporary Global Security held for its account then to be exchanged and a certificate
dated the Exchange Date or a subsequent date and signed by Clearstream as to the portion of such temporary Global Security held for its account then to be exchanged, each in the form set forth in Exhibit B-2 to this Indenture or in such other
form as may be established pursuant to Section 301; and provided further that definitive Bearer Securities shall be delivered in exchange for a portion of a temporary Global Security only in compliance with the requirements of
Section 303.
Unless otherwise specified in such temporary Global Security, the interest of a beneficial owner of Securities of a
series in a temporary Global Security shall be exchanged for definitive Securities of the same series and of like tenor following the Exchange Date when the account holder instructs Euroclear or Clearstream, as the case may be, to request such
exchange on his behalf and delivers to Euroclear or Clearstream, as the case may be, a certificate in the form set forth in Exhibit B-1 to this Indenture (or in such other form as may be established pursuant to Section 301), dated no
earlier than 15 days prior to the Exchange Date, copies of which certificate shall be available from the offices of Euroclear and Clearstream, the Trustee, any Authenticating Agent appointed for such series of Securities and each Paying Agent.
Unless otherwise specified in such temporary Global Security, any such exchange shall be made free of charge to the beneficial owners of such temporary Global Security, except that a Person receiving definitive Securities must bear the cost of
insurance, postage, transportation and the like unless such Person takes delivery of such definitive Securities in person at the offices of Euroclear or Clearstream. Definitive Securities in bearer form to be delivered in exchange for any portion of
a temporary Global Security shall be delivered only to an address located outside the United States.
Until exchanged in full as
hereinabove provided, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of the same series and of like tenor authenticated and delivered hereunder, except
that, unless otherwise specified as contemplated by Section 301, interest payable on a temporary Global Security on an Interest Payment Date for Securities of such series occurring prior to the applicable Exchange Date shall be payable to
Euroclear and Clearstream on such Interest Payment Date upon delivery by Euroclear and Clearstream to the Trustee of a certificate or certificates in the form set forth in Exhibit B-2 to this Indenture (or in such
23
other forms as may be established pursuant to Section 301), for credit without further interest on or after such Interest Payment Date to the respective accounts of Persons who are the
beneficial owners of such temporary Global Security on such Interest Payment Date and who have each delivered to Euroclear or Clearstream, as the case may be, a certificate dated no earlier than 15 days prior to the Interest Payment Date occurring
prior to such Exchange Date in the form set forth as Exhibit B-1 to this Indenture (or in such other forms as may be established pursuant to Section 301). Notwithstanding anything to the contrary herein contained, the certifications made
pursuant to this paragraph shall satisfy the certification requirements of the preceding two paragraphs of this Section 304(b) and of the third paragraph of Section 303 of this Indenture and the interests of the Persons who are the
beneficial owners of the temporary Global Security with respect to which such certification was made will be exchanged for definitive Securities of the same series and of like tenor on the Exchange Date or the date of certification if such date
occurs after the Exchange Date, without further act or deed by such beneficial owners. Except as otherwise provided in this paragraph, no payments of principal or interest owing with respect to a beneficial interest in a temporary Global Security
will be made unless and until such interest in such temporary Global Security shall have been exchanged for an interest in a definitive Security. Any interest so received by Euroclear and Clearstream and not paid as herein provided shall be returned
to the Trustee prior to the expiration of two years after such Interest Payment Date in order to be repaid to the Company.
With respect
to Exhibit B-1 or B-2 to this Indenture, the Company may, in its discretion and if required or desirable under applicable law, substitute one or more other forms of such exhibits for such exhibits, eliminate the requirement that any or
all certificate be provided, or change the time that any certificate may be required, provided that such substitute form or forms or notice of elimination or change of such certification requirement have theretofore been delivered to the Trustee
with a Company Request and such form or forms, elimination or change is reasonably acceptable to the Trustee.
SECTION 305.
Registration, Registration of Transfer, Conversion and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee or in any office or agency of the Company in a Place of Payment a register for each series of
Securities (the registers maintained in such office or in any such office or agency of the Company in a Place of Payment being herein sometimes referred to collectively as the Security Register) in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration of Registered Securities and of transfers of Registered Securities. The Security Register shall be in written form or any other form capable of being converted into
written form within a reasonable time. The Trustee, at its Corporate Trust Office, is hereby initially appointed Security Registrar for the purpose of registering Registered Securities and transfers of Registered Securities on such
Security Register as herein provided. In the event that the Trustee shall cease to be Security Registrar, it shall have the right to examine, and be provided a copy of, the Security Register at all reasonable times.
Subject to the provisions of this Section 305, upon surrender for registration of transfer of any Registered Security of any series at
any office or agency of the Company in a Place of Payment for that series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Registered Securities of
the same series, of any authorized denominations and of a like aggregate principal amount, bearing a number not contemporaneously outstanding, and containing identical terms and provisions.
Subject to the provisions of this Section 305, at the option of the Holder, Registered Securities of any series may be exchanged for
other Registered Securities of the same series, of any authorized denomination or denominations and of a like aggregate principal amount, containing identical terms and provisions, upon surrender of the Registered Securities to be exchanged at any
such office or agency. Whenever any such Registered Securities are so surrendered for exchange, the Company shall execute,
24
and the Trustee shall authenticate and deliver, the Registered Securities which the Holder making the exchange is entitled to receive. Unless otherwise specified with respect to any series of
Securities as contemplated by Section 301, Bearer Securities may not be issued in exchange for Registered Securities.
If (but only
if) permitted by the applicable Board Resolution and (subject to Section 303) set forth in the applicable Officers Certificate, or in any indenture supplemental hereto, delivered as contemplated by Section 301, at the option of the
Holder, Bearer Securities of any series may be exchanged for Registered Securities of the same series of any authorized denominations and of a like aggregate principal amount and tenor, upon surrender of the Bearer Securities to be exchanged at any
such office or agency, with all unmatured coupons and all matured coupons in default thereto appertaining. If the Holder of a Bearer Security is unable to produce any such unmatured coupon or coupons or matured coupon or coupons in default, any such
permitted exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to the Company (or to the Trustee for the Security in case of matured coupons in default) in an amount equal to the face amount of such
missing coupon or coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there is furnished to them such security or indemnity as they may require to save each of them and any Paying Agent
harmless. If thereafter the Holder of such Security shall surrender to any Paying Agent any such missing coupon in respect of which such a payment shall have been made, such Holder shall be entitled to receive the amount of such payment;
provided, however, that, except as otherwise provided in Section 1002, interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside the United
States. Notwithstanding the foregoing, in case a Bearer Security of any series is surrendered at any such office or agency in a permitted exchange for a Registered Security of the same series and like tenor after the close of business at such office
or agency on (i) any Regular Record Date and before the opening of business at such office or agency on the relevant Interest Payment Date, or (ii) any Special Record Date and before the opening of business at such office or agency on the
related proposed date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date or proposed date for payment, as the case may be, and interest or Defaulted Interest, as the
case may be, will not be payable on such Interest Payment Date or proposed date for payment, as the case may be, in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon
when due in accordance with the provisions of this Indenture. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.
Notwithstanding the foregoing, except as otherwise specified as contemplated by Section 301, any permanent
Global Security shall be exchangeable only as provided in this paragraph. If the depository for any permanent Global Security is DTC, then, unless the terms of such Global Security expressly permit such Global Security to be exchanged in whole or in
part for definitive Securities, a Global Security may be transferred, in whole but not in part, only to a nominee of DTC, or by a nominee of DTC to DTC, or to a successor to DTC for such Global Security selected or approved by the Company or to a
nominee of such successor to DTC. If at any time DTC notifies the Company that it is unwilling or unable to continue as depository for the applicable Global Security or Securities or if at any time DTC ceases to be a clearing agency registered under
the Exchange Act if so required by applicable law or regulation, the Company shall appoint a successor depository with respect to such Global Security or Securities. If (w) a successor depository for such Global Security or Securities is not
appointed by the Company within 90 days after the Company receives such notice or becomes aware of such unwillingness, inability or ineligibility, (x) the Company delivers to the Trustee for Securities of such series in registered form a
Company Order stating that the Securities of such series shall be exchangeable, (y) an Event of Default has occurred and is continuing and the beneficial owners representing a majority
25
in principal amount of the applicable series of Securities represented by such Global Security or Securities advise DTC to cease acting as depository for such Global Security or Securities or
(z) the Company, in its sole discretion, determines at any time that all Outstanding Securities (but not less than all) of any series issued or issuable in the form of one or more Global Securities shall no longer be represented by such Global
Security or Securities, then the Company shall execute, and the Trustee shall authenticate and deliver definitive Securities of like series, rank, tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of
such Global Security or Securities. If any beneficial owner of an interest in a permanent global Security is otherwise entitled to exchange such interest for Securities of such series and of like tenor and principal amount of another authorized form
and denomination, as specified as contemplated by Section 301 and provided that any applicable notice provided in the permanent Global Security shall have been given, then without unnecessary delay but in any event not later than the earliest
date on which such interest may be so exchanged, the Company shall execute, and the Trustee shall authenticate and deliver definitive Securities in aggregate principal amount equal to the principal amount of such beneficial owners interest in
such permanent Global Security. On or after the earliest date on which such interests may be so exchanged, such permanent Global Security shall be surrendered for exchange by DTC or such other depository as shall be specified in the Company Order
with respect thereto to the Trustee, as the Companys agent for such purpose; provided, however, that no such exchanges may occur during a period beginning at the opening of business 15 days before any selection of Securities to
be redeemed and ending on the relevant Redemption Date if the Security for which exchange is requested may be among those selected for redemption; and provided further that no Bearer Security delivered in exchange for a portion of a
permanent Global Security shall be mailed or otherwise delivered to any location in the United States. If a Registered Security is issued in exchange for any portion of a permanent Global Security after the close of business at the office or agency
where such exchange occurs on (i) any Regular Record Date and before the opening of business at such office or agency on the relevant Interest Payment Date, or (ii) any Special Record Date and the opening of business at such office or
agency on the related proposed date for payment of Defaulted Interest, interest or Defaulted Interest, as the case may be, will not be payable on such Interest Payment Date or proposed date for payment, as the case may be, in respect of such
Registered Security, but will be payable on such Interest Payment Date or proposed date for payment, as the case may be, only to the Person to whom interest in respect of such portion of such permanent Global Security is payable in accordance with
the provisions of this Indenture.
All Securities issued upon any registration of transfer or conversion or exchange of Securities shall
be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or conversion or exchange.
Every Registered Security presented or surrendered for registration of transfer or for conversion, exchange or redemption shall (if so
required by the Company or the Security Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made to the Holder for any registration of transfer or conversion or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or conversion or exchange of Securities, other than exchanges
pursuant to Section 304, 906, 1107 or 1305 not involving any transfer.
The Company or the Trustee, as applicable, shall not be
required (i) to issue, register the transfer of or exchange any Security if such Security may be among those selected for redemption during a period
26
beginning at the opening of business 15 days before selection of the Securities to be redeemed under Section 1103 and ending at the close of business on (A) if such Securities are
issuable only as Registered Securities, the day of the sending of the relevant notice of redemption and (B) if such Securities are issuable as Bearer Securities, the day of the first publication of the relevant notice of redemption or, if such
Securities are also issuable as Registered Securities and there is no publication, the mailing of the relevant notice of redemption, or (ii) to register the transfer of or exchange any Registered Security so selected for redemption in whole or
in part, except, in the case of any Registered Security to be redeemed in part, the portion thereof not to be redeemed, or (iii) to exchange any Bearer Security so selected for redemption except that such a Bearer Security may be exchanged for
a Registered Security of that series and like tenor, provided that such Registered Security shall be simultaneously surrendered for redemption, or (iv) to issue, register the transfer of or exchange any Security which has been
surrendered for repayment at the option of the Holder, except the portion, if any, of such Security not to be so repaid.
Furthermore,
notwithstanding any other provision of this Section 305, the Company will not be required to exchange any Securities if, as a result of the exchange, the Company would suffer adverse consequences under any United States law or regulation.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security or a Security with a mutilated coupon
appertaining to it is surrendered to the Trustee or the Company, together with, in proper cases, such security or indemnity as may be required by the Company or the Trustee to save each of them or any agent of either of them harmless, the Company
shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series and principal amount, containing identical terms and provisions and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to the surrendered Security.
If there shall be delivered to the Company and to the
Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security or coupon, and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in
the absence of notice to the Company or the Trustee that such Security or coupon has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed,
lost or stolen Security or in exchange for the Security to which a destroyed, lost or stolen coupon appertains (with all appurtenant coupons not destroyed, lost or stolen), a new Security of the same series and principal amount, containing identical
terms and provisions and bearing a number not contemporaneously outstanding, with coupons corresponding to the coupons, if any, appertaining to such destroyed, lost or stolen Security or to the Security to which such destroyed, lost or stolen coupon
appertains.
Notwithstanding the provisions of the previous two paragraphs, in case any such mutilated, destroyed, lost or stolen Security
or coupon has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, with coupons corresponding to the coupons, if any, appertaining to such destroyed, lost or stolen Security or to the
Security to which such destroyed, lost or stolen coupon appertains, pay such Security or coupon if the applicant for such payment shall furnish to the Company and the Trustee for such Security such security or indemnity as may be required by them to
save each of them harmless, and in the case of destruction, loss or theft, evidence satisfactory to the Company and Trustee and any agent of any of them of the destruction, loss or theft of such Security and the ownership thereof; provided,
however, that payment of principal of (and premium or Make-Whole Amount, if any), and interest, if any, on, Bearer Securities shall, except as otherwise provided in Section 1002, be payable only at an office or agency located outside the
United States and, unless otherwise specified as contemplated by Section 301, any interest on Bearer Securities shall be payable only upon presentation and surrender of the coupons appertaining thereto.
27
Upon the issuance of any new Security under this Section, the Company may require the payment of
a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series with its coupons, if any, issued pursuant to this Section in lieu of any destroyed, lost or stolen Security,
or in exchange for a Security to which a destroyed, lost or stolen coupon appertains, shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security and its coupons, if any, or
the destroyed, lost or stolen coupon shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series and their coupons, if any, duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or coupons.
SECTION 307. Payment of
Interest; Interest Rights Preserved. Except as otherwise specified with respect to a series of Securities in accordance with the provisions of Section 301, interest on any Registered Security that is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest payment at the office or
agency of the Company maintained for such purpose pursuant to Section 1002; provided, however, that each installment of interest on any Registered Security may at the Companys option be paid by (i) mailing a check for
such interest, payable to or upon the written order of the Person entitled thereto pursuant to Section 308, to the address of such Person as it appears on the Security Register or (ii) transfer to an account maintained by the payee located
inside the United States.
Unless otherwise provided as contemplated by Section 301 with respect to the Securities of any series,
payment of interest may be made, in the case of a Bearer Security, by transfer to an account maintained by the payee with a bank located outside the United States.
Unless otherwise provided as contemplated by Section 301, every permanent Global Security will provide that interest, if any, payable on
any Interest Payment Date will be paid to DTC, Euroclear and/or Clearstream, as the case may be, with respect to that portion of such permanent Global Security held for its account by Cede & Co. or the Common Depository, as the case may be,
for the purpose of permitting such party to credit the interest received by it in respect of such permanent Global Security to the accounts of the beneficial owners thereof.
In case a Bearer Security of any series is surrendered in exchange for a Registered Security of such series after the close of business (at an
office or agency in a Place of Payment for such series) on any Regular Record Date and before the opening of business (at such office or agency) on the next succeeding Interest Payment Date, such Bearer Security shall be surrendered without the
coupon relating to such Interest Payment Date and interest will not be payable on such Interest Payment Date in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon
when due in accordance with the provisions of this Indenture.
28
Except as otherwise specified with respect to a series of Securities in accordance with the
provisions of Section 301, any interest on any Registered Security of any series that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called Defaulted Interest) shall forthwith cease
to be payable to the registered Holder thereof on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or
(2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the
Registered Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Registered Security of such series and the date of the proposed payment (which shall not be less than 20 days after such notice is received by the
Trustee), and at the same time the Company shall deposit with the Trustee an amount of money in the currency or currencies, currency unit or units or composite currency or currencies in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such series) equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit on or
prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, or sent by electronic transmission, to each Holder of Registered Securities of such series at his address as it appears in the Security Register not less than 10 days prior to such Special Record Date. The Trustee may, in its
discretion, in the name and at the expense of the Company, cause a similar notice to be published at least once in an Authorized Newspaper in each Place of Payment, but such publications shall not be a condition precedent to the establishment of
such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed or sent as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Registered
Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). In case a Bearer Security of any series
is surrendered at the office or agency in a Place of Payment for such series in exchange for a Registered Security of such series after the close of business at such office or agency on any Special Record Date and before the opening of business at
such office or agency on the related proposed date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the coupon relating to such proposed date of payment and Defaulted Interest will not be payable on such proposed
date of payment in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted Interest on the Registered Securities of any series in any other lawful
manner not inconsistent with the requirements of any over-the-counter market or securities exchange on which such Securities may be quoted or listed, and upon such notice as may be required by such market or exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.
29
Unless the Trustee is also appointed to serve as the Paying Agent for the relevant series of
Registered Securities, the Trustee shall have no obligation to calculate Defaulted Interest or to determine whether Defaulted Interest is payable.
Subject to the foregoing provisions of this Section and Section 305, each Security delivered under this Indenture upon registration of
transfer of or upon conversion of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners. Prior to due presentment of a Registered Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Registered Security is registered as the owner of such Security for the purpose of receiving payment of principal of (and premium or Make-Whole Amount, if
any), and (subject to Sections 305 and 307) interest on, such Registered Security and for all other purposes whatsoever, whether or not such Registered Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the
Trustee shall be affected by notice to the contrary. All such payments so made to any such Person, or upon such Persons order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for
money payable upon any such Security.
Title to any Bearer Security and any coupons appertaining thereto shall pass by delivery. The
Company, the Trustee and any agent of the Company or the Trustee may treat the Holder of any Bearer Security and the Holder of any coupon as the absolute owner of such Security or coupon for the purpose of receiving payment thereof or on account
thereof and for all other purposes whatsoever, whether or not such Security or coupon be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.
No holder of any beneficial interest in any Global Security held on its behalf by a depository shall have any rights under this Indenture with
respect to such Global Security and such depository (which is the Holder of such security) shall be treated by the Company, the Trustee, and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever.
None of the Company, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or
for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing,
with respect to any Global Security, nothing herein shall prevent the Company, the Trustee, or any agent of the Company or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by any depository, as a
Holder, with respect to such Global Security or impair, as between such depository and owners of beneficial interests in such Global Security, the operation of customary practices governing the exercise of the rights of such depository (or its
nominee) as Holder of such Global Security.
SECTION 309. Cancellation. All Securities and coupons surrendered for payment,
redemption, repayment at the option of the Holder, registration of transfer or conversion or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any
such Securities and coupons and Securities and coupons surrendered directly to the Trustee for any such purpose, upon direction by the Company, shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation
any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities
30
previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly cancelled by the Trustee. If the Company shall so acquire any of
the Securities, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are surrendered to the Trustee for cancellation. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. Cancelled Securities and coupons held by the Trustee shall be disposed of by the Trustee in accordance
with its customary practices (subject to the record retention requirements of the Exchange Act).
SECTION 310. Computation of
Interest. Except as otherwise specified as contemplated by Section 301 with respect to Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year consisting of twelve 30-day months.
SECTION 311. CUSIP Numbers. The Company in issuing the Securities may use CUSIP numbers (if then generally in use),
and, if so, the Trustee shall use CUSIP numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the CUSIP numbers.
ARTICLE
FOUR - SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request
cease to be of further effect with respect to any series of Securities specified in such Company Request (except as to any surviving rights of registration of transfer or conversion or exchange of Securities of such series herein expressly provided
for), and the Trustee, upon receipt of a Company Order, and at the expense of the Company, shall execute instruments reasonably requested by the Company acknowledging satisfaction and discharge of this Indenture as to such series when
(1) either
(A) all Securities of such series theretofore authenticated and delivered and all coupons, if any, appertaining thereto (other
than (i) coupons appertaining to Bearer Securities surrendered for exchange for Registered Securities and maturing after such exchange, whose surrender is not required or has been waived as provided in Section 305, (ii) Securities and
coupons of such series which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306, (iii) coupons appertaining to Securities called for redemption and maturing after the relevant Redemption
Date, whose surrender has been waived as provided in Section 1106, and (iv) Securities and coupons of such series for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or
(B) all Securities of such series and, in the case of (i) or (ii) below, any coupons appertaining thereto not
theretofore delivered to the Trustee for cancellation
|
(i) |
have become due and payable, or |
31
|
(ii) |
will become due and payable at their Stated Maturity within one year, or |
|
(iii) |
if redeemable at the option of the Company, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the
expense, of the Company, |
and the Company, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose an amount in the currency or currencies, currency unit or units or composite currency or currencies in which the Securities of such series are payable, sufficient to pay and
discharge the entire indebtedness on such Securities and such coupons not theretofore delivered to the Trustee for cancellation, for principal (and premium or Make-Whole Amount, if any) and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be;
(2) the
Company has paid or caused to be paid all other sums payable hereunder by the Company; and
(3) the Company has delivered
to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture as to such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee and any predecessor Trustee under
Section 606, the obligations of the Company to any Authenticating Agent under Section 611 and, if money shall have been deposited with and held by the Trustee pursuant to subclause (B) of clause (1) of this Section, the
obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive such satisfaction and discharge.
SECTION 402. Application of Trust Funds. Subject to the provisions of the last paragraph of Section 1003, all money deposited with
the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities, the coupons and this Indenture, to the payment, either directly or through any Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium or Make-Whole Amount, if any), and any interest for whose payment such money has been deposited with or received by
the Trustee, but such money need not be segregated from other funds except to the extent required by law.
ARTICLE FIVE - REMEDIES
SECTION 501. Events of Default. Event of Default, wherever used herein with respect to any particular series of Securities,
means any one of the following events (whatever the reason for such Event of Default and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest on any Security
of that series or of any coupon appertaining thereto, when such interest or coupon becomes due and payable, and continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of (or premium or Make-Whole Amount, if any, on) any Security of that series when
it becomes due and payable at its Maturity; or
32
(3) default in the deposit of any sinking fund payment, to the extent applicable
to such series of Securities, when and as due by the terms of any Security of that series; or
(4) default in the
performance, or breach, of any covenant or warranty of the Company in this Indenture with respect to any Security of that series (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which has expressly been included in this Indenture solely for the benefit of a series of Securities other than that series), and continuance of such default or breach for a period of 60 days after there has been given, by
registered or certified mail or sent by electronic transmission, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice
specifying such default or breach and requiring it to be remedied and stating that such notice is a Notice of Default hereunder; or
(5) default under any bond, debenture, note, mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any indebtedness for money borrowed by the Company (or by any Subsidiary, the repayment of which the Company has guaranteed or for which the Company is directly responsible or liable as obligor or guarantor), having
an aggregate principal amount outstanding of at least $75,000,000, whether such indebtedness now exists or shall hereafter be created, which default shall have resulted in such indebtedness becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of 30 days after there shall have been given, by registered or
certified mail or sent by electronic transmission, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 10% in principal amount of the Outstanding Securities of that series a written notice specifying such
default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a Notice of Default hereunder; provided, however, that, subject to the
provisions of Sections 601 and 602, the Trustee shall not be deemed to have knowledge of such default unless either (A) a Responsible Officer of the Trustee shall have knowledge of such default or (B) the Trustee shall have received
written notice thereof from the Company, from any Holder, from the holder of any such indebtedness or from the trustee under any such mortgage, indenture or other instrument; or
(6) the Company or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in an involuntary case,
(C) consents to the appointment of a Custodian of it or for all or substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors; or
33
(7) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(A) is for relief against the Company or any Significant Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any Significant Subsidiary or for all or substantially all of either of its
property, or
(C) orders the liquidation of the Company or any Significant Subsidiary, and the order or decree remains
unstayed and in effect for 90 days; or
(8) any other Event of Default provided with respect to Securities of that series.
As used in this Section 501, the term Bankruptcy Law means title 11, U.S. Code or any similar Federal or state law for
the relief of debtors and the term Custodian means any receiver, trustee, assignee, liquidator or other similar official under any Bankruptcy Law.
SECTION 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount (or, if Securities of that
Series are Original Issue Discount Securities or Indexed Securities, such portion of the principal as may be specified in the terms thereof) of all the Securities of that series to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by the Holders), and upon any such declaration such principal or specified portion thereof shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree
for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may
rescind and annul such declaration of acceleration and its consequences if:
(1) the Company has paid or deposited with the
Trustee a sum sufficient to pay in the currency, currency unit or composite currency in which the Securities of such series are payable (except as otherwise specified pursuant to Section 301 for the Securities of such series):
(A) all overdue installments of interest on all Outstanding Securities of that series and any related coupons,
(B) the principal of (and premium or Make-Whole Amount, if any, on) any Outstanding Securities of that series which have
become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates borne by or provided for in such Securities,
(C) to the extent that payment of such interest is lawful, interest upon overdue installments of interest at the rate or rates
borne by or provided for in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and
(2) all Events
of Default with respect to Securities of that series, other than the nonpayment of the principal of (or premium or Make-Whole Amount, if any) or interest on Securities of that series which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
34
No such rescission shall affect any subsequent default or impair any right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if:
(1) default is made in the payment of any installment of interest on any Security of any series and any related coupon when
such interest becomes due and payable and such default continues for a period of 30 days, or
(2) default is made in the
payment of the principal of (or premium or Make-Whole Amount, if any, on) any Security of any series at its Maturity,
then the Company will, upon demand
of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities of such series and coupons, the whole amount then due and payable on such Securities and coupons for principal (and premium or Make-Whole Amount, if any) and
interest, with interest upon any overdue principal (and premium or Make-Whole Amount, if any) and, to the extent that payment of such interest shall be legally enforceable, upon any overdue installments of interest at the rate or rates borne by or
provided for in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of
an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such
Securities of such series and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities of such series, wherever situated.
If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities of such series and any related coupons by such appropriate judicial proceedings as the Trustee shall deem necessary to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective
of whether the principal of the Securities of any series shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue
principal, premium or Make-Whole Amount, if any, or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount, or such lesser amount as may be provided for in the Securities of such
series, of principal (and premium or Make-Whole Amount, if any) and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;
35
and any custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such
judicial proceeding is hereby authorized by each Holder of Securities of such series and coupons to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee and any predecessor Trustee, their agents and counsel, and any other amounts due the Trustee or any predecessor Trustee under
Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder of a Security or coupon any plan of reorganization, arrangement, adjustment or composition affecting the Securities or coupons or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of
any Holder of a Security or coupon in any such proceeding.
In any proceedings brought by the Trustee (and also any proceedings involving
the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the Holders of the Securities, and it shall not be necessary to make any Holders of the Securities parties to any
such proceedings.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities or Coupons. All rights of action and
claims under this Indenture or any of the Securities or coupons may be prosecuted and enforced by the Trustee without the possession of any of the Securities or coupons or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities and coupons in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium or Make-Whole Amount, if any) or interest, upon presentation of the Securities or coupons, or both, as the
case may be, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the
payment of all amounts due the Trustee and any predecessor Trustee due and owing under this Indenture;
SECOND: To the payment of the
amounts then due and unpaid upon the Securities and coupons for principal (and premium or Make-Whole Amount, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority
of any kind, according to the aggregate amounts due and payable on such Securities and coupons for principal (and premium or Make-Whole Amount, if any) and interest, respectively; and
THIRD: To the payment of the remainder, if any, to the Company.
36
SECTION 507. Limitation on Suits. No Holder of any Security of any series or any related
coupon shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the
Securities of that series;
(2) the Holders of not less than 25% in principal amount of the Outstanding Securities of that
series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent
with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all such Holders.
SECTION 508. Unconditional Right of Holders to
Receive Principal, Premium or Make-Whole Amount, if any, and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Security or coupon shall have the right which is absolute and unconditional to receive payment of the
principal of (and premium or Make-Whole Amount, if any) and (subject to Sections 305 and 307) interest on such Security or payment of such coupon on the respective due dates expressed in such Security or coupon (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies. If the Trustee or any Holder of a Security or coupon has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, the Company, the Trustee and the
Holders of Securities and coupons shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative. Except as otherwise provided with
respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or coupons in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Securities or
coupons is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or
in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
37
SECTION 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any
Holder of any Security or coupon to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by
this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders of Securities or coupons, as the case may be.
SECTION 512. Control by Holders of Securities. The Holders of not less than a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Securities of such
series, provided that:
(1) such direction shall not be in conflict with any rule of law or with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in personal liability or be unduly prejudicial to the
Holders of Securities of such series not joining therein.
Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not inconsistent with such direction by Holders.
SECTION 513.
Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series and any related coupons waive any past default
hereunder with respect to such series and its consequences, except a default
(1) in the payment of the principal of (or
premium or Make-Whole Amount, if any) or interest on any Security of such series or any related coupons, or
(2) in respect
of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected; or
(3) in respect of a covenant or provision hereof for the benefit or protection of the Trustee, without its express written
consent.
Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.
SECTION 514. Waiver of Usury, Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of
this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
38
SECTION 515. Undertaking for Costs. All parties to this Indenture agree, and each Holder
of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action
taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys fees and
expenses, against any party litigant in such suit having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal
of (or premium or Make-Whole Amount, if any) or interest on any Security on or after the respective Stated Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date).
ARTICLE SIX - THE TRUSTEE
SECTION 601. Notice of Defaults. Within 90 days after the occurrence of any default hereunder with respect to the Securities of any
series, the Trustee shall transmit in the manner and to the extent provided in TIA Section 313(c), notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however,
that, except in the case of a default in the payment of the principal of (or premium or Make-Whole Amount, if any) or interest on any Security of such series, or in the payment of any sinking or purchase fund installment with respect to the
Securities of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors and/or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders of the Securities and coupons of such series; and provided further that in the case of any default or breach of the character specified in
Section 501(4) with respect to the Securities and coupons of such series, no such notice to Holders shall be given until at least 60 days after the occurrence thereof. For the purpose of this Section, the term default means any
event which is, or after notice or lapse of time or both would become, an Event of Default with respect to the Securities of such series.
SECTION 602. Certain Rights of Trustee. Subject to the provisions of TIA Section 315(a) through 315(d):
(1) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon or other paper or document (whether in its original or facsimile form) reasonably believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order (other than delivery of any Security, together with any coupons appertaining thereto, to the Trustee for authentication and delivery pursuant to Section 303 which shall be
sufficiently evidenced as provided therein) and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
39
(3) whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an
Officers Certificate;
(4) the Trustee may consult with counsel of its own selection and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders of Securities of any series or any related coupons pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs,
expenses and liabilities which might be incurred by it in compliance with such request or direction;
(6) the Trustee shall
not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon or other paper or document,
unless requested in writing so to do by the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of any series; provided that, if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require
indemnity satisfactory to it against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such examination shall be paid by the Holders or, if paid by the Trustee, shall be repaid by the Holders upon demand.
The Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, relevant to the facts or matters that are the subject of its inquiry, personally or by agent or attorney at the expense of the Company and shall incur no liability or additional liability of any kind by
reason of such inquiry or investigation;
(7) the Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;
(8) the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and reasonably believed by it
to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;
(9) any permissive
right or power available to the Trustee under this Indenture or any supplement hereto shall not be construed to be a mandatory duty or obligation;
(10) the Trustee shall not be charged with knowledge of any matter (including any default, other than as described in
Section 501(1), (2) or (3)) unless and except to the extent actually known to a Responsible Officer of the Trustee or to the extent written notice thereof is received by the Trustee at the Corporate Trust Office;
40
(11) the Trustee shall have no liability for any inaccuracy in the books and
records of, or for any actions or omissions of, DTC, Euroclear or Clearstream or any depository acting on behalf of any of them;
(12) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its
right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed by the Trustee to act hereunder; and
(13) the Trustee may request that the Company deliver an Officers Certificate setting forth the names of individuals
and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers Certificate may be signed by any person authorized to sign an Officers Certificate, including any person specified as
so authorized in any such certificate previously delivered and not superseded.
The Trustee shall not be required to expend or risk its
own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Except during the continuance of an Event of Default, the
Trustee undertakes to perform only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee.
In no event shall the Trustee be liable for any special, indirect, punitive or consequential loss or damage of any kind whatsoever (including
but not limited to lost profits), even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
The Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out
of or caused, directly or indirectly, by circumstances beyond its reasonable control, including without limitation, acts of God; earthquakes; fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots; interruptions, loss or
malfunctions of utilities, computer (hardware or software) or communications service, accidents; labor disputes; acts of civil or military authority or governmental actions (it being understood that the Trustee shall use commercially reasonable
efforts to resume performance as soon as practicable under the circumstances).
SECTION 603. Not Responsible for Recitals or Issuance
of Securities. The recitals contained herein and in the Securities, except the Trustees certificate of authentication, and in any coupons shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent
assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities or coupons, except that the Trustee represents that it is duly authorized to execute and
deliver this Indenture, authenticate the Securities and perform its obligations hereunder. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of Securities or the proceeds thereof. The
Trustee shall have no responsibility with respect to any information, statement or recital in any offering prospectus or other disclosure materials prepared or distributed with respect to the Securities.
41
SECTION 604. May Hold Securities. The Trustee, any Paying Agent, Security Registrar,
Authenticating Agent or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and coupons and, subject to TIA Sections 310(b) and 311, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Paying Agent, Security Registrar, Authenticating Agent or such other agent.
SECTION 605.
Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except
as otherwise agreed in writing with the Company.
SECTION 606. Compensation and Reimbursement. The Company agrees:
(1) to pay to the Trustee as agreed upon in writing from time to time reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse each of the Trustee and any predecessor Trustee upon its
request for all reasonable expenses, and disbursements incurred by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the reasonable expenses and disbursements of its agents and counsel), except
any such expense or disbursement as shall be determined to have been caused by its own negligence or willful misconduct, as determined by a final order of a court of competent jurisdiction; and
(3) to indemnify each of the Trustee and any predecessor Trustee for, and to hold it harmless against, any loss, liability,
claim, damage or expense incurred without negligence, willful misconduct or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.
When the
Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 501(7) or Section 501(8), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the
services are intended to constitute expenses of administration under any applicable Federal or state bankruptcy, insolvency or other similar law.
As security for the performance of the obligations of the Company under this Section, the Trustee shall have a lien for payment of the
Trustees fees and expenses prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (or premium or Make-Whole Amount, if any) or interest on
particular Securities or any coupons.
The provisions of this Section shall survive the termination of this Indenture and the resignation
or removal of the Trustee.
SECTION 607. Corporate Trustee Required; Eligibility; Conflicting Interests. There shall at all times
be a Trustee hereunder which shall be eligible to act as Trustee under TIA Section 310(a)(1) and shall have at all times a combined capital and surplus of at least $50,000,000 (or which shall have a combined capital and surplus of at least
$10,000,000 and whose ultimate parent holding company shall have a combined capital and surplus of at least $50,000,000. If the Trustee publishes reports of condition at least annually, pursuant to law or the requirements of Federal, state,
territorial or District of Columbia
42
supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of the Trustee shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this
Article. Neither the Company nor any Person directly or indirectly controlling, controlled by, or under common control with the Company shall serve as Trustee.
SECTION 608. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until
the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 609.
(b) The
Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 60 days
after the giving of such notice of resignation, the resigning Trustee may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series delivered to the Trustee and to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 60 days after the giving of such notice of
resignation, the resigning Trustee may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA Section 310(b) after written request therefor by the
Company or by any Holder of a Security who has been a bona fide Holder of a Security for at least six months, or
(2) the
Trustee shall cease to be eligible under Section 607 and shall fail to resign after written request therefor by the Company or by any Holder of a Security who has been a bona fide Holder of a Security for at least six months, or
(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or
of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by or pursuant to a Board Resolution may remove the Trustee and appoint a successor Trustee with respect to all
Securities, or (ii) subject to TIA Section 315(e), any Holder of a Security who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.
(e)
If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause with respect to the Securities of one or more series, the Company, by or pursuant to a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and
that at any time
43
there shall be only one Trustee with respect to the Securities of any particular series). If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders of Securities and accepted appointment in the manner hereinafter provided, any Holder of a Security who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to Securities of such series.
(f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series in the manner provided for notices to the Holders of Securities in Section 106. Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
SECTION 609. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed
shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder, subject nevertheless to its claim, if any, provided for in Section 606.
(b) In case of the appointment hereunder
of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture
supplemental hereto, pursuant to Article Nine hereof, wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring
with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to
the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become
44
vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates;
but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section 609, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified
and eligible under this Article.
SECTION 610. Merger, Conversion, Consolidation or Succession to Business. Any corporation into
which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Securities or coupons shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the Securities or coupons so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities or coupons. In case any Securities or coupons shall not have been
authenticated by such predecessor Trustee, any such successor Trustee may authenticate and deliver such Securities or coupons, in either its own name or that of its predecessor Trustee, with the full force and effect which this Indenture provides
for the certificate of authentication of the Trustee.
SECTION 611. Appointment of Authenticating Agent. At any time when any of
the Securities remain Outstanding, the Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued
upon conversion or exchange, registration of transfer or partial redemption or repayment thereof, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Any such appointment shall be evidenced by an instrument in writing signed by a Responsible Officer of the Trustee, a copy of which instrument shall be promptly furnished to the Company. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustees certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a bank or trust company or corporation
organized and doing business and in good standing under the laws of the United States of America or of any state or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not
less than $50,000,000 and subject to supervision or examination by Federal or state authorities. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In
case at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.
45
Any corporation into which an Authenticating Agent may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an
Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or further act on the part of the Trustee or the
Authenticating Agent.
An Authenticating Agent for any series of Securities may at any time resign by giving written notice of resignation
to the Trustee for such series and to the Company. The Trustee for any series of Securities may at any time terminate the agency of an Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee for such series may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give notice of such appointment to all Holders of Securities of the series with respect to which such Authenticating Agent will serve in the manner set forth in
Section 106. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating
Agent herein. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.
The Company
agrees to pay to each Authenticating Agent from time to time reasonable compensation including reimbursement of its reasonable expenses for its services under this Section, subject to Section 606.
If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to or in lieu of the Trustees certificate of authentication, an alternate certificate of authentication substantially in the following form:
This is one of the Securities of the series designated therein referred to in the within- mentioned Indenture.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as Trustee |
|
|
|
|
|
Dated: |
|
|
|
|
|
By: |
|
|
|
|
|
|
|
|
|
|
as Authenticating Agent |
|
|
|
|
|
Dated: |
|
|
|
|
|
By: |
|
|
|
|
|
|
|
|
|
|
as Authenticating Agent |
SECTION 612. Certain Duties and Responsibilities of the Trustee.
(a) With respect to the Securities of any series, except during the continuance of an Event of Default with respect to the Securities of such
series:
(1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
46
(2) in the absence of bad faith on its part, the Trustee may conclusively rely,
as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture, but shall not be
under any duty to verify the contents or accuracy thereof.
(b) In case an Event of Default with respect to the Securities of any series
has occurred and is continuing, the Trustee shall, with respect to Securities of such series, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(3) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section;
(4) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(5) the Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Securities of any series relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series; and
(6) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it; and, the Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holder, unless such Holder shall have offered to the Trustee security and indemnity
satisfactory to the Trustee against any loss, liability or expense.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 612.
(e) The Trustee shall not be liable for interest on any money or assets held by it except to the extent the Trustee may agree in writing with
the Company. Assets held in trust by the Trustee need not be segregated from other assets except to the extent required by law.
(f) The
Trustee shall not be deemed to have knowledge of any Event of Default hereunder unless a Responsible Officer of the Trustee has actual knowledge thereof or unless the Trustee shall have been notified in writing of such Event of Default by the
Company or a Holder of Securities. In addition, the Trustee shall have no duty to inquire as to the performance of the Companys covenants in Article Ten hereof.
47
ARTICLE SEVEN - HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders. Every Holder of Securities or coupons, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee nor any Authenticating Agent nor any Paying Agent nor any Security Registrar shall be held accountable by reason of the disclosure of any information as to the names
and addresses of the Holders of Securities in accordance with TIA Section 312, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a
request made under TIA Section 312(b).
SECTION 702. Reports by Trustee. The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be required by TIA Section 313 at the times and in the manner provided by the TIA, which shall initially be not less than every twelve months commencing on
, 2016. A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each
over-the-counter market or securities exchange, if any, upon which any Securities are quoted or listed, with the Commission and with the Company. The Company will notify the Trustee when any Securities are quoted or listed on any over-the-counter
market or securities exchange or delisted therefrom.
SECTION 703. Reports by Company. The Company will:
(1) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of such Sections, then it will file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in
respect of a security quoted or listed and registered on an over-the-counter market or national securities exchange as may be prescribed from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations;
(3) transmit by mail to the Holders of Securities, within 30 days after the filing thereof with the Trustee, in the manner and
to the extent provided in TIA Section 313(c), such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission; and
(4) delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustees receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Companys compliance with
any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers Certificates).
48
SECTION 704. Company to Furnish Trustee Names and Addresses of Holders. The Company will
furnish or cause to be furnished to the Trustee:
(a) semiannually, not later than 15 days after the Regular Record Date for interest for
each series of Securities, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Registered Securities of such series as of such Regular Record Date, or if there is no Regular Record Date for
interest for such series of Securities, semiannually, upon such dates as are set forth in the Board Resolution or indenture supplemental hereto authorizing such series, and
(b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time such list is furnished, provided, however, that, so long as the Trustee is the Security Registrar, no such list shall be required to be furnished.
ARTICLE EIGHT - CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. Consolidations and Mergers of Company and Sales, Leases and Conveyances Permitted Subject to Certain Conditions. The
Company may consolidate with, or sell, lease or convey all or substantially all of its assets to, or merge with or into any other corporation, provided that in any such case, (1) either the Company shall be the continuing corporation, or the
successor corporation shall be a corporation organized and existing under the laws of the United States or a State thereof and such successor corporation shall expressly assume the due and punctual payment of the principal of (and premium or
Make-Whole Amount, if any) and any interest on all of the Securities, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed by the Company by
supplemental indenture, complying with Article Nine hereof, satisfactory to the Trustee, executed and delivered to the Trustee by such corporation, (2) immediately after giving effect to such transaction and treating any indebtedness which
becomes an obligation of the Company or any Subsidiary as a result thereof as having been incurred by the Company or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or the lapse of time, or
both, would become an Event of Default, shall have occurred and be continuing and (3) the Company shall have delivered to the Trustee the Officers Certificate and Opinion of Counsel required pursuant to Section 803 below.
SECTION 802. Rights and Duties of Successor Corporation. In case of any such consolidation, merger, sale, lease or conveyance and upon
any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for the Company, with the same effect as if it had been named herein as the party of the first part, and the predecessor corporation,
except in the event of a lease, shall be relieved of any further obligation under this Indenture and the Securities. Such successor corporation thereupon may cause to be signed, and may issue either in its own name or in the name of the Company, any
or all of the Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor corporation, instead of the Company, and subject to all the terms, conditions
and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities
which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof.
49
In case of any such consolidation, merger, sale, lease or conveyance, such changes in phraseology
and form (but not in substance) may be made in the Securities thereafter to be issued as may be appropriate.
SECTION 803.
Officers Certificate and Opinion of Counsel. Any consolidation, merger, sale, lease or conveyance permitted under Section 801 is also subject to the condition that the Trustee receive an Officers Certificate and an Opinion of
Counsel to the effect that any such consolidation, merger, sale, lease or conveyance, and the assumption by any successor corporation, complies with the provisions of this Article, that the Companys obligations hereunder are the valid and
binding obligations of such successor corporation, and that all conditions precedent herein provided for relating to such transaction have been complied with.
ARTICLE NINE - SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders. Without the consent of any Holders of Securities or coupons, the
Company, when authorized by or pursuant to a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants
of the Company contained herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender
any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default for the benefit of
the Holders of all or any series of Securities (and if such Events of Default are to be for the benefit of less than all series of Securities, stating that such Events of Default are expressly being included solely for the benefit of such series);
provided, however, that in respect of any such additional Events of Default such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default or may limit the right of the Holders of a majority in aggregate principal amount of that or those series of
Securities to which such additional Events of Default apply to waive such default; or
(4) to add to or change any of the
provisions of this Indenture to provide that Bearer Securities may be registrable as to principal, to change or eliminate any restrictions on the payment of principal of or premium or Make-Whole Amount, if any, or interest on Bearer Securities, to
permit Bearer Securities to be issued in exchange for Registered Securities, to permit Bearer Securities to be issued in exchange for Bearer Securities of other authorized denominations or to permit or facilitate the issuance of Securities in
uncertificated form, provided that any such action shall not adversely affect the interests of the Holders of Securities of any series or any related coupons in any material respect; or
(5) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination shall become
effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; or
50
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series and any related coupons as permitted or contemplated by Sections
201 and 301; or
(8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with
respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee; or
(9) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture, provided such provisions shall not adversely affect the
interests of the Holders of Securities of any series or any related coupons in any material respect; or
(10) to supplement
any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the Defeasance and discharge of any series of Securities pursuant to Sections 401, 1402 and 1403; provided that any such action shall not adversely
affect the interests of the Holders of Securities of such series and any related coupons or any other series of Securities in any material respect; or
(11) to make provisions with respect to Holders rights of conversion with respect to any series of Securities pursuant to
Article Seventeen.
SECTION 902. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than
a majority in principal amount of all Outstanding Securities affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by or pursuant to a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of
Securities and any related coupons under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby:
(1) change the Stated Maturity of the principal of (or premium or Make-Whole Amount, if any, on) or any installment of
principal of or interest on, any Security; or reduce the principal amount thereof or the rate or amount of interest thereon, or any premium or Make-Whole Amount payable upon the redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502 or the amount thereof provable in bankruptcy pursuant to Section 504, or adversely affect any
right of repayment at the option of the Holder of any Security, or change any Place of Payment where, or the currency or currencies, currency unit or units or composite currency or currencies in which, any Security or any premium or Make-Whole
Amount or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption or repayment at the option of the Holder, on or after the
Redemption Date or the Repayment Date, as the case may be), or (if Securities of such series are convertible) adversely affect the right of the
51
Holder to convert any Security as provided in Article Seventeen, or modify the provisions of this Indenture with respect to the subordination of the Securities in a manner materially adverse to
the Holders; or
(2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of
whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver with respect to such series (or compliance with certain provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or reduce the requirements of Section 1504 for quorum or voting, or
(3)
modify any of the provisions of this Section, Section 513 or Section 1009, except to increase the required percentage to effect such action or to provide that certain other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Security affected thereby, provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to the Trustee and
concomitant changes in this Section 902 and Section 1009, or the deletion of this proviso, in accordance with the requirements of Sections 609(b) and 901(11).
It shall not be necessary for any Act of Holders under this Section 902 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance thereof.
A supplemental indenture which changes or
eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.
SECTION 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modification thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 612) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, that the supplemental indenture is the valid and binding obligation of the Company, enforceable against it in accordance with its terms and that
all conditions precedent in the Indenture to the execution of the supplemental indenture are satisfied. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustees own rights, duties or
immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder and of any coupon appertaining thereto shall be bound thereby.
SECTION 905. Conformity with
Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall, if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so
determine, new Securities of
52
any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered
by the Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN - COVENANTS
SECTION 1001. Payment of Principal, Premium or Make-Whole Amount, if any; and Interest. The Company covenants and agrees for the
benefit of the Holders of each series of Securities that it will duly and punctually pay the principal of (and premium or Make-Whole Amount, if any) and interest on the Securities of that series in accordance with the terms of such series of
Securities, any coupons appertaining thereto and this Indenture. Unless otherwise specified as contemplated by Section 301 with respect to any series of Securities, any interest due on Bearer Securities on or before Maturity shall be payable
only upon presentation and surrender of the several coupons for such interest installments as are evidenced thereby as they severally mature.
Unless
otherwise specified with respect to Securities of any series pursuant to Section 301, at the option of the Company (upon written notice to the Trustee), all payments of principal may be paid by check to the registered Holder of the Registered
Security or other Person entitled thereto against surrender of such Security.
SECTION 1002. Maintenance of Office or Agency. If
Securities of a series are issuable only as Registered Securities, the Company shall maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or surrendered for payment or
conversion, where Securities of that series may be surrendered for registration of transfer or conversion or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be made or
served. If Securities of a series are issuable as Bearer Securities, the Company will maintain: (A) in the Borough of Manhattan, The City of New York, an office or agency where any Registered Securities of that series may be presented or
surrendered for payment or conversion, where any Registered Securities of that series may be surrendered for registration of transfer, where Securities of that series may be surrendered for conversion or exchange, where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture may be served and where Bearer Securities of that series and related coupons may be presented or surrendered for payment or conversion in the circumstances described in
the following paragraph (and not otherwise); (B) subject to any laws or regulations applicable thereto, in a Place of Payment for that series which is located outside the United States, an office or agency where Securities of that series and
related coupons may be presented and surrendered for payment; provided, however, that if the Securities of that series are listed on any stock exchange located outside the United States and such stock exchange shall so require, the Company will
maintain a Paying Agent for the Securities of that series in any required city located outside the United States, as the case may be, so long as the Securities of that series are listed on such exchange; and (C) subject to any laws or
regulations applicable thereto, in a Place of Payment for that series located outside the United States an office or agency where any Registered Securities of that series may be surrendered for registration of transfer, where Securities of that
series may be surrendered for conversion or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of each such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made at the Corporate Trust Office of the Trustee, except that Bearer Securities of that series and the related coupons may be presented and surrendered for payment or conversion at the offices specified in the
Security, in
53
London, England, and the Company hereby appoints the same as its agent to receive such respective presentations, surrenders, notices and demands, and the Company hereby appoints the Trustee its
agent to receive all such presentations, surrenders, notices and demands at the Corporate Trust Office.
Unless otherwise specified with
respect to any Securities pursuant to Section 301, no payment of principal, premium or Make-Whole Amount or interest on Bearer Securities shall be made at any office or agency of the Company in the United States or by check mailed to any
address in the United States or by transfer to an account maintained with a bank located in the United States; provided, however, that, if the Securities of a series are payable in Dollars, payment of principal of and any premium or
Make-Whole Amount and interest on any Bearer Security shall be made at the office of the Companys Paying Agent in the Borough of Manhattan, The City of New York, if (but only if) payment in Dollars of the full amount of such principal, premium
or Make-Whole Amount, or interest, as the case may be, at all offices or agencies outside the United States maintained for the purpose by the Company in accordance with this Indenture, is illegal or effectively precluded by exchange controls or
other similar restrictions.
The Company may from time to time designate one or more other offices or agencies (in or outside the Place of
Payment) where the Securities of one or more series may be presented or surrendered for any or all of such purposes, and may from time to time rescind such designations; provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or agency in accordance with the requirements set forth above for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such other office or agency. Unless otherwise specified with respect to any Securities pursuant to Section 301 with respect to a series of Securities, the Company hereby
designates as a Place of Payment for each series of Securities, each of (i) the office or agency of the Company in the Borough of Manhattan, The City of New York, and (ii) the Corporate Trust Office of the Trustee (as Paying Agent); and
the Company hereby initially appoints the Trustee at its Corporate Trust Office as Paying Agent in such city; and the Company hereby initially appoints as its agent to receive all such presentations, surrenders, notices and demands each of the
Trustee, at its Corporate Trust Office.
Unless otherwise specified with respect to any Securities pursuant to Section 301, if and so
long as the Securities of any series (i) are denominated in a Foreign Currency or (ii) may be payable in a Foreign Currency, or so long as it is required under any other provision of the Indenture, then the Company will maintain with
respect to each such series of Securities, or as so required, at least one exchange rate agent (of which it shall give written notice to the Trustee).
SECTION 1003. Money for Securities Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent with
respect to any series of any Securities and any related coupons, it will, on or before each due date of the principal of (and premium or Make-Whole Amount, if any), or interest on any of the Securities of that series, segregate and hold in trust for
the benefit of the Persons entitled thereto a sum in the currency or currencies, currency unit or units or composite currency or currencies in which the Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series) sufficient to pay the principal (and premium or Make-Whole Amount, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and
will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities and any related coupons, it will, on or before each due date of the principal of (and premium or Make-Whole Amount, if any), or interest on any Securities of that series, deposit with a Paying Agent a sum (in the currency or
currencies, currency unit or units or composite currency or currencies described in the
54
preceding paragraph) sufficient to pay the principal (and premium or Make-Whole Amount, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled
to such principal, premium or Make-Whole Amount, if any, or interest and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will
(1) hold all sums held by it for the payment of principal of (and premium or Make-Whole Amount, if any) or interest on
Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any such
payment of principal (and premium or Make-Whole Amount, if any) or interest on the Securities of that series; and
(3) at
any time during the continuance of any such default upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such sums.
Except as otherwise provided in the Securities of any series, and subject to applicable laws, any money deposited with the Trustee or any
Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium or Make-Whole Amount, if any) or interest on any Security of any series and remaining unclaimed for two years after such principal (and premium or
Make-Whole Amount, if any) or interest has become due and payable shall be paid to the Company upon Company Request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Company for payment of such principal of (and premium or Make-Whole Amount, if any) or interest on any Security, without interest thereon, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of
the Company cause to be published once, in an Authorized Newspaper, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Company.
SECTION 1004. Existence. Subject to Article Eight, the Company will do or
cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, all material rights (by certificate of incorporation, by-laws and statute) and material franchises; provided, however, that
the Company shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company.
SECTION 1005. Maintenance of Properties. The Company will cause all of its material properties used or useful in the conduct of its
business or the business of any Subsidiary to be maintained and kept in
55
good condition, repair and working order, normal wear and tear, casualty and condemnation excepted, and supplied with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof (and the Company may take out of service for a period of time, any of its properties that have been condemned or suffered any loss due to casualty in order to make such repairs,
betterments and improvements), all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that the
Company and its Subsidiaries shall not be prevented from (i) removing permanently any property that has been condemned or suffered a loss due to casualty based on the Companys reasonable judgment that such removal is in the best interest
of the Company, or (ii) selling or otherwise disposing of their properties for value in the ordinary course of business.
SECTION
1006. Insurance. The Company will cause each of its and its Subsidiaries insurable properties to be insured against loss or damage in an amount deemed reasonable by the Board of Directors with insurers of recognized responsibility.
SECTION 1007. Payment of Taxes and Other Claims. The Company will pay or discharge or cause to be paid or discharged, before the same
shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon it or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings.
SECTION 1008. Statement as to Compliance. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year, a
brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Companys compliance with all conditions and covenants under this Indenture and, in the event
of any noncompliance, specifying such noncompliance and the nature and status thereof. For purposes of this Section 1008, such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture.
SECTION 1009. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any term, provision or
condition set forth in Sections 1004 to 1008, inclusive, if before or after the time for such compliance the Holders of at least a majority in principal amount of all outstanding Securities of such series, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.
ARTICLE ELEVEN - REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article. Securities of any series which are redeemable before their Stated Maturity shall be redeemable
in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for Securities of any series) in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by or
pursuant to a Board Resolution. In case of any redemption at the election of the Company of less than all of the Securities of any series, the Company shall, at least 45
56
days prior to the giving of the notice of redemption in Section 1104 (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the
principal amount of Securities of such series to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers Certificate evidencing compliance with such restriction.
SECTION 1103.
Selection by Trustee of Securities to Be Redeemed. If less than all the Securities of any series issued on the same day with the same terms are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series issued on such date with the same terms not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of Securities of such series of a denomination larger than the
minimum authorized denomination for Securities of that series.
The Trustee shall promptly notify the Company and the Security Registrar
(if other than itself) in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall
relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed.
SECTION 1104. Notice of Redemption. Notice of redemption shall be given in the manner provided in Section 106, not less than 30
days nor more than 60 days prior to the Redemption Date, unless a shorter period is specified by the terms of such series established pursuant to Section 301, to each Holder of Securities to be redeemed, but failure to give such notice in the
manner herein provided to the Holder of any Security designated for redemption as a whole or in part, or any defect in the notice to any such Holder, shall not affect the validity of the proceedings for the redemption of any other such Security or
portion thereof.
Any notice that is mailed or sent to the Holders of Registered Securities in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, accrued interest to the Redemption Date payable as provided in Section 1106, if any,
(3) if less than all Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial
redemption, the principal amount) of the particular Security or Securities to be redeemed,
(4) in case any Security is to
be redeemed in part only, the notice which relates to such Security shall state that on and after the Redemption Date, upon surrender of such Security, the holder will receive, without a charge, a new Security or Securities of authorized
denominations for the principal amount thereof remaining unredeemed,
57
(5) that on the Redemption Date the Redemption Price and accrued interest to the
Redemption Date payable as provided in Section 1106, if any, will become due and payable upon each such Security, or the portion thereof, to be redeemed and, if applicable, that interest thereon shall cease to accrue on and after said date,
(6) the Place or Places of Payment where such Securities, together in the case of Bearer Securities with all coupons
appertaining thereto, if any, maturing after the Redemption Date, are to be surrendered for payment of the Redemption Price and accrued interest, if any, or for conversion,
(7) that the redemption is for a sinking fund, if such is the case,
(8) that, unless otherwise specified in such notice, Bearer Securities of any series, if any, surrendered for redemption must
be accompanied by all coupons maturing subsequent to the date fixed for redemption or the amount of any such missing coupon or coupons will be deducted from the Redemption Price, unless security or indemnity satisfactory to the Company, the Trustee
for such series and any Paying Agent is furnished,
(9) if Bearer Securities of any series are to be redeemed and any
Registered Securities of such series are not to be redeemed, and if such Bearer Securities may be exchanged for Registered Securities not subject to redemption on this Redemption Date pursuant to Section 305 or otherwise, the last date, as
determined by the Company, on which such exchanges may be made,
(10) the CUSIP number of such Security, if any, and
(11) if applicable, that a Holder of Securities who desires to convert Securities for redemption must satisfy the requirements
for conversion contained in such Securities, the then existing conversion price or rate, the place or places where such Securities may be surrendered for conversion, and the date and time when the option to convert shall expire.
Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Companys
request, by the Trustee in the name and at the expense of the Company.
SECTION 1105. Deposit of Redemption Price. On or prior to
any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, which it may not do in the case of a sinking fund payment under Article Twelve, segregate and hold in trust
as provided in Section 1003) an amount of money in the currency or currencies, currency unit or units or composite currency or currencies in which the Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series) sufficient to pay on the Redemption Date the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities or portions thereof
which are to be redeemed on that date.
If any Securities called for redemption are converted, any money deposited with the Trustee or
with any Paying Agent or so segregated and held in trust for the redemption of such Security shall be paid to the Company upon Company Request or, if then held by the Company, shall be discharged from such trust.
SECTION 1106. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified in the currency or currencies, currency unit or units or composite
58
currency or currencies in which the Securities of such series are payable (except as otherwise specified pursuant to Section 301 for the Securities of such series) (together with accrued
interest, if any, to the Redemption Date), and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall, if the same were interest-bearing, cease to bear interest
and the coupons for such interest appertaining to any Bearer Securities so to be redeemed, except to the extent provided below, shall be void. Upon surrender of any such Security for redemption in accordance with said notice, together with all
coupons, if any, appertaining thereto maturing after the Redemption Date, such Security shall be paid by the Company at the Redemption Price, together with accrued interest, if any, to the Redemption Date; provided, however, that
installments of interest on Bearer Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable only at an office or agency located outside the United States (except as otherwise provided in Section 1002) and, unless
otherwise specified as contemplated by Section 301, only upon presentation and surrender of coupons for such interest; and provided further that except as otherwise provided with respect to Securities convertible into the
Companys Common Stock or Preferred Stock, installments of interest on Registered Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to
them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a
deduction shall have been made from the Redemption Price, such Holder shall be entitled to receive the amount so deducted; provided, however, that interest represented by coupons shall be payable only at an office or agency located
outside the United States (except as otherwise provided in Section 1002) and, unless otherwise specified as contemplated by Section 301, only upon presentation and surrender of those coupons.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium or Make-Whole
Amount, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Security.
SECTION 1107. Securities
Redeemed in Part. Any Registered Security which is to be redeemed only in part (pursuant to the provisions of this Article or of Article Twelve) shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Company shall execute and the Trustee
shall authenticate and deliver to the Holder of such Security without service charge a new Security or Securities of the same series, of any authorized denomination as requested by such Holder in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal of the Security so surrendered. If a Global Security is so surrendered, the Company shall execute and the Trustee shall authenticate and deliver to the depository, without service charge, a new Global
Security in a denomination equal to and in exchange for the unredeemed portion of the principal of the Global Security so surrendered.
59
ARTICLE TWELVE - SINKING FUNDS
SECTION 1201. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of
Securities of a series except as otherwise specified as contemplated by Section 301 for Securities of such series.
The minimum
amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a mandatory sinking fund payment, and any payment in excess of such minimum amount provided for by the terms of such
Securities of any series is herein referred to as an optional sinking fund payment. If provided for by the terms of any Securities of any series, the cash amount of any mandatory sinking fund payment may be subject to reduction as
provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities. The Company may, in satisfaction of all or any part of any
mandatory sinking fund payment with respect to the Securities of a series, (1) deliver Outstanding Securities of such series (other than any previously called for redemption) together in the case of any Bearer Securities of such series with all
unmatured coupons appertaining thereto and (2) apply as a credit Securities of such series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional
sinking fund payments pursuant to the terms of such Securities, as provided for by the terms of such Securities, or which have otherwise been acquired by the Company; provided that such Securities so delivered or applied as a credit have not
been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the applicable Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such
mandatory sinking fund payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund. Not less
than 60 days prior to each sinking fund payment date for Securities of any series, the Company will deliver to the Trustee an Officers Certificate specifying the amount of the next ensuing mandatory sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash in the currency or currencies, currency unit or units or composite currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the Securities of such series) and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 1202, and
the optional amount, if any, to be added in cash to the next ensuing mandatory sinking fund payment, and will also deliver to the Trustee any Securities to be so delivered and credited. If such Officers Certificate shall specify an optional
amount to be added in cash to the next ensuing mandatory sinking fund payment, the Company shall thereupon be obligated to pay the amount therein specified. Not less than 30 days before each such sinking fund payment date the Trustee shall select
the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in
Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN - REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article. Repayment of Securities of any series before their Stated Maturity at the option of Holders
thereof shall be made in accordance with the terms of such Securities, if any, and (except as otherwise specified by the terms of such series established pursuant to Section 301) in accordance with this Article.
60
SECTION 1302. Repayment of Securities. Securities of any series subject to repayment in
whole or in part at the option of the Holders thereof will, unless otherwise provided in the terms of such Securities, be repaid at a price equal to the principal amount thereof, together with interest, if any, thereon accrued to the Repayment Date
specified in or pursuant to the terms of such Securities. The Company covenants that on or prior to the Repayment Date it will deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 1003) an amount of money in the currency or currencies, currency unit or units or composite currency or currencies in which the Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series) sufficient to pay the principal (or, if so provided by the terms of the Securities of any series, a percentage of the principal) of, and (except if the Repayment Date shall be an Interest Payment
Date) accrued interest on, all the Securities or portions thereof, as the case may be, to be repaid on such date.
SECTION 1303.
Exercise of Option. Securities of any series subject to repayment at the option of the Holders thereof will contain an Option to Elect Repayment form on the reverse of such Securities. In order for any Security to be repaid at the
option of the Holder, the Trustee must receive at the Place of Payment therefor specified in the terms of such Security (or at such other place or places of which the Company shall from time to time notify the Holders of such Securities) not earlier
than 60 days nor later than 30 days prior to the Repayment Date (1) the Security so providing for such repayment together with the Option to Elect Repayment form on the reverse thereof duly completed by the Holder (or by the
Holders attorney duly authorized in writing) or (2) a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange, or the FINRA, or a commercial bank or trust company in the United States setting
forth the name of the Holder of the Security, the principal amount of the Security, the principal amount of the Security to be repaid, the CUSIP number, if any, or a description of the tenor and terms of the Security, a statement that the option to
elect repayment is being exercised thereby and a guarantee that the Security to be repaid, together with the duly completed form entitled Option to Elect Repayment on the reverse of the Security, will be received by the Trustee not later
than the fifth Business Day after the date of such telegram, telex, facsimile transmission or letter; provided, however, that such telegram, telex, facsimile transmission or letter shall only be effective if such Security and form duly
completed are received by the Trustee by such fifth Business Day. If less than the entire principal amount of such Security is to be repaid in accordance with the terms of such Security, the principal amount of such Security to be repaid, in
increments of the minimum denomination for Securities of such series, and the denomination or denominations of the Security or Securities to be issued to the Holder for the portion of the principal amount of such Security surrendered that is not to
be repaid, must be specified. The principal amount of any Security providing for repayment at the option of the Holder thereof may not be repaid in part if, following such repayment, the unpaid principal amount of such Security would be less than
the minimum authorized denomination of Securities of the series of which such Security to be repaid is a part. Except as otherwise may be provided by the terms of any Security providing for repayment at the option of the Holder thereof, exercise of
the repayment option by the Holder shall be irrevocable unless waived by the Company.
SECTION 1304. When Securities Presented for
Repayment Become Due and Payable. If Securities of any series providing for repayment at the option of the Holders thereof shall have been surrendered as provided in this Article and as provided by or pursuant to the terms of such Securities,
such Securities or the portions thereof, as the case may be, to be repaid shall become due and payable and shall be paid by the Company on the Repayment Date therein specified, and on and after such Repayment Date (unless the Company shall default
in the payment of such Securities on such Repayment Date) such Securities shall,
61
if the same were interest-bearing, cease to bear interest and the coupons for such interest appertaining to any Bearer Securities so to be repaid, except to the extent provided below, shall be
void. Upon surrender of any such Security for repayment in accordance with such provisions, together with all coupons, if any, appertaining thereto maturing after the Repayment Date, the principal amount of such Security so to be repaid shall be
paid by the Company, together with accrued interest, if any, to the Repayment Date; provided, however, that coupons whose Stated Maturity is on or prior to the Repayment Date shall be payable only at an office or agency located outside
the United States (except as otherwise provided in Section 1002) and, unless otherwise specified pursuant to Section 301, only upon presentation and surrender of such coupons; and provided further that, in the case of Registered
Securities, installments of interest, if any, whose Stated Maturity is on or prior to the Repayment Date shall be payable (but without interest thereon, unless the Company shall default in the payment thereof) to the Holders of such Securities, or
one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307.
If any Bearer Security surrendered for repayment shall not be accompanied by all appurtenant coupons maturing after the Repayment Date, such
Security may be paid after deducting from the amount payable therefor as provided in Section 1302 an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company
and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Security shall surrender to the Trustee or any Paying Agent any such
missing coupon in respect of which a deduction shall have been made as provided in the preceding sentence, such Holder shall be entitled to receive the amount so deducted; provided, however, that interest represented by coupons shall
be payable only at an office or agency located outside the United States (except as otherwise provided in Section 1002) and, unless otherwise specified as contemplated by Section 301, only upon presentation and surrender of those coupons.
If the principal amount of any Security surrendered for repayment shall not be so repaid upon surrender thereof, such principal amount
(together with interest, if any, thereon accrued to such Repayment Date) shall, until paid, bear interest from the Repayment Date at the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) set forth in such
Security.
SECTION 1305. Securities Repaid in Part. Upon surrender of any Registered Security which is to be repaid in part only,
the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge and at the expense of the Company, a new Registered Security or Securities of the same series, of any authorized
denomination specified by the Holder, in an aggregate principal amount equal to and in exchange for the portion of the principal of such Security so surrendered which is not to be repaid.
ARTICLE FOURTEEN - DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Applicability of Article; Companys Option to Effect Defeasance or Covenant Defeasance. If, pursuant to
Section 301, provision is made for either or both of (a) Defeasance of the Securities of or within a series under Section 1402 or (b) Covenant Defeasance of the Securities of or within a series under Section 1403, then the
provisions of such Section or Sections, as the case may be, together with the other provisions of this Article (with such modifications thereto as may be specified pursuant to Section 301 with respect to any Securities), shall be applicable to
such Securities and any coupons appertaining thereto, and the Company may at its option by Board Resolution, at any time, with respect to such Securities and any coupons appertaining thereto, elect to have Section 1402 (if applicable) or
Section 1403 (if applicable) be applied to such Outstanding Securities and any coupons appertaining thereto upon compliance with the conditions set forth below in this Article.
62
SECTION 1402. Defeasance and Discharge. Upon the Companys exercise of the above
option applicable to this Section with respect to any Securities of or within a series, the Company shall be deemed to have been discharged from its obligations with respect to such Outstanding Securities and any coupons appertaining thereto on the
date the conditions set forth in Section 1404 are satisfied (hereinafter, Defeasance). For this purpose, such Defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by such
Outstanding Securities and any coupons appertaining thereto, which shall thereafter be deemed to be Outstanding only for the purposes of Section 1405 and the other Sections of this Indenture referred to in clauses (A) and
(B) below, and to have satisfied all of its other obligations under such Securities and any coupons appertaining thereto and this Indenture insofar as such Securities and any coupons appertaining thereto are concerned (and the Trustee, at the
expense of the Company, shall execute such instruments reasonably requested by the Company acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (A) the rights of Holders of
such Outstanding Securities and any coupons appertaining thereto to receive, solely from the trust fund described in Section 1404 and as more fully set forth in such Section, payments in respect of the principal of (and premium or Make-Whole
Amount, if any) and interest, if any, on such Securities and any coupons appertaining thereto when such payments are due, (B) the Companys obligations with respect to such Securities under Sections 305, 306, 1002 and 1003, and the
Companys obligations under Section 606 hereof (C) the rights, powers, trusts, duties and immunities of the Trustee hereunder and (D) this Article. Subject to compliance with this Article Fourteen, the Company may exercise its
option under this Section notwithstanding the prior exercise of its option under Section 1403 with respect to such Securities and any coupons appertaining thereto.
SECTION 1403. Covenant Defeasance. Upon the Companys exercise of the above option applicable to this Section with respect to any
Securities of or within a series, the Company shall be released from its obligations under Sections 1004 to 1009, inclusive, and, if specified pursuant to Section 301, its obligations under any other covenant contained herein or in any
indenture supplemental hereto, with respect to such Outstanding Securities and any coupons appertaining thereto on and after the date the conditions set forth in Section 1404 are satisfied (hereinafter, Covenant Defeasance), and
such Securities and any coupons appertaining thereto shall thereafter be deemed to be not Outstanding for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection
with Sections 1004 to 1009, inclusive, or such other covenant, but shall continue to be deemed Outstanding for all other purposes hereunder. For this purpose, such Covenant Defeasance means that, with respect to such Outstanding
Securities and any coupons appertaining thereto, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such Section or such other covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such Section or such other covenant or by reason of reference in any such Section or such other covenant to any other provision herein or in any other document and such omission to comply shall not
constitute a default or an Event of Default under Section 501(4) or 501(8) or otherwise, as the case may be, but, except as specified above, the remainder of this Indenture and such Securities and any coupons appertaining thereto shall be
unaffected thereby.
SECTION 1404. Conditions to Defeasance or Covenant Defeasance. The following shall be the conditions to
application of Section 1402 or Section 1403 to any Outstanding Securities of or within a series and any coupons appertaining thereto:
(a) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements
of Section 607 who shall agree to comply with the
63
provisions of this Article Fourteen applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of such Securities and any coupons appertaining thereto, (1) an amount in such currency, currencies or currency unit in which such Securities and any coupons appertaining thereto are then specified as payable at Stated
Maturity, or (2) Government Obligations applicable to such Securities and coupons appertaining thereto (determined on the basis of the currency, currencies or currency unit in which such Securities and coupons appertaining thereto are then specified
as payable at Stated Maturity) which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment of principal of (and premium or Make-Whole
Amount, if any) and interest, if any, on such Securities and any coupons appertaining thereto, money in an amount, or (3) a combination thereof, in any case, in an amount, sufficient, without consideration of any reinvestment of such principal
and interest, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, (i) the principal of (and premium or Make-Whole Amount, if any) and interest, if any, on such Outstanding Securities and any coupons appertaining thereto on the Stated Maturity of such principal or
installment of principal or interest and (ii) any mandatory sinking fund payments or analogous payments applicable to such Outstanding Securities and any coupons appertaining thereto on the day on which such payments are due and payable in
accordance with the terms of this Indenture and of such Securities and any coupons appertaining thereto.
(b) Such Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound.
(c) No Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to such Securities
and any coupons appertaining thereto shall have occurred and be continuing on the date of such deposit or, insofar as Sections 501(6) and 501(7) are concerned, at any time during the period ending on the 91st day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until the expiration of such period).
(d) In the case of an election
under Section 1402, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of
execution of this Indenture, there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of such Outstanding Securities and any coupons
appertaining thereto will not recognize income, gain or loss for Federal income tax purposes as a result of such Defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been
the case if such Defeasance had not occurred.
(e) In the case of an election under Section 1403, the Company shall have delivered
to the Trustee an Opinion of Counsel to the effect that the Holders of such Outstanding Securities and any coupons appertaining thereto will not recognize income, gain or loss for Federal income tax purposes as a result of such Covenant Defeasance
and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred.
(f) The Company shall have delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the Defeasance under Section 1402 or the Covenant Defeasance under Section 1403 (as the case may be) have been complied with and an
64
Opinion of Counsel to the effect that either (i) as a result of a deposit pursuant to subsection (a) above and the related exercise of the Companys option under Section 1402
or Section 1403 (as the case may be), registration is not required under the Investment Company Act of 1940, as amended, by the Company, with respect to the trust funds representing such deposit or by the Trustee for such trust funds or
(ii) all necessary registrations under said Act have been effected.
(g) Notwithstanding any other provisions of this Section, such
Defeasance or Covenant Defeasance shall be effected in compliance with any additional or substitute terms, conditions or limitations which may be imposed on the Company in connection therewith pursuant to Section 301.
(h) The payment of amounts payable to the Trustee pursuant to this Indenture shall be paid or provided for to the reasonable satisfaction of
the Trustee.
SECTION 1405. Deposited Money and Government Obligations to Be Held in Trust; Other Miscellaneous Provisions. Subject
to the provisions of the last paragraph of Section 1003, all money and Government Obligations (or other property as may be provided pursuant to Section 301) (including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 1405, the Trustee) pursuant to Section 1404 in respect of any Outstanding Securities of any series and any coupons appertaining thereto shall be held in trust and applied by
the Trustee, in accordance with the provisions of such Securities and any coupons appertaining thereto and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Holders of such Securities and any coupons appertaining thereto of all sums due and to become due thereon in respect of principal (and premium or Make-Whole Amount, if any) and interest, but such money need not be
segregated from other funds except to the extent required by law.
Unless otherwise specified with respect to any Security pursuant to
Section 301, if, after a deposit referred to in Section 1404(a) has been made, (a) the Holder of a Security in respect of which such deposit was made is entitled to, and does, elect pursuant to Section 301 or the terms of such
Security to receive payment in a currency or currency unit other than that in which the deposit pursuant to Section 1404(a) has been made in respect of such Security, or (b) a Conversion Event occurs in respect of the currency or currency
unit in which the deposit pursuant to Section 1404(a) has been made, the indebtedness represented by such Security and any coupons appertaining thereto shall be deemed to have been, and will be, fully discharged and satisfied through the
payment of the principal of (and premium or Make-Whole Amount, if any), and interest, if any, on such Security as the same becomes due out of the proceeds yielded by converting (from time to time as specified below in the case of any such election)
the amount or other property deposited in respect of such Security into the currency or currency unit in which such Security becomes payable as a result of such election or Conversion Event based on the applicable market exchange rate for such
currency or currency unit in effect on the second Business Day prior to each payment date, except, with respect to a Conversion Event, for such currency or currency unit in effect (as nearly as feasible) at the time of the Conversion Event.
The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 1404 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of such Outstanding Securities and any coupons appertaining
thereto.
Anything in this Article to the contrary notwithstanding, subject to Section 606, the Trustee shall deliver or pay to the
Company from time to time upon Company Request any money or Government Obligations (or other property and any proceeds therefrom) held by it as provided in Section 1404 which,
65
in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect a Defeasance or Covenant Defeasance, as applicable, in accordance with this Article.
ARTICLE FIFTEEN - MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called. A meeting of Holders of Securities of any series may be called at any time and
from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of Securities of such series.
SECTION 1502. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of Securities of any series for any purpose specified in Section 1501, to be
held at such time and at such place as the Trustee shall determine. Notice of every meeting of Holders of Securities of any series, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such
meeting, shall be given, in the manner provided in Section 106, not less than 20 nor more than 180 days prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 25% in principal amount of the Outstanding
Securities of any series shall have requested the Trustee to call a meeting of the Holders of Securities of such series for any purpose specified in Section 1501, by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have made the first publication of the notice of such meeting within 20 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the
Company or the Holders of Securities of such series in the amount above specified, as the case may be, may determine the time and the place for such meeting and may call such meeting for such purposes by giving notice thereof as provided in
subsection (a) of this Section.
SECTION 1503. Persons Entitled to Vote at Meetings. To be entitled to vote at any meeting of
Holders of Securities of any series, a Person shall be (1) a Holder of one or more Outstanding Securities of such series, or (2) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding
Securities of such series by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders of Securities of any series shall be the Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the Company and its counsel.
SECTION 1504. Quorum;
Action. The Persons entitled to vote a majority in principal amount of the Outstanding Securities of a series shall constitute a quorum for a meeting of Holders of Securities of such series; provided, however, that if any action is
to be taken at such meeting with respect to a consent or waiver which this Indenture expressly provides may be given by the Holders of not less than a specified percentage in principal amount of the Outstanding Securities of a series, the Persons
entitled to vote such specified percentage in principal amount of the Outstanding Securities of such series shall constitute a quorum. In the absence of a quorum within 30 minutes after the time appointed for any such meeting, the meeting shall, if
convened at the request of Holders of Securities of such series, be dissolved. In any other case the meeting may be adjourned for a
66
period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at the reconvening of any such adjourned meeting,
such adjourned meeting may be further adjourned for a period of not less than 10 days; at the reconvening of any meeting adjourned or further adjourned for lack of a quorum, the Persons entitled to vote 25% in aggregate principal amount of the then
Outstanding Securities shall constitute a quorum for the taking of any action set forth in the notice of the original meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 1502(a), except that such
notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened.
Except as
limited by the proviso to Section 902, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted by the affirmative vote of the Persons entitled to vote a majority in
aggregate principal amount of the Outstanding Securities represented at such meeting; provided, however, that, except as limited by the proviso to Section 902, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which this Indenture expressly provides may be made, given or taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Securities of a
series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Securities of that
series.
Any resolution passed or decision taken at any meeting of Holders of Securities of any series duly held in accordance with this
Section shall be binding on all the Holders of Securities of such series and the related coupons, whether or not present or represented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504, if any action is to be taken at a meeting of Holders of Securities of any
series with respect to any request, demand, authorization, direction, notice, consent, waiver or other action that this Indenture expressly provides may be made, given or taken by the Holders of a specified percentage in principal amount of all
Outstanding Securities affected thereby, or of the Holders of such series and one or more additional series:
|
(i) |
there shall be no minimum quorum requirement for such meeting; and |
|
(ii) |
the principal amount of the Outstanding Securities of such series that vote in favor of such request, demand, authorization, direction, notice, consent, waiver or other action shall be taken into account in determining
whether such request, demand, authorization, direction, notice, consent, waiver or other action has been made, given or taken under this Indenture. |
SECTION 1505. Determination of Voting Rights; Conduct and Adjournment of Meetings.
(a) Notwithstanding any provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities of a series in regard to proof of the holding of Securities of such series and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities
shall be proved in the manner specified in Section 104 and the appointment of any proxy shall be proved in the manner specified in Section 104 or by having the signature of the Person executing the proxy witnessed or guaranteed by any
trust company, bank or banker authorized by Section 104 to certify to the holding of Bearer Securities. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without
the proof specified in Section 104 or other proof.
67
(b) The Trustee shall, by an instrument in writing appoint a temporary chairman of the meeting,
unless the meeting shall have been called by the Company or by Holders of Securities as provided in Section 1502(b), in which case the Company or the Holders of Securities of the series calling the meeting, as the case may be, shall in like
manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Securities of such series represented at
the meeting.
(c) At any meeting each Holder of a Security of such series or proxy shall be entitled to one vote for each $1,000
principal amount of the Outstanding Securities of such series held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the
chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly called pursuant to Section 1502 at which a quorum is present may be
adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Securities of such series represented at the meeting, and the meeting may be held as so adjourned without further notice.
SECTION 1506. Counting Votes and Recording Action of Meetings. The vote upon any resolution submitted to any meeting of Holders
of Securities of any series shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities of such series or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding
Securities of such series held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record, at least in duplicate, of the proceedings of each meeting of Holders of Securities of any Series shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the fact, setting forth a copy of the notice of the
meeting and showing that said notice was given as provided in Section 1502 and, if applicable, Section 1504. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy
shall be delivered to the Company and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein
stated.
ARTICLE SIXTEEN - SUBORDINATION OF SECURITIES
SECTION 1601. Agreement to Subordinate. Notwithstanding anything in this Indenture to the contrary (other than Article Four of this
Indenture), the Company covenants and agrees, and each Holder of a Security, by his acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article, the Indebtedness represented by the
Securities and the payment of any Obligations with respect to each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness.
68
SECTION 1602. Payment Over of Proceeds upon Dissolution, Etc. In the event of (a) any
insolvency or bankruptcy case or Proceeding, or any receivership, liquidation, reorganization or other similar case or Proceeding in connection therewith, relative to the Company or to its creditors, as such, or to its assets, or (b) any
liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or any other marshaling of assets and
liabilities of the Company, then and in any such event specified in (a), (b) or (c) above (each such event, if any, herein sometimes referred to as a Proceeding)
(1) the holders of Senior Indebtedness shall first be entitled to receive payment in full of all Obligations due or to become
due on or in respect of all Senior Indebtedness, or provision shall be made for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Indebtedness, before the Holders of the Securities are entitled
to receive any payment or distribution on account of principal of or premium, if any, or interest on or other Obligations in respect of the Securities or on account of any purchase, redemption or other acquisition of Securities by the Company or any
Subsidiary (individually and collectively, a Securities Payment), and
(2) any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or securities (other than Capital Stock or securities of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan
of reorganization or readjustment, the payment of which is subordinate, at least to the extent provided in this Article Sixteen with respect to the Securities, to the payment in full, without diminution or modification by such plan, of all Senior
Indebtedness), to which the Holders would be entitled except for the provisions of this Article Sixteen, shall be paid by the liquidating trustee or agent or other person making such a payment or distribution, directly to the holders of Senior
Indebtedness) (or their representative(s) or trustee(s) acting on their behalf), ratably according to the aggregate amounts remaining unpaid on account of the principal of or interest on and other amounts due on the Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness.
In the event that, notwithstanding the foregoing provisions of this Section 1602, the Trustee or the Holder of any Security shall have
received any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than Capital Stock or securities of the Company as reorganized or readjusted, or securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinate, at least to the extent provided in this Article with respect to the Securities, to the payment in full, without diminution or
modification by such plan, of Senior Indebtedness), before all Senior Indebtedness is paid in full or payment thereof provided for in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Indebtedness, such payment
or distribution shall be held in trust for the benefit of, and be paid over to, the holders of the Senior Indebtedness remaining unpaid (or their representative(s) or trustee(s) acting on their behalf), ratably as aforesaid, for application to the
payment of such Senior Indebtedness until such Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness.
The consolidation of the Company with, or the merger of the Company into, another Person or the liquidation or dissolution of the Company
following the conveyance or transfer of all or substantially all of its properties and assets as an entirety to another Person upon the terms and conditions set forth in Article Eight shall not be deemed a Proceeding for the purposes of this
Section 1602 if the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer such properties and assets as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions set forth in Article Eight.
SECTION 1603. No Payment When
Senior Indebtedness in Default. Anything in this Indenture to the contrary notwithstanding, no payment on account of principal of or redemption of, interest on or other
69
amounts due on the Securities, and no redemption, purchase, or other acquisition of the Securities, shall be made by or on behalf of the Company (i) unless full payment of amounts then due
for principal and interest and of all other obligations then due on all Senior Indebtedness has been made or duly provided for pursuant to the terms of the instrument governing such Senior Indebtedness, (ii) if, at the time of such payment,
redemption, purchase or other acquisition, or immediately after giving effect thereto, there shall exist under any Senior Indebtedness, or any agreement pursuant to which any Senior Indebtedness is issued, any default, which default shall not have
been cured or waived and which default shall have resulted in the full amount of such Senior Indebtedness being declared due and payable or (iii) if, at the time of such payment, redemption, purchase or other acquisition, the Trustee shall have
received written notice from the holder or holders of any Senior Indebtedness or their representative or representatives (a Payment Blockage Notice) that there exists under such Senior Indebtedness, or any agreement pursuant to which
such Senior Indebtedness is issued, any default, which default shall not have been cured or waived, permitting the holders thereof to declare the full amount of such Senior Indebtedness due and payable, but only for the period (the Payment
Blockage Period) commencing on the date of receipt of the Payment Blockage Notice and ending (unless earlier terminated by notice given to the Trustee by the Holders of such Senior Indebtedness) on the earlier of (A) the date on which
such event of default shall have been cured or waived or (B) 180 days from the receipt of the Payment Blockage Notice. Upon termination of a Payment Blockage Period, payments on account of principal of or interest on the Securities and
redemptions, purchases or other acquisitions may be made by or on behalf of the Company. Notwithstanding anything herein to the contrary, (A) only one Payment Blockage Notice may be given during any period of 360 consecutive days with respect
to the same event of default and any other events of default on the same issue of Senior Indebtedness existing and known to the person giving such notice at the time of such notice and (B) no new Payment Blockage Period may be commenced by the
holder or holders of the same issue of Senior Indebtedness or their representative or representatives during any period of 360 consecutive days unless all events of default which were the object of the immediately preceding Payment Blockage Notice,
and any other event of default on the same issue of Senior Indebtedness existing and known to the person giving such notice at the time of such notice, have been cured or waived.
In the event that, notwithstanding the provisions of this Section 1603, payments are made by or on behalf of the Company in contravention
of the provisions of this Section 1603, such payments shall be held by the Trustee, any Paying Agent or the Holders, as applicable, in trust for the benefit of, and shall be paid over to and delivered to, the holders of Senior Indebtedness or
their representative or the trustee under the indenture or other agreement (if any), pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective interests may appear, for application to the payment
of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in accordance with the terms of such Senior Indebtedness, after giving effect to any concurrent payment or distribution to or for the holders
of Senior Indebtedness.
The provisions of this Section shall not apply to any payment with respect to which Section 1602 would be
applicable.
SECTION 1604. Reliance by Senior Indebtedness on Subordination Provisions. Each Holder of any Security by his
acceptance thereof acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration for each holder of any Senior Indebtedness, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness, and such holder of Senior Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold or in continuing to hold such Senior Indebtedness.
70
SECTION 1605. Subrogation to Rights of Holders of Senior Indebtedness. Subject to the
payment in full of all Obligations due or to become due on or in respect of Senior Indebtedness, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Indebtedness, the Holders
of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this Article Sixteen to the rights of the holders of such Senior Indebtedness to
receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness until the principal of and premium, if any, and interest on the Securities shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article Sixteen, and no payments over pursuant
to the provisions of this Article Sixteen to the holders of Senior Indebtedness by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, be
deemed to be a payment or distribution by the Company to or on account of the Senior Indebtedness.
SECTION 1606. Provisions Solely to
Define Relative Rights. The provisions of this Article Sixteen are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Indebtedness on the other hand.
Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, the
obligation of the Company, which is absolute and unconditional (and which, subject to the rights under this Article Sixteen of the holders of Senior Indebtedness, is intended to rank equally with all other general obligations of the Company), to pay
to the Holders of the Securities the principal of and premium, if any, and interest on the Securities as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than the holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.
SECTION 1607. Trustee to Effectuate Subordination. Each Holder of a Security by his acceptance thereof authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to effectuate, as between the Holders of the Securities and the holders of Senior Indebtedness, the subordination provided in this Article Sixteen and appoints the Trustee
his attorney-in-fact for any and all such purposes, including, in the event of any dissolution, winding up or liquidation or reorganization under any applicable bankruptcy law of the Company (whether in bankruptcy, insolvency or receivership
Proceedings or otherwise), the timely filing of a claim for the unpaid balance of such Holders Securities in the form required in such Proceedings and the causing of such claim to be approved. If the Trustee does not file a claim or proof of
debt in the form required in such Proceedings prior to 30 days before the expiration of the time to file such claims or proofs, then the holders of Senior Indebtedness, jointly, or their representatives shall have the right to file an appropriate
claim for and on behalf of the Holders and to demand, sue for, collect, receive and receipt for the payments and distributions in respect of the Securities which are required to be paid or delivered to the holders of Senior Indebtedness as provided
in this Article Sixteen and to take all such other action in the name of the Holders or otherwise, as such holder of Senior Indebtedness or representative thereof may determine to be necessary or appropriate for the enforcement of the provisions of
this Article Sixteen.
SECTION 1608. No Waiver of Subordination Provisions. No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to
71
act, in good faith, by any such holder or any representative or trustee therefor, or by any non-compliance by the Company with the terms, provisions and covenants of this Indenture, regardless of
any knowledge thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time from time to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article Sixteen or the obligations hereunder of the Holders of the Securities to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or
terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is
outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any Person liable in any manner for the collection of Senior Indebtedness and settle
or compromise Senior Indebtedness (which, to the extent so settled and compromised, shall be deemed to have been paid in full for all purposes hereof); (iv) apply any amounts received to any liability of the Company owing to holders of Senior
Indebtedness; and (v) exercise or refrain from exercising any rights against the Company and any other Person.
SECTION 1609.
Notice to Trustee. The Company shall give prompt written notice to the Trustee of any default or event of default with respect to any Senior Indebtedness or of any fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities pursuant to the provisions of this Article Sixteen. Notwithstanding the provisions of this Article Sixteen or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder of
Senior Indebtedness or from any representative or trustee acting on their behalf; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Section 612, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if a Responsible Officer of the Trustee shall not have received the notice provided for in this Section at least three Business Days prior to the date upon which by the terms hereof any money
may become payable for any purpose (including, without limitation, the payment of the principal of and premium, if any, or interest on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power
and authority to receive such money and to apply the same to the purpose for which such money was received and shall not be affected by any notice to the contrary which may be received by it within three Business Days prior to such date. Nothing
contained in this Article Sixteen or any other Article of this Indenture or in any of the Securities shall prevent (a) the Company, at any time except during the pendency of any Proceeding, or under the conditions described in
Section 1603, from making payments at any time in respect of the Securities, or (b) the application by the Trustee of any money deposited with it hereunder to the payment of or on account of the Securities, or the retention thereof by any
Holder, if the Trustee did not have notice, as provided in this Section 1609, that such payment would have been prohibited by the provisions of this Article Sixteen.
Subject to the provisions of Section 612, the Trustee shall be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a representative or trustee therefor) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee therefor). In the event that the Trustee determines in
good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article Sixteen, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of Senior
72
Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this
Article Sixteen, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
SECTION 1610. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Company
referred to in this Article Sixteen, the Trustee, subject to the provisions of Section 612, and the Holders of the Securities shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which any
Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the
Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 1611. Trustee Not
Fiduciary for Holders of Senior Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness. Nothing contained in this Article Sixteen or elsewhere in this Indenture, or in any of the Securities,
shall prevent the application by the Trustee of any moneys which were deposited with it hereunder, prior to its receipt of written notice of facts which would prohibit such application, for the purpose of the payment of or on account of the
principal of or interest on, the Securities unless, prior to the date on which such application is made by the Trustee, the Trustee shall be charged with notice under Section 1609 hereof of the facts which would prohibit the making of such
application.
SECTION 1612. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustees Rights. The Trustee
in its individual capacity shall be entitled to all the rights set forth in this Article Sixteen with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing
in this Indenture shall deprive the Trustee of any of its rights as such holder. Nothing in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 606.
SECTION 1613. Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term Trustee as used in this Article Sixteen shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its
meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that Section 1612 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
ARTICLE SEVENTEEN - CONVERSION OF SECURITIES
SECTION 1701. Applicability of Article; Conversion Privilege and Conversion Price. Securities of any series which are convertible shall
be convertible in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for Securities of any series) in accordance with this Article Seventeen. Subject to and upon compliance with the provisions of this
Article Seventeen, at any time during the period specified in the Securities, at the option of the Holder thereof, any Security or any portion of the principal amount thereof which is $1,000 or an integral multiple of $1,000 may be converted at the
principal amount thereof, or of such portion thereof, into fully paid and nonassessable shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock of the
73
Company, at the Conversion Price, determined as hereinafter provided, in effect at the time of conversion. In case a Security or portion thereof is called for redemption, such conversion right in
respect of the Security or portion so called shall expire at the close of business on the Business Day immediately preceding the Redemption Date, unless the Company defaults in making the payment due upon redemption, in which case such conversion
right shall terminate on the date such default is cured.
The price at which shares of Common Stock shall be delivered upon conversion
(herein called the Conversion Price) of Securities of any series shall be specified in such Securities. The Conversion Price shall be adjusted in certain instances as provided in Section 1704.
In case the Company shall, by dividend or otherwise, declare or make a distribution on its Common Stock referred to in paragraph (4) of
Section 1704, the Holder of each Security, upon the conversion thereof pursuant to this Article Seventeen subsequent to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution and
prior to the effectiveness of the Conversion Price adjustment in respect of such distribution pursuant to paragraph (4) of Section 1704, shall be entitled to receive for each share of Common Stock into which such Security is converted, the
portion of the evidence of indebtedness, shares of Capital Stock or assets so distributed applicable to one share of Common Stock; provided, however, that, at the election of the Company (whose election shall be evidenced by a Board
Resolution filed with the Trustee) with respect to all Holders so converting, the Company may, in lieu of distributing to such Holder any portion of such distribution not consisting of cash or securities of the Company, pay such Holder an amount in
cash equal to the fair market value thereof (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution filed with the Trustee). If any conversion of a Security entitled to the
benefits described in the immediately preceding sentence occurs prior to the payment date for a distribution to holders of Common Stock which the Holder of the Security so converted is entitled to receive in accordance with the immediately preceding
sentence, the Company may elect (such election to be evidenced by a Board Resolution filed with the Trustee) to distribute to such Holder a due bill for the evidences of indebtedness, shares of Capital Stock or assets to which such Holder is so
entitled, provided that such due bill (i) meets any applicable requirements of the principal over-the-counter market or national securities exchange or other market on which the Common Stock is then traded, and (ii) requires payment or
delivery of such evidences of indebtedness or assets no later than the date of payment or delivery thereof to holders of Common Stock receiving such distribution.
SECTION 1702. Exercise of Conversion Privilege. In order to exercise the conversion privilege, the Holder of any Security to be
converted shall surrender such Security, duly endorsed or assigned to the Company or in blank, at any office or agency maintained by the Company pursuant to Section 1002, accompanied by written notice to the Company at such office or agency
that the Holder elects to convert such Security or, if less than the entire principal amount thereof is to be converted, the portion thereof to be converted and shall comply with any additional requirements set forth in such Security. Securities
surrendered for conversion during the period from the close of business on any Regular Record Date next preceding any Interest Payment Date to the opening of business on such Interest Payment Date shall (except for Securities the Maturity of which
is prior to such Interest Payment Date) be accompanied by payment in funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount of Securities being surrendered for conversion and
such interest shall be paid on such Interest Payment Date as provided in Section 307. Except as provided in the preceding sentence, no payment or adjustment shall be made upon any conversion on account of any interest accrued on the Securities
surrendered for conversion or on account of any dividends on the Common Stock issued upon conversion.
74
The Companys delivery to the Holder of the fixed number of shares of the Common Stock of
the Company (and any cash in lieu of any fractional share of Common Stock) into which the Security is convertible shall be deemed to satisfy the Companys obligation to pay the principal amount of the Security and all accrued interest and
original issue discount that has not previously been paid. The shares of Common Stock of the Company so delivered shall be treated as issued first in payment of accrued interest and original issue discount and then in payment of principal. Thus,
accrued interest and original issue discount shall be treated as paid, rather than canceled, extinguished or forfeited.
Securities shall
be deemed to have been converted immediately prior to the close of business on the day of surrender of such Securities for conversion in accordance with the foregoing provisions, and at such time the rights of the Holders of such Securities as
Holders shall cease, and the Person or Persons entitled to receive the Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such Common Stock at such time. As promptly as practicable on or after
the conversion date, the Company shall issue and shall deliver at such office or agency a certificate or certificates for the number of full shares of Common Stock issuable upon conversion, together with payment in lieu of any fraction of a share,
as provided in Section 1703.
In the case of any Security which is converted in part only, as promptly as practicable on or after the
conversion date the Company shall execute and the Trustee shall authenticate and make available for delivery to the Holder thereof (or the Depositary in the case of a Global Security), at the expense of the Company, a new Security or Securities, of
authorized denominations in aggregate principal amount equal to the unconverted portion of the principal amount of such Security.
SECTION
1703. Fractions of Shares. No fractional shares of Common Stock shall be issued upon conversion of Securities. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares of Common
Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any Security or Securities (or specified portions thereof), the Company shall pay a cash adjustment (rounded to the nearest cent) in respect of such fraction in an amount equal to the same fraction of the
Closing Price per share of the Common Stock on the day of conversion (or, if such day is not a Trading Day, on the Trading Day immediately preceding such day).
SECTION 1704. Adjustment of Conversion Price. The Conversion Price shall be subject to adjustment from time to time as follows:
(1) If the Company pays or makes a dividend or other distribution (a) on its Common Stock exclusively in Common Stock or
(b) on any other class of Capital Stock of the Company, which dividend or distribution includes Common Stock of the Company, the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution (the Dividend Record Date) shall be reduced by multiplying such Conversion Price by a fraction of which the numerator shall be the number of shares of Common Stock of
the Company outstanding at the close of business on the Dividend Record Date and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution. Such reduction shall become
effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this paragraph (1), the number of shares of Common Stock of the Company at any time outstanding shall not include
shares held in the treasury of the Company, but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company shall not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company.
75
(2) Subject to paragraph (6) of this Section, if the Company pays or makes a
dividend or other distribution on its Common Stock consisting exclusively of Short Term Rights (as defined below), or otherwise issues Short Term Rights to all holders of its Common Stock, the Conversion Price in effect at the opening of business on
the day following the record date for the determination of holders of Common Stock entitled to receive such Short Term Rights (the Rights Record Date) shall be reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock of the Company outstanding at the close of business on the Rights Record Date plus the number of shares of Common Stock of the Company which the aggregate of the offering price of the total
number of shares of Common Stock so offered for subscription or purchase would purchase at such current market price and the denominator shall be the number of shares of Common Stock of the Company outstanding at the close of business on the Rights
Record Date plus the number of shares of Common Stock so offered for subscription or purchase. Such reduction shall become effective immediately after the opening of business on the day following the Rights Record Date. For the purposes of this
paragraph (2), the number of shares of Common Stock of the Company at any time outstanding shall not include shares held in the treasury of the Company, but shall include shares issuable in respect of scrip certificates issued in lieu of fractions
of shares of Common Stock of the Company. The Company shall not issue any rights, options or warrants in respect of shares of its Common Stock held in the treasury of the Company. When used in this Section 1704, the term Short Term
Rights shall mean rights, warrants or options entitling the holders thereof (for a period commencing no earlier than the Rights Record Date and expiring not more than 45 days after the Rights Record Date) to subscribe for or purchase shares of
Common Stock of the Company at a price per share less than the current market price per share (determined as provided in paragraph (7) of this Section 1704) of the Common Stock of the Company on the Rights Record Date.
(3) In case outstanding shares of Common Stock of the Company shall be subdivided into a greater number of shares of Common
Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and, conversely, in case outstanding shares of Common Stock of the Company
shall be combined into a smaller number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective.
(4) Subject to the last sentence of this paragraph (4) of this Section, if the Company, by dividend or otherwise,
(a) distributes to all holders of its Common Stock evidences of its indebtedness, shares of any class of Capital Stock of the Company or other assets (other than cash dividends out of current or retained earnings), or (b) distributes to
substantially all holders of Common Stock rights or warrants to subscribe for securities (other than Short Term Rights to which paragraph (2) of this Section 1704 applies), the Conversion Price shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the current market price per share (determined as provided in paragraph (7) of this Section 1704) of the Common Stock of the Company on the Reference Date (as defined below)
less the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution filed with the Trustee), on the Reference Date, of
76
the portion of the evidences of indebtedness and other assets so distributed or of such subscription rights or warrants applicable to one share of Common Stock (collectively, the Market
Value of the Distribution) and the denominator shall be such current market price per share of the Common Stock of the Company. Such reduction shall become effective immediately prior to the opening of business on the day (the Reference
Date) following the later of (a) the date fixed for the payment of such distribution and (b) the date 20 days after notice relating to such distribution is required to be given pursuant to Section 1706(a). If the Board of
Directors determines the fair market value of any distribution for purposes of this paragraph (4) by reference to the actual or when issued trading market for any securities comprising such distribution, it must in doing so consider the prices
in such market over the same period used in computing the current market price per share pursuant to paragraph (7) of this Section 1704. In the event that, with respect to any distribution to which this paragraph (4) of
Section 1704 would otherwise apply, the Market Value of the Distribution is greater than the current market price per share of the Common Stock (such distribution being referred to herein as an Unadjusted Distribution), then the
adjustment provided by this paragraph (4) shall not be made and in lieu thereof the provisions of Section 1711 shall apply with respect to such Unadjusted Distribution.
(5) The Company may, but shall not be required to, make such reductions in the Conversion Price, in addition to those required
by paragraphs (1), (2), (3), and (4) of this Section 1704, as it considers to be advisable in order that any event treated for federal income tax purposes as a dividend of stock or stock rights shall not be taxable to the recipients. In
addition, the Company, from time to time, may decrease the Conversion Price by any amount and for any reason, temporarily or otherwise, including situations where the Board of Directors determines such decrease to be fair and appropriate with
respect to transactions in which holders of Common Stock have the right to participate.
(6) Rights or warrants issued or
distributed by the Company to all holders of its Common Stock entitling the holders thereof to subscribe for or purchase shares of Common Stock or Preferred Stock, which rights or warrants (i) are deemed to be transferred with such shares of
Common Stock, (ii) are not exercisable and (iii) are also issued or distributed in respect of future issuances of Common Stock, in each case in clauses (i) through (iii) until the occurrence of a specified event or events
(Trigger Events), shall for purposes of this Section 1704 not be deemed issued or distributed until the occurrence of the earliest Trigger Event. Each share of Common Stock issued upon conversion of Securities pursuant to this
Article Seventeen shall be entitled to receive the appropriate number of Common Stock purchase rights (the Rights), if any, and the certificates representing the Common Stock issued upon conversion shall bear such legends, if any.
Notwithstanding anything to the contrary in this Article Seventeen, there shall not be any adjustment to the Conversion Price as a result of (i) the distribution of separate certificates representing the Rights; (ii) the occurrence of
certain events entitling holders of Rights to receive, upon exercise thereof, Common Stock or other securities of the Company or other securities of another corporation; or (iii) the exercise of such Rights. No adjustment in the Conversion
Price need be made for rights to purchase or the sale of Common Stock pursuant to a Company plan providing for reinvestment of dividends or interest.
(7) For the purpose of any computation under paragraph (2), (4) or (5) of this Section 1704, the current
market price per share of Common Stock of the Company on any date shall be deemed to be the average of the daily Closing Prices for the 15 consecutive Trading Days selected by the Company commencing not more than 30 Trading Days before, and
ending not later than, the date in question.
77
(8) No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Conversion Price; provided, however, that any adjustments which by reason of this paragraph (8) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article Seventeen shall be made to the nearest cent or to the nearest one-hundredth of a share of Common Stock, as the case may be.
(9) Anything herein to the contrary notwithstanding, in the event the Company shall declare any dividend or distribution
requiring an adjustment in the Conversion Price hereunder and shall, thereafter and before the payment of such dividend or distribution to stockholders, legally abandon its plan to pay such dividend or distribution, the Conversion Price then in
effect hereunder, if changed to reflect such dividend or distribution, shall upon the legal abandonment of such plan be changed to the Conversion Price which would have been in effect at the time of such abandonment (after giving effect to all other
adjustments not so legally abandoned pursuant to the provisions of this Article Seventeen) had such dividend or distribution never been declared.
(10) Notwithstanding any other provision of this Section 1704, no adjustment to the Conversion Price shall reduce the
Conversion Price below the then par value per share of the Common Stock of the Company, and any such purported adjustment shall instead reduce the Conversion Price to such par value. Notwithstanding the foregoing sentence, the Company hereby
covenants that it will from time to time take all such action as may be required to assure that the par value per share of the Common Stock is at all times equal to or less than the Conversion Price.
(11) In the event that this Article Seventeen requires adjustments to the Conversion Price under more than one of paragraphs
(1), (2), (3) or (4) of this Section 1704, and the record or effective dates for the transaction giving rise to such adjustments shall occur on the same date, then such adjustments shall be made by applying (to the extent they are
applicable), first, the provisions of paragraph (3) of this Section 1704, second, the provisions of paragraph (1) of this Section 1704, third, the provisions of paragraph (4) of this Section 1704 and, fourth, the
provisions of paragraph (2) of this Section 1704. Anything herein to the contrary notwithstanding, no single event shall require or result in duplicative adjustments in the Conversion Price pursuant to this Section 1704. After an
adjustment to the Conversion Price under this Article Seventeen, any subsequent event requiring an adjustment under this Article Seventeen shall cause an adjustment to the Conversion Price as so adjusted. If, after an adjustment, a Holder of a
Security upon conversion of such Security receives shares of two or more classes of Capital Stock of the Company, the Conversion Price shall thereafter be subject to adjustment upon the occurrence of an action taken with respect to any such class of
Capital Stock as is contemplated by this Article Seventeen with respect to the Common Stock in this Article Seventeen.
SECTION 1705.
Notice of Adjustments of Conversion Price. Whenever the Conversion Price is adjusted as herein provided:
(1) the
Company shall compute the adjusted Conversion Price in accordance with Section 1704 or Section 1711 and shall prepare an Officers Certificate setting forth the adjusted Conversion Price and showing in reasonable detail the facts upon
which such adjustment is based, and such certificate shall forthwith be filed (with a copy to the Trustee) at each office or agency maintained for the purpose of conversion of any Securities pursuant to Section 1002; and
(2) a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall
forthwith be required, and as soon as practicable after it is required, such notice shall be mailed by the Company to all Holders at their last addresses as they shall appear in the Security Register.
78
SECTION 1706. Notice of Certain Corporate Action. In case:
(1) the Company shall take any action that would require a Conversion Price adjustment pursuant to Section 1704 or
Section 1711; or
(2) there shall occur any reclassification of the Common Stock of the Company (other than a
subdivision or combination of its outstanding shares of Common Stock), or any consolidation or merger to which the Company is a party, or the sale, transfer or lease of all or substantially all of the assets of the Company and for which approval of
any stockholders of the Company is required; or
(3) there shall occur the voluntary or involuntary dissolution,
liquidation or winding up of the Company, then the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of Securities pursuant to Section 1002, and shall cause to be mailed to all Holders at their
last addresses as they shall appear in the Security Register, at least 10 days prior to the applicable record, effective or expiration date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of
any dividend, distribution or granting of rights, warrants or options, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights, options or warrants are to
be determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and, if applicable, the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
SECTION 1707. Company to Reserve Common Stock. The Company shall at all times reserve and keep available, free from preemptive rights,
out of its authorized but unissued Common Stock, for the purpose of effecting the conversion of Securities, a number of shares of Common Stock for the conversion of all outstanding Securities of any series which is convertible into Common Stock.
SECTION 1708. Taxes on Conversion. The Company will pay any and all taxes that may be payable in respect of the issue or delivery
of shares of Common Stock on conversion of Securities pursuant hereto. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name
other than that of the Holder of the Security or Securities to be converted, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Company the amount of any such tax, or has established to the
satisfaction of the Company that such tax has been paid.
SECTION 1709. Covenants as to Common Stock. The Company covenants that
all shares of Common Stock which may be issued upon conversion of Securities will upon issue be duly and validly issued, fully paid and nonassessable, free of preemptive or any similar rights, and, except as provided in Section 1708, the
Company will pay all taxes, liens and charges with respect to the issue thereof.
The Company will endeavor promptly to comply with all
Federal and state securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Securities, if any, and will list or cause to have quoted such shares of Common Stock on each national securities exchange or in the
over-the-counter market or such other market on which the Common Stock is then listed or quoted.
79
SECTION 1710. Cancellation of Converted Securities. All Securities delivered for
conversion shall be delivered to the Trustee to be cancelled by or at the direction of the Trustee, which shall dispose of the same as provided in Section 309.
SECTION 1711. Provisions in Case of Consolidation, Merger or Sale of Assets; Special Distributions. If any of the following shall
occur, namely: (i) any reclassification or change of outstanding shares of Common Stock issuable upon conversion of Securities (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), (ii) any consolidation or merger to which the Company is a party other than a merger in which the Company is the continuing corporation and which does not result in any reclassification of, or change
(other than a change in name, or par value, or from par value to no par value, or from no par value to par value or as a result of a subdivision or combination) in, outstanding shares of Common Stock or (iii) any sale or conveyance of all or
substantially all of the property or business of the Company as an entirety, then the Person formed by such consolidation or resulting from such merger or which acquires such properties or assets, as the case may be, shall as a condition precedent
to such transaction execute and deliver to the Trustee a supplemental indenture providing that the Holder of each Security then outstanding shall have the right thereafter, during the period such Security shall be convertible as specified in
Section 1701, to convert such Security only into the kind and amount of securities, cash and other property receivable, if any, upon such consolidation, merger, sale, transfer or lease by a holder of the number of shares of Common Stock of the
Company into which such Security might have been converted immediately prior to such consolidation, merger, sale, transfer or lease; provided that the kind and amount of securities, cash and other property so receivable shall be determined on the
basis of the following assumptions. The holder of Common Stock referred to in the foregoing sentence:
(1) is not
(a) a Person with which the Company consolidated, (b) a Person into which the Company merged or which merged into the Company, or (c) a Person to which such sale, transfer or lease was made (any Person described in the foregoing
clauses (a), (b), or (c), hereinafter referred to as a Constituent Person), or (d) an Affiliate of a Constituent Person; and
(2) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, sale, transfer or lease (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale transfer or lease is not the same for each share of
Common Stock of the Company in respect of which such rights of election shall not have been exercised, then for the purpose of this Section 1711 the kind and amount of securities, cash and other property receivable upon such consolidation,
merger, sale, transfer or lease shall be deemed to be the kind and amount so receivable per share by a plurality of such shares of Common Stock).
Such supplemental indenture shall provide for adjustments which, for events subsequent to the effective date of such supplemental indenture,
shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article Seventeen. If, in the case of any such consolidation, merger, sale transfer or lease the stock or other securities and property (including cash)
receivable thereupon by a holder of Common Stock includes shares of stock or other securities and property of a corporation other than the successor or purchasing corporation, as the case may be, in such consolidation, merger, sale, transfer or
lease then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the Holders of the Securities as the Board of Directors of the Company shall reasonably
consider necessary by reason of the foregoing. The above provisions of this Section 1711 shall similarly apply to successive consolidations, mergers, sales, transfers or leases.
80
In the event the Company shall execute a supplemental indenture pursuant to this
Section 1711, the Company shall promptly file with the Trustee an Officers Certificate briefly stating the reasons therefor, the kind or amount of shares of stock or securities or property (including cash) receivable by Holders of the
Securities upon the conversion of their Securities after any such reclassification, change, consolidation, merger, sale, transfer or lease and any adjustment to be made with respect thereto.
If the Company makes a distribution to all holders of its Common Stock that constitutes an Unadjusted Distribution pursuant to the last
sentence of paragraph (4) of Section 1704, then, from and after the record date for determining the holders of Common Stock entitled to receive such distribution (the Distribution Record Date), a Holder of a Security who
converts such Security in accordance with the provisions of this Indenture shall, upon conversion, be entitled to receive, in addition to the shares of Common Stock into which the Security is convertible, the kind and amount of evidences of
indebtedness, shares of Capital Stock, or other assets or subscription rights or warrants, as the case may be, comprising the distribution that such Holder would have received if such Holder had converted the Security immediately prior to the
Distribution Record Date.
SECTION 1712. Trustee Adjustment Disclaimer; Company Determination Final. The Trustee has no duty to
determine when an adjustment under this Article Seventeen should be made, how it should be made or what it should be. The Trustee has no duty to determine whether a supplemental indenture under Section 1711 need be entered into or whether any
provisions of any supplemental indenture are correct. The Trustee shall not be accountable for and makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities. The Trustee shall not be
responsible for the Companys failure to comply with this Article Seventeen. Any determination that the Company or the Board of Directors must make pursuant to this Article Seventeen is conclusive, absent manifest error.
SECTION 1713. When No Adjustment Required. Except as expressly set forth in Section 1704, no adjustment in the Conversion Price
shall be made because the Company issues, in exchange for cash, property or services, shares of its Common Stock, or any securities convertible into or exchangeable for shares of its Common Stock, or securities (including warrants, rights and
options) carrying the right to subscribe for or purchase shares of its Common Stock or such convertible or exchangeable securities.
(1) Notwithstanding anything herein to the contrary, no adjustment in the Conversion Price shall be made pursuant to
Section 1704 in respect of any dividend or distribution if the Holders may participate therein (on a basis to be determined in good faith by the Board of Directors) and receive the same consideration they would have received if they had
converted the Securities immediately prior to the record date with respect to such dividend or distribution.
SECTION 1714. Equivalent
Adjustments. In the event that, as a result of an adjustment made pursuant to Section 1704 above, the holder of any Security thereafter surrendered for conversion shall become entitled to receive any shares of Capital Stock of the Company
other than shares of its Common Stock, thereafter the Conversion Price of such other shares so receivable upon conversion of any Securities shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to Common Stock contained in this Article Seventeen.
81
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as of the day and year first above written.
|
|
|
LOCAL CORPORATION |
|
|
By: |
|
|
Name: |
|
|
Title: |
|
|
|
U.S. BANK NATIONAL ASSOCIATION, as Trustee |
|
|
By: |
|
|
Name: |
|
|
Title: |
|
|
82
EXHIBIT A
FORM OF REDEEMABLE OR NON-REDEEMABLE SUBORDINATED SECURITY
[Face of Security]
[If the Holder of this
Security (as indicated below) is The Depository Trust Company (DTC) or a nominee of DTC, this Security is a Global Security and the following two legends apply:
Unless this Security is presented by an authorized representative of The Depository Trust Company a New York corporation (DTC) to the Company
or its agent for registration of transfer, conversion, exchange or payment, and such Security issued is registered in the name of Cede & Co., or in such other name as requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, inasmuch as the registered owner hereof,
Cede & Co., has an interest herein.
Unless and until this Security is exchanged in whole or in part for Securities in certificated form,
this Security may not be transferred except as a whole by DTC to a nominee thereof or by a nominee thereof to DTC or another nominee of DTC or by DTC or any such nominee to a successor of DTC or a nominee of such successor.]
[If this Security is an Original Issue Discount Security, insert FOR PURPOSES OF SECTION 1273 and 1275 OF THE UNITED STATES INTERNAL REVENUE
CODE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THIS SECURITY IS % OF ITS PRINCIPAL AMOUNT, THE ISSUE DATE IS
, 20 , AND THE YIELD TO MATURITY IS %. THE METHOD USED TO DETERMINE THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT APPLICABLE TO THE SHORT ACCRUAL PERIOD OF , 20 TO
, 20 , IS % OF THE PRINCIPAL AMOUNT OF THIS SECURITY.]
A-1
LOCAL CORPORATION
[Designation of Series]
CUSIP No.
LOCAL CORPORATION, a
Delaware corporation (herein referred to as the Company, which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to
or
registered assigns the principal sum of Dollars on (the Stated Maturity Date) [or insert date
fixed for earlier redemption (the Redemption Date, and together with the Stated Maturity Date with respect to principal repayable on such date, the Maturity Date.)]
[If the Security is to bear interest prior to Maturity, insert and to pay interest thereon from
or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on
and in each year (each, an Interest Payment Date), commencing
, at the rate of % per annum, until the principal hereof is paid or duly provided for. The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in such Indenture, be paid to the Holder in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which
shall be the or (whether or not a Business Day), as the case may be, next preceding such Interest Payment
Date [at the office or agency of the Company maintained for such purpose; provided, however, that such interest may be paid, at the Companys option, by mailing a check to such Holder at its registered address or by transfer of
funds to an account maintained by such Holder within the United States]. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date, and may be paid to the Holder in
whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this series not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any over-the-counter market or securities exchange on which the
Securities of this series may be quoted or listed, and upon such notice as may be required by such market or exchange, all as more fully provided in the Indenture. Interest will be computed on the basis of a 360-day year of twelve 30-day months.]
[If the Security is not to bear interest prior to Maturity, insert The principal of this Security shall not bear interest except in the
case of a default in payment of principal upon acceleration, upon redemption or at the [Stated] Maturity Date and in such case the overdue principal of this Security shall bear interest at the rate of % per annum (to the
extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such default in payment to the date payment of such principal has been made or duly provided for. Interest on any overdue principal shall be
payable on demand. Any such interest on any overdue principal that is not so paid on demand shall bear interest at the rate of % per annum (to the extent that the payment of such interest shall be legally enforceable), which
shall accrue from the date of such demand for payment to the date payment of such interest has been made or duly provided for, and such interest shall also be payable on demand.]
The principal of this Security payable on the Stated Maturity Date [or the principal of, premium or Make-Whole Amount, if any, and, if the Redemption Date is
not an Interest Payment Date, interest on this
A-2
Security payable on the Redemption Date] will be paid against presentation of this Security at the office or agency of the Company maintained for that purpose in
, in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts.
Interest payable on this Security on any Interest Payment Date and on the [Stated] Maturity Date [or Redemption Date, as the case may be,] will include
interest accrued from and including the next preceding Interest Payment Date in respect of which interest has been paid or duly provided for (or from and including , if no
interest has been paid on this Security) to but excluding such Interest Payment Date or the [Stated] Maturity Date [or Redemption Date, as the case may be.] If any Interest Payment Date or the [Stated] Maturity Date or [Redemption Date] falls on a
day that is not a Business Day, as defined below, principal, premium or Make-Whole Amount, if any, and/or interest payable with respect to such Interest Payment Date or [Stated] Maturity Date [or Redemption Date, as the case may be,] will be paid on
the next succeeding Business Day with the same force and effect as if it were paid on the date such payment was due, and no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date or [Stated] Maturity
Date [or Redemption Date, as the case may be.] Business Day means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in The City of New York are required or authorized by
law, regulation or executive order to close.
[If this Security is a Global Security, insert All payments of principal, premium or
Make-Whole Amount, if any, and interest in respect of this Security will be made by the Company in immediately available funds.]
Reference is hereby made
to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the Certificate of Authentication hereon has been executed by the Trustee by manual signature of one of its authorized signatories, this Security shall
not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed under its facsimile corporate seal.
|
|
|
|
|
|
|
|
|
Dated: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOCAL CORPORATION |
|
|
|
|
|
|
|
|
|
|
|
By: |
|
|
|
|
|
|
|
|
|
|
Name: |
|
|
|
|
|
|
|
|
Title: |
Attest: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secretary |
|
|
|
|
|
|
|
|
A-3
[Reverse of Security]
LOCAL CORPORATION
This Security is one of a
duly authorized issue of securities of the Company (herein called the Securities), issued and to be issued in one or more series under an Indenture, dated as of ,
2015 (herein called the Indenture) between the Company and U.S. Bank National Association, as Trustee (herein called the Trustee, which term includes any successor trustee under the Indenture with respect to the series
of which this Security is a part), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and
the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the duly authorized series of Securities designated on the face hereof (collectively, the
Securities), [if applicable, insert and the aggregate principal amount of the Securities to be issued under such series is limited to $ (except
for Securities authenticated and delivered upon transfer of, or in exchange for, or in lieu of other Securities).] All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
If an Event of Default, as defined in the Indenture, shall occur and be continuing, the principal of the Securities of this series may be declared due and
payable in the manner and with the effect provided in the Indenture.
[If applicable, insert The Securities may not be redeemed prior to the
Stated Maturity Date.]
[If applicable, insert The Securities are subject to redemption [ (l) (If applicable, insert on in any
year commencing with the year and ending with the year through operation of the sinking fund for this
series at a Redemption Price equal to 100% of the principal amount, and (2) ] [If applicable, insert at any time [on or after
], as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the
principal amount):
If redeemed on or before , % and if
redeemed during the 12-month period beginning of the years indicated at the Redemption Prices indicated below.
|
|
|
|
|
|
|
Year |
|
Redemption Price |
|
Year |
|
Redemption Price |
|
|
|
|
|
|
|
and thereafter at a Redemption Price equal to % of the principal amount, together in the case of any
such redemption [If applicable, insert (whether through operation of the sinking fund or otherwise)] with accrued interest to the Redemption Date; provided, however, that installments of interest on this Security whose
Stated Maturity is on or prior to such Redemption Date will be payable to the Holder of this Security, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.]
[If applicable, insert The Securities are subject to redemption (1) on
in any year commencing with the year and ending with the year
through
A-4
operation of the sinking fund for this series at the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the
table below, and (2) at any time [on or after ], as a whole or in part, at the election of the Company, at the Redemption
Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning
of the years indicated,
|
|
|
|
|
Year |
|
Redemption Price for Redemption Through Operation of the Sinking Fund |
|
Redemption Price for Redemption Otherwise Than Through Operation of the Sinking Fund |
|
|
|
|
|
and thereafter at a Redemption Price equal to % of the principal amount, together in the case of any
such redemption (whether through operation of the sinking fund or otherwise) with accrued interest to the Redemption Date; provided, however, that installments of interest on this Security whose Stated Maturity is on or prior to such Redemption Date
will be payable to the Holder of this Security, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert Notwithstanding the foregoing, the Company may not, prior to
, redeem any Securities as contemplated by [Clause (2) of] the preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly
or indirectly, of moneys borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than % per annum.]
[If applicable, insert The sinking fund for the Securities provides for the redemption on
in each year, beginning with the year and ending with the year
, of [not less than] $ ] [(mandatory sinking fund) and not more than
$ ] aggregate principal amount of the Securities. [The Securities acquired or redeemed by the Company otherwise than through [mandatory] sinking fund payments may be
credited against subsequent [mandatory] sinking fund payments otherwise required to be made in the [describe order] order in which they become due.]]
Notice of redemption will be given by mail or electronic transmission to Holders of Securities, not less than 30 nor more than 60 days prior
to the Redemption Date, all as provided in the Indenture.
In the event of redemption of this Security in part only, a new Security or
Securities for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof.
[If
applicable, insert conversion provisions set forth in any Board Resolution or indenture supplemental to the Indenture.]
The Indenture
permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority of the aggregate principal amount of all Securities issued under the Indenture at the time Outstanding and affected thereby. The Indenture also contains provisions permitting the
Holders of not less than a majority of the aggregate principal amount of the Outstanding Securities, on behalf of the Holders of all such Securities, to waive compliance by the Company with certain provisions
A-5
of the Indenture. Furthermore, provisions in the Indenture permit the Holders of not less than a majority of the aggregate principal amount, in certain instances, of the Outstanding Securities of
any series to waive, on behalf of all of the Holders of Securities of such series, certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and other Securities issued upon the registration of transfer hereof or conversion or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this
Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of (and premium or Make-Whole Amount, if any) and interest on this Security at the times, places and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein [and herein] set forth, the transfer of this Security is registrable
in the Security Register of the Company upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of (and premium or Make-Whole Amount, if any) and interest on this Security
are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or by his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein [and herein] set forth, this Security is exchangeable for a like
aggregate principal amount of Securities of different authorized denominations but otherwise having the same terms and conditions, as requested by the Holder hereof surrendering the same.
This Security is subordinated to the prior payment in full in cash of Senior Indebtedness to the extent set forth in Article Sixteen of the
Indenture.
The Securities of this series are issuable only in registered form [without coupons] in denominations of
$ and any integral multiple thereof.
No service charge shall
be made for any such registration of transfer or conversion or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith, Prior to due presentment of this Security
for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment
of the principal of or premium or Make-Whole Amount, if any, or the interest on this Security, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against
any past, present or future stockholder, employee, officer or director, as such, of the Company or of any successor, either directly or through the Company or any successor, whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.
The Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in such State.
A-6
EXHIBIT B
FORMS OF CERTIFICATION
EXHIBIT
B-1
FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED TO RECEIVE BEARER
SECURITY OR TO OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or
sufficient description of Securities to be delivered]
This is to certify that, as of the date hereof, and except as set forth below, the
above-captioned Securities held by you for our account (i) are owned by person(s) that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to
United States Federal income taxation regardless of its source (United States person(s)), (ii) are owned by United States person(s) that are (a) foreign branches of United States financial institutions (financial institutions,
as defined in United States Treasury Regulations Section 2.165-12(c)(1)(v) are herein referred to as financial institutions) purchasing for their own account or for resale, or (b) United States person(s) who acquired the
Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial
institution hereby agrees, on its own behalf or through its agent, that you may advise Local Corporation or its agent that such financial institution will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the United
States Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and, in addition, if the owner is a United States or foreign financial institution described in clause (iii) above (whether or not also described in clause (i) or (ii)), this is to further
certify that such financial institution has not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.
As used herein, United States means the United States of America (including the States and the District of Columbia); and its
possessions include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex or by telecopy on or prior to the date on which you intend to submit your certification
relating to the above-captioned Securities held by you for our account in accordance with your operating procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that
this certification applies as of such date.
This certificate excepts and does not relate to [U.S.$] of such interest in the
above-captioned Securities in respect of which we are not able to certify and as to which we understand an exchange for an interest in a permanent Global Security or an exchange for and delivery of definitive Securities (or, if relevant, collection
of any interest) cannot be made until we do so certify.
We understand that this certificate may be required in connection with certain
tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate or a copy thereof to
any interested party in such proceedings.
B-1
Dated:
[To be dated no earlier than the 15th day prior to (i) the Exchange Date or (ii) the relevant Interest Payment Date occurring prior
to the Exchange Date, as applicable]
|
[Name of Person Making Certification] |
|
|
(Authorized Signature) |
Name: |
Title: |
B-2
EXHIBIT B-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR AND CLEARSTREAM S.A. IN CONNECTION WITH
THE EXCHANGE OF A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or
sufficient description of Securities to be delivered]
This is to certify that, based solely on written certifications that we have
received in writing, by tested telex or by electronic transmission from each of the persons appearing in our records as persons entitled to a portion of the principal amount set forth below (our Member Organizations) substantially in the
form attached hereto, as of the date hereof, [U.S.$] principal amount of the above-captioned Securities (i) is owned by person(s) that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any
estate or trust the income of which is subject to United States Federal income taxation regardless of its source (United States person(s)), (ii) is owned by United States person(s) that are (a) foreign branches of United States
financial institutions (financial institutions, as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v) are herein referred to as financial institutions) purchasing for their own account or for resale, or (b) United
States person(s) who acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (a) or (b), each
such financial institution has agreed, on its own behalf or through its agent, that we may advise Local Corporation or its agent that such financial institution will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) is owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and, to the further effect, that financial institutions described in clause (iii) above (whether or not also described in clause (i) or (ii)) have certified that they have not acquired the
Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.
As used herein, United States means the United States of America (including the States and the District of Columbia); and its
Possessions include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.
We further certify that (i) we are not making available herewith for exchange (or, if relevant, collection of any interest) any portion
of the temporary Global Security representing the above-captioned Securities excepted in the above-referenced certificates of Member Organizations and (ii) as of the date hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member Organizations with respect to any portion of the part submitted herewith for exchange (or, if relevant, collection of any interest) are no longer true and cannot be relied upon as
of the date hereof.
We understand that this certification is required in connection with certain tax legislation in the United States. If
administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate or a copy thereof to any interested party in such
proceedings.
Dated:
[To be dated no
earlier than the Exchange Date or the relevant Interest Payment Date occurring prior to the Exchange Date, as applicable]
1
[ , as Operator of
the Euroclear System] [Clearstream Banking Luxembourg]
B-2
Exhibit 4.2
LOCAL CORPORATION
TO
U.S. BANK NATIONAL ASSOCIATION, as Trustee
FORM OF
[FIRST][SECOND] SUPPLEMENTAL INDENTURE TO
INDENTURE DATED MARCH [ ], 2015
(SUBORDINATED DEBT SECURITIES)
Dated as of March [ ], 2015
Series [A][B]
Senior Convertible Notes
LOCAL CORPORATION
[FIRST][SECOND] SUPPLEMENTAL INDENTURE TO
INDENTURE DATED MARCH [ ], 2015
(SUBORDINATED DEBT SECURITIES)
SERIES [A][B] SENIOR SUBORDINATED CONVERTIBLE NOTES
[FIRST][SECOND] SUPPLEMENTAL INDENTURE, dated as of March [ ], 2015 (this [First][Second] Supplemental
Indenture), between LOCAL CORPORATION, a Delaware corporation (the Company), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States, as Trustee (the
Trustee).
RECITALS
A. The Company has heretofore executed and delivered to the Trustee an Indenture, dated as of March [ ], 2015,
(the Indenture), providing for the issuance from time to time of Securities (as defined in the Indenture) by the Company.
B. Section 301 of the Indenture provides for various matters with respect to any series of Securities issued under the Indenture to be
established in an indenture supplemental to the Indenture.
C. Section 901(7) of the Indenture provides for the Company and the
Trustee to enter into an indenture supplemental to the Indenture without the consent of Holders of Securities in order to establish the form or terms of Securities of any series and any related coupons as permitted or contemplated by Sections 201
and 301 of the Indenture.
D. In accordance with that certain Securities Purchase Agreement, dated March 9, 2015 (the
Securities Purchase Agreement), by and among the Company and the investors party thereto (the Investors), the Company has agreed to sell to the Investors, and the Investors have agreed to purchase, at the
Closing (as defined in the Securities Purchase Agreement) subject to the satisfaction of certain terms and conditions set forth therein), in accordance with the Indenture and the Supplemental Indentures (as defined below)
(i) (A) $4,568,056 in aggregate principal amount of Series A Notes (as defined below) and (B) Warrants (as defined in the Securities Purchase Agreement) to purchase Common Stock (as defined in the Securities Purchase Agreement) of the
Company, to be issued in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the 1933 Act) and Rule 506(b) of Regulation D (Regulation
D) as promulgated by the United States Securities and Exchange Commission (the SEC) under the 1933 Act and (ii) $4.75 million in aggregate principal amount of Series B Notes (as defined below), to be issued pursuant
to the Companys Registration Statement on Form S-3 (File number 333-196429) (the Registration Statement), at the Closing (as defined in the Securities Purchase Agreement).
E. The Company hereby desires to supplement the Indenture pursuant to this [First][Second] Supplemental Indenture to set forth the terms and
conditions of the Series [A][B] to be issued in accordance herewith.
1
NOW, THEREFORE, THIS [FIRST][SECOND] SUPPLEMENTAL INDENTURE WITNESSETH, for and in consideration
of the premises and the issuance of the series of Securities provided for herein, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities of such series, as follows:
ARTICLE I
RELATION TO INDENTURE;
DEFINITIONS
Section 1.1. RELATION TO INDENTURE; HOLDERS DEEMED TO BE BOUND. This [First][Second] Supplemental Indenture constitutes
an integral part of the Indenture. All references herein to the Indenture shall mean the Indenture, as amended and supplemented by this [First][Second] Supplemental Indenture. The holders of Series [A][B] Notes, by acceptance of such Series [A][B]
Notes, are deemed to be bound by the terms and conditions of the Indenture as amended and supplemented by this [First][Second] Supplemental Indenture.
Section 1.2. DEFINITIONS. For all purposes of this [First][Second] Supplemental Indenture:
(a) Capitalized terms used herein without definition shall have the meanings specified in the Indenture or in the Securities, as applicable;
(b) All references herein to Articles and Sections, unless otherwise specified, refer to the corresponding Articles and Sections of this
[First][Second] Supplemental Indenture; and
(c) The terms herein, hereof, hereunder and other words
of similar import refer to this [First][Second] Supplemental Indenture.
ARTICLE II
THE SERIES OF SECURITIES
Section 2.1. TITLE. There shall be a series of Securities designated the Series [A][B] Senior Subordinated Convertible
Notes (the Series [A][B] Notes).
Section 2.2. LIMITATION ON AGGREGATE PRINCIPAL AMOUNT. The
aggregate principal amount of the Series [A][B] Notes shall initially be limited to [INSERT IN SERIES A SUPPLEMENTAL INDENTURE ONLY: $4,568,056. On the date hereof, the Company intends to issue, in accordance with the terms of the Securities
Purchase Agreement and the related Indenture supplement, $4.75 million in aggregate principal amount of additional Securities designated as Series B Senior Subordinated Convertible Notes (the Series B
2
Notes) in the form attached as Exhibit A-2 to the Securities Purchase Agreement and the related indenture supplement (the Series B Supplemental
Indenture, and together with this Supplemental Indenture, the Supplemental Indentures).][INSERT IN SERIES B SUPPLEMENTAL INDENTURE ONLY: $4.75 million. On the date hereof, the Company has issued, in accordance with the
terms of the Securities Purchase Agreement and the related Indenture supplement, $4,568,056 in aggregate principal amount of additional Securities designated as Series A Senior Subordinated Convertible Notes (the Series A
Notes) in the form attached as Exhibit A-1 to the Securities Purchase Agreement, the Registration Statement and the related indenture supplement (the Series A Supplemental Indenture, and together with this
Supplemental Indenture, the Supplemental Indentures).] The Series [A][B] Notes, together with the Series [B][A] Notes offered by the Series A Supplemental Indenture, will constitute two separate series of Securities under the
Indenture.
Section 2.3. RANK. The Series [A][B] Notes and the Series [B][A] Notes shall rank pari passu in right of
payment.
Section 2.4. PRINCIPAL PAYMENT DATE. The principal amount of the Series [A][B] Notes outstanding (together with any
accrued and unpaid interest and other amounts) shall be payable in accordance with the terms and conditions set forth in the Series [A][B] Notes on each [INSERT IN SERIES B SUPPLEMENTAL INDENTURE ONLY: Installment Date,] Interest Date, Conversion
Date, Redemption Date and on the Maturity Date, in each case as defined in the Series [A][B] Notes.
Section 2.5. INTEREST AND
INTEREST RATES. The rate of interest on each Security shall be [INSERT IN SERIES A SUPPLEMENTAL INDENTURE ONLY: 8%][INSERT IN SERIES B SUPPLEMENTAL INDENTURE ONLY: 10%] per annum, subject to adjustment as provided in the Series [A][B] Notes,
accruing from March [ ], 2015, and shall be payable at such times and in the manner set forth in the Series [A][B] Notes. Any interest to be paid with respect to any Series [A][B] Note will, as provided in the Indenture and
the Series [A][B] Notes, be paid to the record holder of such Security [INSERT IN SERIES A SUPPLEMENTAL INDENTURE ONLY: on the applicable Interest Date in Interest Shares, Cash Interest or a combination of Interest Shares and Cash Interest, as
applicable, as set forth in the Series A Notes.][INSERT IN SERIES B SUPPLEMENTAL INDENTURE ONLY: (i) on each Interest Date occurring on an Installment Date in accordance with Section 8 of the Series B Notes as part of the applicable
Installment Amount due on the applicable Installment Date or (ii) with respect to each other Interest Date and subject to the limitations set forth in Section 2.20(a)(iii), on such Interest Date in cash.]
Section 2.6. PLACE OF PAYMENT. The Place of Payment where the Series [A][B] Notes may be presented or surrendered for payment of
principal, interest and other amounts payable thereunder shall initially be the office of the Issuer set forth for such purpose. The place where the Series [A][B] Notes may be surrendered for registration of transfer or exchange (to the extent
required or permitted, as applicable, by the terms of the Series [A][B] Notes) and where notices and demand to or upon the Trustee in respect of the Series [A][B] Notes and the Indenture may be made shall initially be the Corporate Trust Office of
the Trustee.
3
Section 2.7. [INSERT IN SERIES A SUPPLEMENTAL INDENTURE ONLY: REDEMPTION. The Company may
redeem the Series A Notes, in whole or in part, at such times and in the manner set forth in the Series A Notes.][INSERT IN SERIES B SUPPLEMENTAL INDENTURE ONLY: Reserved]
Section 2.8. DENOMINATION. The Securities of this series shall be issuable only in registered form without coupons and in minimum
denominations of $10,000 and integral multiples of $1.00 in excess thereof.
Section 2.9. CURRENCY. Principal and interest and any
other amounts payable, from time to time, on the Series [A][B] Notes shall be payable in United States Dollars (U.S. Dollars) in accordance with Section [26] of the Series [A][B] Notes.
Section 2.10. FORM OF SECURITIES. In lieu of the Form of Security provided in Exhibit A of the Indenture, the Series [A][B] Notes shall
be issued in the form attached to the Securities Purchase Agreement and hereto as Exhibit [A-1][A-2]. The Company has elected to issue only definitive Securities and shall not issue any Global Securities hereunder. Notwithstanding the
issuance of definitive Securities, the Register (as defined in the Series [A][B] Notes) kept by the Securities Registrar shall be conclusive and binding on the Holders of the Securities.
Section 2.11. CONVERTIBLE SECURITIES; RESTRICTIONS ON TRANSFER. The Series [A][B] Notes are convertible into the Common Stock of the
Company upon the terms and conditions set forth in the Series [A][B] Notes. [INSERT IN SERIES A SUPPLEMENTAL INDENTURE: The Series A Notes and any shares of Common Stock issued upon conversion of any Series A Note may be offered, sold, assigned or
transferred by the holder thereof without restriction and without the consent of the Company, subject only to the provisions of Section 2(g) of the Securities Purchase Agreement.] [INSERT IN SERIES B SUPPLEMENTAL INDENTURE: The Series B Notes and
any shares of Common Stock issued upon conversion of any Series B Note may be offered, sold, assigned or transferred by the holder thereof without restriction and without the consent of the Company.]
Section 2.12. SECURITIES REGISTRAR. The Trustee shall serve initially as Securities Registrar.
Section 2.13. SINKING FUND OBLIGATIONS. The Company has no obligation to redeem or purchase any Series [A][B] Notes pursuant to any
sinking fund or analogous requirement.
Section 2.14. FORM OF TRUSTEES CERTIFICATE OF AUTHENTICATION. In lieu of the form of
Trustees Certificate of Authentication set forth in Section 202 of the Indenture, each Series [A][B] Note shall be authenticated by the Trustee pursuant to the Certificate of Authentication set forth on the signature page of
each Series [A][B] Note.
4
Section 2.15. EXCLUDED PROVISIONS. The Company has elected that none of the following
provisions of the Indenture shall be applicable to the Series [A][B] Notes and any analogous provisions (including definitions related thereto) of this [First][Second] Supplemental Indenture and/or the Series [A][B] Notes shall govern in lieu
thereof:
|
|
|
The following definitions in Section 101: |
|
|
|
Section 112 (Legal Holidays); |
|
|
|
Section 203 (Securities Issuable in Global Form); |
|
|
|
Section 302 (Denominations); |
|
|
|
Section 304 (Temporary Securities); |
|
|
|
Section 306 (Mutilated, Destroyed, Lost and Stolen Securities); |
|
|
|
Section 307 (Payment of Interest; Interest Rights Preserved); |
|
|
|
Section 310 (Computation of Interest); |
|
|
|
Section 401 (Satisfaction and Discharge of Indenture); |
|
|
|
Section 402 (Application of Trust Funds); |
|
|
|
Section 502 (Acceleration of Maturity; Rescission and Annulment) |
|
|
|
Section 507 (Limitation on Suits); |
|
|
|
Section 901 (Supplemental Indentures Without Consent of Holders); |
|
|
|
Section 902 (Supplement Indentures with Consent of Holders); |
5
|
|
|
Section 1004 (Existence); |
|
|
|
Section 1005 (Maintenance of Properties); |
|
|
|
Section 1006 (Insurance); |
|
|
|
Section 1009 (Waiver of Certain Covenants); |
|
|
|
Article Eight (Consolidation, Merger, Sale, Lease or Conveyance); |
|
|
|
Article Eleven (Redemption of Securities); |
|
|
|
Article Twelve (Sinking Funds); |
|
|
|
Article Thirteen (Repayment at the Option of Holders); |
|
|
|
Article Fourteen (Defeasance and Covenant Defeasance); and |
|
|
|
Article Seventeen (Conversion of Securities). |
Section 2.16. DEFINITIONS. The definition
of Senior Indebtedness in Section 101 shall have the meaning stated in Permitted Senior Indebtedness in Section 33 of the Series [A][B] Notes. The definition of Stated Maturity in Section 101 shall have
the meaning stated in Maturity Date in Section 33 of the Series [A][B] Notes.
Section 2.17. EVENTS OF DEFAULT. In
accordance with Section 301(16) of the Indenture, only the Events of Default set forth in Section 4(a) of the Series [A][B] Notes shall be applicable to the Series [A][B] Notes.
Section 2.18. COVENANTS. In addition to the covenants set forth in Article Ten of the Indenture (other than in Section 1004,
Section 1005 and Section 1006), the Company shall comply with the additional covenants set forth in Section 15 of the Series [A][B] Notes and in Sections 4 and 5 of the Securities Purchase Agreement.
Section 2.19. IMMEDIATELY AVAILABLE FUNDS. All cash payments of principal and interest shall be made in U.S. Dollars and immediately
available funds.
Section 2.20. SUBORDINATION. The Company and the holders of Senior Indebtedness as of the date hereof have
agreed that (i) the subordination provisions of Sections 1601, 1602, 1603 and 1605 of Article Sixteen of the Indenture are hereby amended and restated in the form of this Section 2.20, mutatis mutandis, and such other provisions of
Article Sixteen of the Indenture shall otherwise remain in full force and effect and (ii) the Series [A][B] Notes are subordinated in accordance with Section Sixteen of the Indenture (as amended by this Section 2.20).
6
(a) Permitted Cash Payments.
(i) Restrictions on Cash Redemptions. Notwithstanding anything in the Indenture to the contrary, while the Permitted
Senior Indebtedness remains outstanding (x) there shall be no restrictions on the right of a holder of Series [A][B] Notes to deliver any Redemption Notice (as defined in the Series [A][B] Notes) to the Company and (y) the Company shall be
prohibited from paying any holder of Series [A][B] Notes in cash, and each holder of Series [A][B] Notes shall be prohibited from accepting any cash amount from the Company, in satisfaction of any amount owed under the Series [A][B] Notes with
respect thereto; provided, that the foregoing restrictions on cash payments shall not apply at any time (x) the Current Senior Lender (as defined in the Series [A][B] Notes) does not hold any Permitted Senior Indebtedness and (y) if at
such time the Potential Successor Senior Lender (as defined in the Series [A][B] Notes) holds Permitted Senior Indebtedness, (I) to the extent that after giving effect to the applicable cash payment the Company and its Subsidiaries, on a
consolidated basis, have at least $500,000 in cash or cash equivalents (excluding cash held in the Companys collection account or other account subject to daily cash sweep), and (II) no event of default under the Permitted Senior Indebtedness
has occurred and is continuing.
(ii) Payments of Interest and Other Amounts. Notwithstanding anything in the
Indenture to the contrary, the Company shall be permitted to pay, and each holder of Series [A][B] Notes shall be permitted to receive, with respect to any Series [A][B] Notes of such holder, any (i) Interest (as defined in the Series [A][B]
Notes), (ii) Late Charges (as defined in the Series [A][B] Notes, (iii) Buy-In Price (as defined in each of the Securities Purchase Agreement and the Notes, (iv) Allocation Cancellation Amount (as defined in each of the Series [A][B]
Notes), or (v) Exchange Cap Cancellation Amount (as defined in each of the Series [A][B] Notes), in each case, due and payable from time to time, in accordance therewith; provided, however, that, while the Permitted Senior Indebtedness remains
outstanding, the Company shall only be permitted to pay the amounts set forth in (i) through (v) above in shares of Common Stock (as defined in the Series [A][B] Notes) and/or any other securities of the Company or any of its Subsidiaries
(or any successor entities) that are not senior in rank or payment to the Permitted Senior Indebtedness; provided, that the foregoing restrictions on cash payments shall not apply at any time (x) the Current Senior Lender does not hold any
Permitted Senior Indebtedness and (y) if at such time the Potential Successor Senior Lender holds Permitted Senior Indebtedness, (I) to the extent that after giving effect to the applicable cash payment the Company and its Subsidiaries, on
a consolidated basis, have at least $500,000 in cash or cash equivalents (excluding cash held in the Companys collection account or other account subject to daily cash sweep), and (II) no event of default under the Permitted Senior
Indebtedness has occurred and is continuing.
(b) No Limitation on Payment in Equity or Equity-Linked Securities. Notwithstanding
anything in the Indenture to the contrary, there shall be no restrictions on the Companys right, at any time, to deliver, and the right of a holder of Series [A][B] Notes, at any
7
time, to receive, shares of Common Stock and/or any other equity or equity-linked securities of the Company or any of its Subsidiaries (or any successor entities), as applicable, in satisfaction
of all, or any part, of any amounts outstanding or other obligations under such Series [A][B] Notes or any other Transaction Document (as defined in the Securities Purchase Agreement), whether upon conversion of any Notes (as defined in the
Securities Purchase Agreement), exercise of any Warrants (as defined in the Securities Purchase Agreement) or otherwise, provided that, so long as any Permitted Senior Indebtedness is outstanding, any such securities delivered to the holders of
Series [A][B] Notes shall be junior in rank or payment to the Permitted Senior Indebtedness.
(c) No Limitation on Actions to Enforce
Payment in Securities. Notwithstanding anything in the Indenture to the contrary, there shall be no restrictions on the rights of a holder of Series [A][B] Notes to, at any time, take any actions, in law or equity, in any court or other
Governmental Entity (as defined in the Securities Purchase Agreement) to enforce such holders right to receive payment in shares of Common Stock or and/or any other securities of the Company or any of its Subsidiaries, as applicable, in
satisfaction of all, or any part, of any amounts outstanding or other obligations under such Series [A][B] Notes or any other Transaction Document, whether in connection with a proposed conversion of any Notes, exercise of any Warrants or otherwise;
provided that, so long as any Permitted Senior Indebtedness is outstanding, (x) any such securities delivered to the holders of Series [A][B] Notes shall be junior in rank or right of payment to the Permitted Senior Indebtedness and (y) no
holder of Series [A][B] Notes shall institute any action, in law or equity, to commence bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors against the Company or any of its Subsidiaries
or consent to the filing of such petition or to the appointment of a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official with respect to the Company or any of its Subsidiaries without the prior written consent
of the holders of at least 51% of the aggregate principal amount of Permitted Senior Indebtedness then outstanding (the Required Permitted Senior Indebtedness Holders).
(d) No Rights to Proceeds from Sale of Securities. Notwithstanding anything in the Indenture to the contrary, no holder of Permitted
Senior Indebtedness shall have any rights pursuant to the Indenture or this [First][Second] Supplemental Indenture to any proceeds received by any holder of Series [A][B] Notes from any sale of Series [A][B] Notes or Common Stock or any other
securities of the Company or any of its Subsidiaries, as applicable, delivered to any holder of Series [A][B] Notes in satisfaction of all, or any part, of any amounts outstanding or other obligations under such Series [A][B] Notes or any other
Transaction Document, whether in connection with a proposed conversion of any Notes, exercise of any Warrants or otherwise, provided that, so long as any Permitted Senior Indebtedness is outstanding, any such securities delivered to the holders of
Series [A][B] Notes shall be junior in rank or payment to the Permitted Senior Indebtedness.
(e) No Subordination Rights with Respect
to Other Securities or Agreements. Notwithstanding anything in the Indenture to the contrary, nothing in the Indenture or this [First][Second] Supplemental Indenture shall be deemed to subordinate any amounts or other obligations due and
payable, from time to time, under the Warrants or any other Transaction Document (other than the Notes).
8
(f) Amendments Related to Equity. Notwithstanding anything in the Indenture to the
contrary, there shall be no restrictions on the rights of a holder of Series [A][B] Notes, at any time, to amend, waive, reset or otherwise adjust (whether pursuant to the terms thereof or otherwise) any provision of this [First][Second]
Supplemental Indenture or the Series [A][B] Notes or any other Transaction Document; provided, that nothing in any such amendments, waivers, resets or other adjustments may amend or waive any provision of this Indenture or of the [First][Second]
Supplemental Indenture, including without limitation, this Section 2.20, in any manner materially adverse to the holders of Permitted Senior Indebtedness then outstanding (solely in their capacity as holders of outstanding indebtedness of the
Company or any of its Subsidiaries and not in their capacity as a holder of Common Stock, Convertible Securities (as defined in the Series [A][B] Notes) and/or Options (as defined in the Series [A][B] Notes) and/or other equity securities of the
Company or any of its Subsidiaries), without the written consent of the Required Permitted Senior Indebtedness Holders.
(g) Third
Party Beneficiaries. Each of the parties hereto acknowledges and agrees that the holders of Permitted Senior Indebtedness (including without limitation, when applicable, each of Fast Pay Partners LLC and its affiliates) (collectively, the
Senior Lender), as holders of 100% of the Permitted Senior Indebtedness as of the date hereof, shall be an intended and actual third-party beneficiary to this Section 2.20 (Subordination), and each of the parties
hereto acknowledges and agrees this [First][Second] Supplemental Indenture confers certain rights, remedies, and benefits upon Senior Lender as set forth herein and Senior Lender may initiate any action to enforce such rights, remedies, and
benefits.
Section 2.21. Paying Agent. The Company will act as Paying Agent (as defined in the Indenture) in connection with
any payments in accordance with the Indenture or the Series [A][B] Notes.
Section 2.22. TRUSTEE MATTERS.
(a) Duties of Trustee. Notwithstanding anything in the Indenture to the contrary:
(i) with respect to the Series [A][B] Notes, the Trustee shall act solely as set forth herein or as required by applicable law
(including, without limitation, the TIA) unless otherwise agreed to by the Holders of not less than a majority in aggregate principal amount of the Series [A][B] Notes (the Required Holders), the Trustee and the Company in an
additional supplemental Indenture (other than the First Supplemental Indenture or the Second Supplemental Indenture);
(ii) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by
the proper party or parties, and the Trustee need not investigate any fact or matter contained therein;
9
(iii) the Trustee shall not be liable for any action it takes or omits to take
in good faith without negligence or willful misconduct which it believes to be authorized or within its discretion, rights or powers;
(iv) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney and
the reasonable expenses of every such examination shall be paid by the Company or, if paid by the Trustee or any predecessor Trustee, shall be reimbursed by the Company upon demand;
(v) the permissive rights of the Trustee to do things enumerated in the Indenture shall not be construed as a duty and the
Trustee shall not be liable for any action or inaction hereunder other than due to its negligence or willful misconduct as determined by a final order of a court of competent jurisdiction;
(vi) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its
right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian, and any other such Persons employed to act hereunder;
(vii) in no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations
hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts or war or terrorism, civil or military disturbances, nuclear or natural catastrophes or
acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services (it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the
banking industry to avoid and mitigate the effects of such occurrences and to resume performance as soon as practicable under the circumstances);
(viii) in no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any
kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action;
(ix) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of the Indenture; but in the case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether they conform to the requirements of the Indenture but shall have no obligation or liability for confirming or
investigating the accuracy of mathematical calculations or other facts purported to be stated therein;
10
(x) the Trustee shall not be charged with knowledge of any matter (including any
Default) unless and except to the extent actually known to a Responsible Officer of the Trustee or to the extent written notice thereof is received by the Trustee at the Corporate Trust Office, such notice being labeled a Notice of
Default; and
(xi) the rights, privileges, protections, immunities and benefits given to the Trustee, including,
without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder (including, without limitation, as Securities Registrar), and each agent, custodian and other Person
employed by the Trustee to act hereunder.
(b) Additional Indemnification. In addition to any indemnification rights set forth in
the Indenture, the Company agrees to indemnify each of the Trustee, or any successor Trustee, and its officers, directors, agents and employees, for, and to hold it harmless against, any and all loss, liability, damage, claim or expense, including
taxes (other than taxes based upon, measured by or determined by the income of the Trustee), incurred without negligence or willful misconduct on its part, as determined by a final order of a court of competent jurisdiction, arising out of or in
connection with the acceptance or administration of the trust or trusts hereunder, including the reasonable costs and expenses of defending itself against any claim (whether asserted by the Company, or any Holder or any other person) or liability in
connection with the exercise or performance of any of its powers or duties hereunder or in connection with enforcing the provisions of this Section. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure
by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim with counsel who shall be reasonably satisfactory to the Trustee, and the Trustee shall cooperate in the defense.
In addition, the Trustee may retain one separate counsel on behalf of itself and the Holders (and in the case of an actual or perceived conflict of interest, one additional separate counsel on behalf of the Holders) and, if deemed advisable by such
counsel, local counsel, and the Company shall pay the reasonable fees and expenses of such separate counsel and local counsel. The indemnification herein also extends to a settlement.
(c) Successor Trustee Petition Right. If an instrument of acceptance by a successor Trustee required by Section 609 of the
Indenture has not been delivered to the Trustee within thirty (30) days after the giving of a notice of removal, the Trustee being removed, at the expense of the Company, may petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
(d) Trustee as Creditor. If and when the Trustee shall be or
become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor).
11
(e) Reports by the Company. In addition to the Companys obligations pursuant to
Section 703 of the Indenture, the Company shall:
(i) file with the Trustee (unless filed with the SEC through the
EDGAR system or any successor system), within fifteen (15) days after the Company files the same with the SEC, copies of the annual and quarterly reports and of the information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Company may be required to file with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to
file information, documents or reports pursuant to either of said Sections, then it shall file with the Trustee and the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such of the supplementary and periodic
information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and
regulations; and
(ii) whether or not required under the Exchange Act, so long as any Securities are Outstanding, the
Company shall file a copy of all of the information and reports referred to in clauses (i) above with the SEC for public availability within the time periods specified in the SEC rules and regulations (unless the SEC will not accept such a
filing) and make such information available to Holders, securities analysts and prospective investors upon request.
The parties hereto acknowledge and
agree that delivery of such reports, information, and documents to the Trustee pursuant to the provisions of Section 703 of the Indenture and this Section 2.22(e) is for informational purposes only and the Trustees receipt of such
shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Companys compliance with any of its covenants hereunder (as to which the Trustee is entitled to
rely exclusively on Officers Certificates).
(f) Execution of Supplemental Indentures. Notwithstanding anything in the
Indenture to the contrary, the Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustees own rights, duties, liabilities or immunities under the Indenture or otherwise.
(g) Statements by Officers as to Compliance. In addition to the Companys obligations pursuant to Section 1008 of the
Indenture, the Company agrees as follows:
(i) Annually, within ninety (90) days after the close of each fiscal year
beginning with the first fiscal year during which one or more series of Securities are Outstanding, the Company will deliver to the Trustee an Officers Certificate (which need not include the statements set forth in Section 103 of the
Indenture) from the principal executive officer, principal financial officer or principal accounting officer of the Company as to his or her knowledge of the Companys compliance (without regard to any period of grace or requirement of notice
provided herein) with all conditions and covenants under the Indenture and, if the Company shall be in Default, specifying all such Defaults and the nature and status thereof of which such officer has knowledge.
12
(ii) The Company shall, so long as any of the Securities are Outstanding,
deliver to the Trustee, as soon as practicable and in any event within thirty (30) days after the Company becomes aware of any Default, an Officers Certificate specifying such Default, its status and the actions that the Company is taking
or proposes to take in respect thereof.
(iii) The Company shall deliver to the Trustee within ninety (90) days after
the end of each fiscal year of the Company, an Opinion of Counsel to the extent required under the Trust Indenture Act.
(h) No Global
Security. Notwithstanding anything in the Indenture to the contrary, none of the Securities shall be represented by a Global Security.
(i) Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (1) all taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon the Company or any Subsidiary or upon the income, profits or property
of the Company or any Subsidiary, and (2) all material lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any Subsidiary; provided, however, that the
Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which disputed
amounts adequate reserves have been made.
(j) Further Instruments and Acts. Upon request of the Trustee, the Company will execute
and deliver such further instruments and perform such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of the Indenture.
(k) Expense. Notwithstanding anything in the Indenture to the contrary, any actions taken by the Trustee in its capacity as the
Security Registrar shall be at the Companys reasonable expense.
(l) Authenticating Agent. The Trustee may appoint an
Authenticating Agent acceptable authenticate Securities in accordance with Section 611 of the Indenture. Each reference in the Indenture to authentication by the Trustee includes authentication by such agent.
(m) Officers Certificate. In lieu of the definition of Officers Certificate in Section 101 of the
Indenture, the Company and the Holders of Senior Indebtedness as of the date hereof have elected to have the following definition apply throughout both the Indenture and this [First][Second Supplemental Indenture, in each case, solely with respect
to the Series [A][B] Notes:
Officers Certificate means, in the case of the Company, a certificate signed by two
officers, such as the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Chief Accounting Officer, the President, any Vice President, the Treasurer, the Secretary, or any other duly
authorized officer of the Company, or a person duly authorized by any of them, and delivered to the Trustee.
13
(n) Responsible Officer. In lieu of the definition of Responsible Officer in
Section 101 of the Indenture, the Company and the Holders of Senior Indebtedness as of the date hereof have elected to have the following definition apply throughout both the Indenture and this [First][Second Supplemental Indenture, in each
case, solely with respect to the Series [A][B] Notes:
Responsible Officer when used with respect to the Trustee, means
any officer within the Global Corporate Trust Services division of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee with direct responsibility for the administration of this [First][Second] Supplemental
Indenture, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.
ARTICLE III
EXPENSES
Section 3.1. PAYMENT OF EXPENSES. In connection with the offering, sale and issuance of the Series [A][B] Notes, the Company, in its
capacity as borrower with respect to the Series [A][B] Notes, shall pay all costs and expenses relating to the offering, sale and issuance of the Series [A][B] Notes (except as otherwise provided in the Securities Purchase Agreement), and the
compensation and expenses of the Trustee under the Indenture in accordance with the provisions of Section 606 of the Indenture.
Section 3.2. PAYMENT UPON RESIGNATION OR REMOVAL. Upon termination of this [First][Second] Supplemental Indenture or the Indenture or
the removal or resignation of the Trustee, unless otherwise stated, the Company shall pay to the Trustee all amounts accrued to the date of such termination, removal or resignation.
ARTICLE IV
MISCELLANEOUS
PROVISIONS
Section 4.1. TRUSTEE NOT RESPONSIBLE FOR RECITALS. The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representation as to the validity or sufficiency of this [First][Second] Supplemental Indenture.
Section 4.2. ADOPTION, RATIFICATION AND CONFIRMATION. The Indenture, as supplemented and amended by this [First][Second] Supplemental
Indenture, is in all respects hereby adopted, ratified and confirmed.
Section 4.3. CONFLICT WITH INDENTURE; TRUST INDENTURE ACT.
Notwithstanding anything to the contrary in the Indenture, if any conflict arises between the
14
terms and conditions of this [First][Second] Supplemental Indenture (including, without limitation, the terms and conditions of the Series [A][B] Notes attached Securities Purchase Agreement and
hereto as Exhibit [A-1][A-2]) and the Indenture, the terms and conditions of this [First][Second] Supplemental Indenture (including the Series [A][B] Notes) shall control; provided, however, that if any provision of this
[First][Second] Supplemental Indenture or the Series [A][B] Notes limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this [First][Second] Supplemental Indenture, the
latter provisions shall control. If any provision of this [First][Second] Supplemental Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provisions shall be deemed to apply to the
Indenture as so modified or excluded, as the case may be.
Section 4.4. AMENDMENTS; WAIVER. Subject to Section 2.20(h),
Section 2.22(f) and the rights of the holders of the Permitted Senior Indebtedness, this [First][Second] Supplemental Indenture may be amended by the written consent of the Company and the Required Holders. Subject to Section 2.20(f),
Section 2.22(f) and the rights of the holders of the Permitted Senior Indebtedness, no provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.
Section 4.5. SUCCESSORS. This [First][Second] Supplemental Indenture shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any purchasers of the Series [A][B] Notes.
Section 4.6. SEVERABILITY. If any
provision of this First][Second] Supplemental Indenture shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this First][Second] Supplemental
Indenture in that jurisdiction or the validity or enforceability of any provision of this First][Second] Supplemental Indenture in any other jurisdiction.
Section 4.7. COUNTERPARTS. This [First][Second] Supplemental Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one and the same instrument.
Section 4.8. GOVERNING LAW.
THIS [FIRST][SECOND] SUPPLEMENTAL INDENTURE AND EACH SECURITY SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF.
[The remainder of the page is intentionally left blank]
15
IN WITNESS WHEREOF, the parties hereto have caused this [First][Second] Supplemental Indenture
to be duly executed, and their respective corporate seals to be hereunto affixed and attested, on the date or dates indicated in the acknowledgments and as of the day and year first above written.
|
|
|
LOCAL CORPORATION |
|
|
By: |
|
|
|
|
Name: |
|
|
Title: |
|
|
|
U.S. BANK NATIONAL ASSOCIATION, as Trustee |
|
|
By: |
|
|
Name: |
|
|
Title: |
|
|
|
|
|
Acknowledged and Agreed, solely s to Section 2.20, and the definitions related thereto as of this day of , 2015
by: |
|
SQUARE 1 BANK |
|
|
By: |
|
|
|
|
Name: |
|
|
Title: |
|
FAST PAY PARTNERS LLC |
|
|
By: |
|
|
|
|
Name: |
|
|
Title: |
EXHIBIT A-[1][2]
(FORM OF SECURITY)
Exhibit 4.3
[FORM OF SERIES [A][B] SENIOR CONVERTIBLE NOTE]
[INSERT IN SERIES A NOTE ONLY: NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW.]
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(ii) AND 20(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE
AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(ii) OF THIS NOTE.
LOCAL CORPORATION
SERIES [A][B] SENIOR CONVERTIBLE NOTE
|
|
|
Issuance Date: [], 2015 |
|
Original Principal Amount: U.S. $[] |
FOR VALUE RECEIVED, Local Corporation, a Delaware corporation (the Company), hereby
promises to pay to the order of [BUYER] or its registered assigns (Holder) the amount set forth above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the
Principal) when due, whether upon the Maturity Date (as defined below), [INSERT IN SERIES B NOTE ONLY: on any Installment Date with respect to the Installment Amount due on such Installment Date (each as defined below),] or upon
acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (Interest) on any outstanding Principal at the applicable Interest Rate (as defined below) from the date set forth above
as the Issuance Date (the Issuance Date) until the same becomes due and payable, whether upon the Maturity Date, [INSERT IN SERIES B NOTE ONLY: on any Installment Date with respect to the Installment
Amount due on such Installment Date,] or upon acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Series [A][B] Senior Convertible Note
(including all Series [A][B] Senior Convertible Notes issued in exchange, transfer or replacement hereof, this Note) is one of an issue of Series [A][B] Senior Convertible Notes issued pursuant to (i) the Indenture (as
defined below), (ii) the Series [A][B] Supplemental Indenture (as defined below), [INSERT IN SERIES A NOTE ONLY: and] (iii) [INSERT IN SERIES B NOTE ONLY: the Companys Registration Statement on Form S-3 (File number 333-196429) and
(iv)] the Securities Purchase Agreement, dated as of March 9, 2015 (the Subscription Date), by and among the Company and the investors (the Buyers) referred to therein, as amended from time to time
(collectively, the Series [A][B] Notes, and together with the Series [B][A] Notes (as defined below), the Notes, and such Notes (other than this Note), the Other Notes). Certain capitalized
terms used herein are defined in Section 33.
1. PAYMENTS OF PRINCIPAL. [INSERT IN SERIES B NOTE ONLY: On each Installment
Date, the Company shall pay to the Holder an amount equal to the Installment Amount due on such Installment Date in accordance with Section 8.] On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all
outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 26(c)) on such Principal and Interest. Other than as specifically permitted by this Note, the Company may not prepay any portion of
the outstanding Principal, accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and Interest, if any.
2.
INTEREST; INTEREST RATE.
[INSERT IN SERIES A NOTE ONLY:
(a) Interest on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 360-day year and
twelve 30-day months, shall compound on each Interest Date, and shall be payable in arrears quarterly on each Interest Date with the first Interest Date being July 1, 2015. Interest shall be payable on each Interest Date, to the record holder of
this Note on the applicable Interest Date, in shares of Common Stock (Interest Shares, and each such Interest Date in which Interest Shares are to paid hereunder, an Interest Share Delivery Deadline) so long as
there has been no Equity Conditions Failure; provided however, that the Company may, at its option following written notice to the Holder, pay Interest on any Interest Date in cash (Cash Interest) or in a combination of Cash
Interest and Interest Shares. The Company shall deliver a written notice (each, an Interest Election Notice) to each holder of the Series A Notes on or prior to the twentieth (20th) Trading Day prior to the applicable
Interest Date (the Interest Notice Due Date, and the date such notice is delivered to all of the holders of Series A Notes, the Interest Notice Date) which notice (i) either (A) confirms that Interest
to be paid on such Interest Date shall be paid entirely in Interest Shares or (B) elects to pay Interest as Cash Interest or a combination of Cash Interest and Interest Shares and specifies the amount of Interest that shall be paid as Cash
Interest and the amount of Interest, if any, that shall be paid in Interest Shares and (ii) certifies that there has been no Equity Conditions Failure. If an Equity
2
Conditions Failure has occurred as of the Interest Notice Date, then the applicable Interest Notice shall state either (x) the Company has elected to pay such Interest as Cash Interest or
(y) the Company is seeking the consent of the Holder to waive the Equity Conditions Failure to permit the payment of such Interest, in whole or in part, as specified by the Company in such Interest Notice, in Interest Shares; provided, that if
the Holder does not waive such Equity Conditions Failure, such Interest shall be paid as Cash Interest. Notwithstanding anything herein to the contrary, if no Equity Conditions Failure has occurred as of the Interest Notice Date but an Equity
Conditions Failure occurs at any time prior to the Interest Date, (A) the Company shall provide the Holder a subsequent notice to that effect and (B) unless the Holder waives the Equity Conditions Failure, the Interest shall be paid in
cash. Interest to be paid on an Interest Date in Interest Shares shall be paid in a number of fully paid and nonassessable shares (rounded to the nearest whole share in accordance with Section 3(a)) of Common Stock equal to the quotient of
(1) the amount of Interest payable on such Interest Date less any Cash Interest paid and (2) the Interest Conversion Price in effect on the applicable Interest Date. If the Company fails to deliver an Interest Election Notice with respect
to an Interest Date on or prior to the applicable Interest Notice Due Date and the Permitted Senior Indebtedness has consent to the payment of such Interest in cash, the Company shall be deemed to have delivered an Interest Election Notice
confirming that Interest to be paid on such Interest Date shall be paid entirely in cash. If the Company fails to deliver an Interest Election Notice with respect to an Interest Date on or prior to the applicable Interest Notice Due Date and the
Permitted Senior Indebtedness has not consented to the payment of such Interest in cash, the Company shall be deemed to have delivered an Interest Election Notice confirming that Interest to be paid on such Interest Date shall be paid entirely in
Interest Shares and certifying that no Equity Conditions Failure then exists.
(b) When any Interest Shares are to be paid
on an Interest Date, the Company shall (i) (A) provided that the Companys Transfer Agent (as defined below) is participating in the DTC (as defined below) Fast Automated Securities Transfer Program, credit such aggregate number of
Interest Shares to which the Holder shall be entitled to the Holders or its designees balance account with DTC through its Deposit/Withdrawal at Custodian system, or (B) if the Transfer Agent is not participating in the DTC Fast
Automated Securities Transfer Program, issue and deliver on the applicable Interest Date, to the address set forth in the register maintained by the Company for such purpose pursuant to the Securities Purchase Agreement or to such address as
specified by the Holder in writing to the Company at least two (2) Business Days prior to the applicable Interest Date, a certificate, registered in the name of the Holder or its designee, for the number of Interest Shares to which the Holder
shall be entitled and (ii) with respect to each Interest Date, pay to the Holder, in cash by wire transfer of immediately available funds, the amount of any Cash Interest. The Company shall not issue any fraction of a share of Common Stock upon
any issuance of Interest Shares on any Interest Date. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. In addition
to Holders right to pursue any remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or
3
injunctive relief with respect to the Companys failure to timely deliver certificates representing Interest Shares (or to electronically deliver such Interest Shares), any failure by the
Company to timely deliver Interest Shares to the Holder (or its designee) on an Interest Date shall be subject to the provisions of 3(c)(ii) below.
[INSERT IN SERIES B NOTE ONLY: (a) Interest on this Note shall commence accruing on the Issuance Date and shall be
computed on the basis of a 360-day year and twelve 30-day months and shall be payable in arrears on each Interest Date and shall compound each calendar month and shall be payable in accordance with the terms of this Note. Interest shall be paid
(i) on each Interest Date occurring on an Installment Date in accordance with Section 8 as part of the applicable Installment Amount due on the applicable Installment Date and (ii) with respect to each other Interest Date, on such
Interest Date in cash.
(b) [Reserved]]
(c) Prior to the payment of Interest on an Interest Date, the Maturity Date or any applicable Redemption Date, Interest on this
Note shall accrue at the Interest Rate and be payable by way of inclusion of the Interest in the Conversion Amount on each Conversion Date in accordance with Section 3(b)(i) or upon any redemption in accordance with Section 13 or any
required payment upon any Bankruptcy Event of Default (as defined below). From and after the occurrence and during the continuance of any Event of Default or at any time the Common Stock of the Company is not listed on a Major Market (an
Exchange Breach), the Interest Rate shall automatically be increased to eighteen percent (18.0%) per annum. In the event that such Event of Default or Exchange Breach, as applicable, is subsequently cured, the adjustment
referred to in the preceding sentence shall cease to be effective as of the calendar day immediately following the date of such cure; provided that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of
Default or Exchange Breach, as applicable, shall continue to apply to the extent relating to the days after the occurrence of such Event of Default or Exchange Breach, as applicable, through and including the date of such cure of such Event of
Default or Exchange Breach, as applicable. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent (as defined below) and the Trustee)
that may be payable with respect to the issuance and delivery of shares of Common Stock issuable hereunder.
3. CONVERSION OF SERIES
[A][B] NOTES. At any time after the Issuance Date, this Note shall be convertible into validly issued, fully paid and non-assessable shares of Common Stock (as defined below), on the terms and conditions set forth in this Section 3.
(a) Conversion Right. Subject to the provisions of Section 3(d), at any time or times on or after the Issuance
Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section 3(c), at the
Conversion Rate (as defined below). The Company shall not issue any fraction of
4
a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common
Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent (as defined below) and the Trustee) that
may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.
(b)
Conversion Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the
Conversion Rate).
(i) Conversion Amount means the sum of (x) portion of the
Principal to be converted, redeemed or otherwise with respect to which this determination is being made, (y) all accrued and unpaid Interest with respect to such portion of the Principal amount and accrued and unpaid Late Charges with respect
to such portion of such Principal and such Interest, if any and (z) if elected by the Holder in a writing to the Company, including without limitation, a Conversion Notice, the Subordinated Payment Amounts.
(ii) Conversion Price means
[ ]1.
(c) Mechanics of Conversion.
(i) Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a Conversion
Date), the Holder shall deliver (whether via facsimile, electronic mail or otherwise), for receipt on or prior to 8:00 p.m., New York time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit
I (the Conversion Notice) to the Company. If required by Section 3(c)(ii), within three (3) Trading Days following the delivery of the Conversion Notice, the Holder shall surrender this Note to a nationally
recognized overnight delivery service for delivery to the Company (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction as contemplated by Section 20(b)). On or before the first
(1st) Trading Day following the date of receipt of a Conversion Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation, in the form attached hereto as
1 |
INSERT IN SERIES A NOTES: 0.5534 |
INSERT IN SERIES B NOTES: 0.7090
5
Exhibit II, of receipt of such Conversion Notice to the Holder and Computershare Investor Services Ltd. (the Transfer Agent), which confirmation shall constitute an
instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the second (2nd) Trading Day following the date of receipt of a
Conversion Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the applicable Conversion Date of such shares of Common Stock issuable pursuant to
such Conversion Notice) [(each, a Conversion Share Delivery Deadline, and together with each [INSERT IN SERIES A NOTE: Interest Share Delivery Deadline] [INSERT IN SERIES B NOTE: Installment Share Delivery Deadline (as defined
below)] and each other share delivery deadline hereunder, each a Share Delivery Deadline), the Company shall (1) provided that the Transfer Agent is participating in the Depository Trust Company (DTC) Fast
Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holders or its designees balance account with DTC through its Deposit/Withdrawal at Custodian
system or (2) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice, a certificate, registered
in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled. If this Note is physically surrendered for conversion to the Trustee as required by Section 3(c)(iii) and the outstanding
Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Trading Days after receipt of this Note and at its own
expense, issue and deliver to the Trustee a new duly executed Note (in accordance with Section 20(d)) representing the outstanding Principal not converted, for authentication by the Trustee in accordance with the applicable provisions of the
Indenture. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date. [INSERT
IN SERIES A NOTE ONLY: Notwithstanding anything to the contrary contained in this Note or the Registration Rights Agreement, after the effective date of the Registration Statement (as defined in the Registration Rights Agreement) and prior to the
Holders receipt of the notice of a Grace Period (as defined in the Registration Rights Agreement), the Company shall cause the Transfer Agent to deliver unlegended shares of Common Stock to the Holder (or its designee) in connection with any
sale of Registrable Securities (as defined in the Registration Rights Agreement) with respect to which the Holder has entered into a contract for sale, and delivered a copy of the prospectus included as part of the particular Registration Statement
to the extent applicable, and for which the Holder has not yet settled.] [INSERT IN SERIES B NOTE ONLY: In the event of a partial conversion of this Note pursuant hereto, the Principal amount converted shall be deducted from the Installment
Amount(s) relating to the Installment Date(s) as set forth in the applicable Conversion Notice.]
6
(ii) Companys Failure to Timely Convert. If the Company shall fail,
for any reason or for no reason, on or prior to the applicable Share Delivery Deadline, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, to issue and deliver to the Holder (or its
designee) a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Companys share register or, (II) if the Transfer Agent is participating in the DTC Fast Automated
Securities Transfer Program, to credit the balance account of such Holder or such Holders designee with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holders conversion of this Note or as payment
of other amounts hereunder in shares of Common Stock when due hereunder (a Conversion Failure), then, in addition to all other remedies available to the Holder, (1) the Company shall pay in cash to the Holder on each day
after such Share Delivery Deadline that the issuance of such shares of Common Stock is not timely effected an amount equal to 2% of the product of (A) the sum of the number of shares of Common Stock not issued to the Holder on a timely basis
and to which the Holder is entitled multiplied by (B) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such shares of Common Stock to the Holder
without violating Section 3(c)(i) and (2) if applicable, the Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the case may be) any portion of this Note that has not
been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion Notice shall not affect the Companys obligations to make any payments which have accrued prior to the date of such notice pursuant to this
Section 3(c)(ii) or otherwise. In addition to the foregoing, if on or prior to the applicable Share Delivery Deadline either (A) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, the Company
shall fail to issue and deliver to the Holder (or its designee) a certificate and register such shares of Common Stock on the Companys share register or, (B) if the Transfer Agent is participating in the DTC Fast Automated Securities
Transfer Program, the Transfer Agent shall fail to credit the balance account of the Holder or the Holders designee with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holders conversion hereunder
or pursuant to the Companys obligation pursuant to clause (II) below, and if on or after such Share Delivery Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale
by the Holder of all or any portion of the number of shares of Common Stock, or a sale of a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock, issuable upon such conversion that the Holder so
anticipated receiving from the Company, then, in addition to all other remedies available to the Holder, the Company shall, within three (3) Business Days after receipt of the Holders request and in the Holders discretion, either:
(I) pay cash to the Holder in an amount equal to the Holders total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by
any other Person in respect, or on behalf, of the Holder) (the Buy-In Price), at which point
7
the Companys obligation to so issue and deliver such certificate or credit the Holders balance account with DTC for the number of shares of Common Stock to which the Holder is
entitled upon the Holders conversion hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate, or (II) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates
representing such shares of Common Stock or credit the Holders balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holders conversion hereunder or as payment of other amounts
hereunder in shares of Common Stock when due hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (x) such number of shares of Common Stock multiplied by
(y) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Conversion Notice or other applicable notice hereunder, as applicable, and ending on the date of such issuance
and payment under this clause (II) (the Buy-In Payment Amount). Subject to Section 21, nothing shall limit the Holders right to pursue any other remedies available to it hereunder, at law or in equity, including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Companys failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock)
upon the conversion of this Note as required pursuant to the terms hereof.
(iii) Registration; Book-Entry. The
Trustee shall maintain a register (the Register) for the recordation of the names and addresses of the holders of each Series [A][B] Note and the principal amount of the Series [A][B] Notes held by such holders (the
Registered Notes) as provided in Section 305 of the Indenture and Section 2.12 of the Supplemental Indenture. No later than the first (1st) Trading Day after the delivery of the Conversion Notice or any redemption
of this Note, the Company shall deliver written confirmation to the Trustee that such conversion or redemption, as applicable, has been completed in full, which confirmation shall set forth the aggregate Principal of this Note then converted or
redeemed, as applicable, and the remaining aggregate principal of this Note then outstanding. The Trustee shall be entitled to conclusively rely on such confirmation by the Company, as authorization to adjust the Register in accordance with such
confirmation. The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company, the Trustee and the holders of the Series [A][B] Notes shall treat each Person whose name is recorded in the Register as
the owner of a Series [A][B] Note for all purposes (including, without limitation, the right to receive payments of Principal and Interest hereunder) notwithstanding notice to the contrary. A Registered Note may be assigned, transferred or sold in
whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a written request to assign, transfer or sell all or part of any Registered Note by the holder thereof (together with any information as may be
required by the Trustee or the Company under the applicable securities laws), the Trustee shall record the information contained therein in the Register and the Company shall issue one or
8
more new Registered Notes, which shall be duly authenticated by the Trustee upon receipt of a Company Order (as such term is defined in the Indenture), in the same aggregate principal amount as
the principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 20. Notwithstanding anything to the contrary set forth in this Section 3 or in the Indenture or in the Series [A][B]
Supplemental Indenture, following conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Trustee unless (A) the full Conversion Amount represented by
this Note is being converted (in which event this Note shall be delivered to the Trustee following conversion thereof as contemplated by Section 3(c)(i)) or (B) the Holder has provided the Company and the Trustee with prior written notice
(which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder, the Trustee (subject to the limitation set forth below) and the Company shall maintain records showing the
Principal, Interest and Late Charges (and, with respect to the Trustee, only with respect to Principal as set forth in the Register, and only with respect to Interest and Late Charges as set forth in a certificate of the Company which has been
provided to the Trustee), if any, converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) or shall use such other method, reasonably satisfactory to the Holder, the Trustee and the Company,
so as not to require physical surrender of this Note upon conversion.
(iv) Pro Rata Conversion; Disputes. In the
event that the Company receives a Conversion Notice from more than one holder of Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion, the Company, subject to
Section 3(d), shall convert from each holder of Notes electing to have Notes converted on such date a pro rata amount of such holders portion of its Notes submitted for conversion based on the principal amount of Notes submitted for
conversion on such date by such holder relative to the aggregate principal amount of all Notes submitted for conversion on such date. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a
conversion of this Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance with Section 25.
(d) Limitations on Conversions.
(i) Beneficial Ownership. The Company shall not effect the conversion of any portion of this Note, and the Holder shall
not have the right to convert any portion of this Note pursuant to the terms and conditions of this Note and any such conversion shall be null and void and treated as if never made, to the extent that after giving effect to such conversion, the
Holder together with the other Attribution Parties collectively would beneficially own in excess of 9.99% (or such other percentage or amount as elected by the Holder on the signature page of the Holder to the Securities Purchase Agreement) (the
Maximum Percentage) of the shares of Common Stock outstanding immediately after giving effect to such
9
conversion. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include the number of
shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock issuable upon conversion of this Note with respect to which the determination of such sentence is being made, but shall exclude
shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted portion of this Note beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any Series [A][B] Notes, convertible notes or convertible preferred stock or warrants, including the Warrants) beneficially owned by the
Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 3(d)(i). For purposes of this Section 3(d)(i), beneficial ownership shall be calculated in
accordance with Section 13(d) of the 1934 Act. For purposes of determining the number of outstanding shares of Common Stock the Holder may acquire upon the conversion of this Note without exceeding the Maximum Percentage, the Holder may rely on
the number of outstanding shares of Common Stock as reflected in (x) the Companys most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as the case may be,
(y) a more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the Reported Outstanding Share
Number). If the Company receives a Conversion Notice from the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall notify the Holder in writing
of the number of shares of Common Stock then outstanding and, to the extent that such Conversion Notice would otherwise cause the Holders beneficial ownership, as determined pursuant to this Section 3(d)(i), to exceed the Maximum
Percentage, the Holder must notify the Company of a reduced number of shares of Common Stock to be acquired pursuant to such Conversion Notice. For any reason at any time, upon the written or oral request of the Holder made or delivered at any time
on during the period commencing on 9:30 A.M., New York time and ending on 8:00 P.M., New York time on a Business Day, the Company shall within one (1) Business Day confirm orally and in writing or by electronic mail to the Holder the number of
shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the Holder and any
other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon conversion of this Note results in the Holder and the other
Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by
which the Holders and the other Attribution Parties aggregate beneficial ownership exceeds
10
the Maximum Percentage (the Excess Shares) shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer
the Excess Shares. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this Note in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes
of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to convert this Note pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination
of convertibility. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 3(d)(i) to the extent necessary to correct this paragraph (or any portion of
this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 3(d)(i) or to make changes or supplements necessary or desirable to properly give effect to such limitation. The
limitation contained in this paragraph may not be waived and shall apply to a successor holder of this Note.
(ii)
Principal Market Regulation. The Company shall not issue any shares of Common Stock upon conversion of this Note or otherwise pursuant to the terms of this Note if the issuance of such shares of Common Stock would exceed the aggregate number
of shares of Common Stock which the Company may issue upon conversion or exercise (as the case may be) of the Notes and the Warrants or otherwise pursuant to the terms of this Note without breaching the Companys obligations under the rules or
regulations of the Principal Market (the number of shares which may be issued without violating such rules and regulations, including rules related to the aggregate of offerings under NASDAQ Listing Rule 5635(d), the Exchange
Cap), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of the Principal Market for issuances of shares of Common Stock upon
conversion or exercise (as the case may be) of the Notes and the Warrants or otherwise pursuant to the terms of this Note in excess of such amount or (B) obtains a written opinion from outside counsel to the Company that such approval is not
required, which opinion shall be reasonably satisfactory to the Holder. Until such approval or such written opinion is obtained, no Buyer shall be issued in the aggregate, upon conversion or exercise (as the case may be) of any Notes or any of the
Warrants or otherwise pursuant to the terms of this Note, shares of Common Stock in an amount greater than the product of (i) the Exchange Cap multiplied by (ii) the quotient of (A) the aggregate original principal amount of Notes
issued to such Buyer pursuant to the Securities Purchase Agreement on the Closing Date divided by (B) the aggregate original principal amount of all Notes issued to the Buyers pursuant to the Securities Purchase Agreement on the Closing Date
(with respect to each Buyer, the Exchange Cap Allocation). In the event that any Buyer shall sell or otherwise transfer any of such Buyers Notes, the transferee shall be allocated a pro rata portion of such Buyers
Exchange Cap Allocation with respect to such portion of such Notes so transferred, and the restrictions of the prior sentence shall apply to such
11
transferee with respect to the portion of the Exchange Cap Allocation so allocated to such transferee. Upon conversion and exercise in full of a holders Notes and Warrants, the difference
(if any) between such holders Exchange Cap Allocation and the number of shares of Common Stock actually issued to such holder upon such holders conversion in full of such holders Notes and exercise in full of such Warrants shall be
allocated to the respective Exchange Cap Allocations of the remaining holders of Notes and Warrants on a pro rata basis in proportion to the shares of Common Stock underlying the Notes and Warrants then held by each such holder. In the event that
the Company is prohibited from issuing shares of Common Stock pursuant to this Section 3(d)(ii) (the Exchange Cap Shares), the Company shall pay cash in exchange for the cancellation of such shares of Common Stock at a price
equal to the sum of (i) the product of (x) such number of Exchange Cap Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable
Conversion Notice with respect to such Exchange Cap Shares to the Company and ending on the date of such issuance and payment under this Section 3(d)(ii) and (ii) to the extent the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Exchange Cap Shares, any Buy-In Payment Amount, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection
therewith (collectively, the Exchange Cap Share Cancellation Amount); provided, that no Exchange Cap Share Cancellation Amount shall be due and payable to the Holder to the extent that (x) on or prior to the applicable Share
Delivery Deadline, the Exchange Cap Allocation of a Holder is increased (whether by assignment by a holder of Notes and/or Warrants or all, or any portion, of such holders Exchange Cap Allocation or otherwise) (an Exchange Cap
Allocation Increase) and (y) after giving effect to such Exchange Cap Allocation Increase, the Company delivers the applicable Exchange Cap Shares to the Holder (or its designee) on or prior to the applicable Share Delivery Deadline.
(e) Right of Alternate Conversion.
(i) General. At any time during any Event of Default Redemption Right Period (as defined below)(each, an
Alternate Conversion Eligibility Date), the Holder may, at such Holders option, convert (each, an Alternate Conversion) all, or any part of, this Note (such portion of this Note being converted, the
Alternate Conversion Amount) into Common Stock at the Alternate Conversion Price.
(ii) Mechanics of
Alternate Conversion. At any time after the Alternate Conversion Eligibility Date, the Holder may voluntarily convert any Alternate Conversion Amount pursuant to Section 3(c) (with Alternate Conversion Price replacing
Conversion Price for all purposes hereunder with respect to such Alternate Conversion) by designating in the Conversion Notice delivered pursuant to this Section 3(e) of this Note that the Holder is electing to use the Alternate
Conversion Price for such conversion. Notwithstanding
12
anything to the contrary in this Section 3(e), but subject to Section 3(d), until the Company delivers shares of Common Stock representing the applicable Alternate Conversion Amount to
the Holder, such Alternate Conversion Amount may be converted by the Holder into shares of Common Stock pursuant to Section 3(c) without regard to this Section 3(e).
4. RIGHTS UPON EVENT OF DEFAULT.
(a) Event of Default. Each of the following events shall constitute an Event of Default and each of
the events in clauses (ix), (x) and (xi), shall constitute a Bankruptcy Event of Default:
(i) the
failure of the applicable Registration Statement (as defined in the Registration Rights Agreement) to be filed with the SEC on or prior to the date that is five (5) days after the applicable Filing Deadline (as defined in the Registration
Rights Agreement) or the failure of the applicable Registration Statement to be declared effective by the SEC on or prior to the date that is ten (10) Trading Days after the applicable Effectiveness Deadline (as defined in the Registration
Rights Agreement); provided that to the extent such failure of the applicable Registration Statement to be declared effective by the SEC was caused by the failure of the Company to satisfy by the SEC on the relevant Registration Statement or any
document incorporated by reference therein and the Company and its counsel has timely and in good faith responded to comments by the SEC as required by the Registration Rights Agreement, no Event of Default shall be deemed to occur for an additional
five (5) Trading Day period;
(ii) while the applicable Registration Statement is required to be maintained effective
pursuant to the terms of the Registration Rights Agreement, the effectiveness of the applicable Registration Statement lapses for any reason (including, without limitation, the issuance of a stop order) or such Registration Statement (or the
prospectus contained therein) is unavailable to any holder of Registrable Securities (as defined in the Registration Rights Agreement) for sale of all of such holders Registrable Securities in accordance with the terms of the Registration
Rights Agreement, and such lapse or unavailability continues for a period of five (5) consecutive Trading Days or for more than an aggregate of ten (10) Trading Days in any 365-day period (excluding days during an Allowable Grace Period
(as defined in the Registration Rights Agreement));
(iii) the suspension from trading or the failure of the Common Stock
to be trading or listed (as applicable) on an Eligible Market for a period of five (5) consecutive Trading Days;
(iv)
the Companys (A) failure to cure a Conversion Failure (other than a Conversion Failure with respect to which a Conversion Notice has been withdrawn by the Holder) or a Delivery Failure (as defined in the Warrants) by delivery of the
required number of shares of Common Stock within five (5) Trading Days after the
13
applicable Conversion Date or exercise date (as the case may be) or (B) notice, written or oral, to any holder of the Notes or Warrants, including, without limitation, by way of public
announcement or through any of its agents, at any time, of its intention not to comply, as required, with a request for conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions of the Notes, other than
pursuant to Section 3(d), or a request for exercise of any Warrants for Warrant Shares in accordance with the provisions of the Warrants;
(v) except to the extent the Company is in compliance with Section 11(b) below, at any time following the tenth (10th) consecutive day that the Holders Authorized Share Allocation (as defined in Section 11(a) below) is less than the number of shares of Common Stock that the Holder would be entitled
to receive upon a conversion of the full Conversion Amount of this Note (without regard to any limitations on conversion set forth in Section 3(d) or otherwise);
(vi) the Companys failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts when and
as due under this Note (including, without limitation, the Companys failure to pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined in the Securities Purchase Agreement) or any other agreement,
document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby, except, in the case of a failure to pay Interest and Late Charges when and as due, in which case only if such failure remains
uncured for a period of at least five (5) Trading Days;
(vii) the Company fails to remove any restrictive legend on
any certificate or any shares of Common Stock issued to the Holder upon conversion or exercise (as the case may be) of any Securities acquired by the Holder under the Securities Purchase Agreement (including this Note) as and when required by such
Securities or the Securities Purchase Agreement, unless otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five (5) Trading Days;
(viii) the occurrence of any default under, redemption of or acceleration prior to maturity of at least an aggregate of
$250,000 of Indebtedness (as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries (as defined in the Securities Purchase Agreement), other than with respect to any Other Notes;
(ix) bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be
instituted by or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed within forty-five (45) days of its initiation;
(x) the commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or
foreign
14
bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree, order,
judgment or other similar document in respect of the Company or any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property, or the making by it
of an assignment for the benefit of creditors, or the execution of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability to pay its debts generally as
they become due, the taking of corporate action by the Company or any Subsidiary in furtherance of any such action or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure sale or any other similar action under
federal, state or foreign law, except, solely with respect to any involuntary case or proceeding, that is not dismissed within forty-five (45) days of their initiation;
(xi) the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any
Subsidiary of a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or (ii) a decree, order, judgment or other similar document adjudging the
Company or any Subsidiary as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect of the Company or any Subsidiary under any applicable federal,
state or foreign law or (iii) a decree, order, judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial
part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order, judgment or other similar document unstayed and in
effect for a period of forty-five (45) consecutive days;
(xii) a final judgment, judgments, any arbitration or
mediation award or any settlement of any litigation or any other satisfaction of any claim made by any Person pursuant to any litigation, as applicable, (each a Judgment, and collectively, the Judgments) with
respect to the payment of cash, securities and/or other assets with an aggregate fair value (as determined in accordance with Section 2(b)(iv) of the Warrants) in excess of $250,000 are rendered against, agreed to or otherwise accepted by, the
Company and/or any of its Subsidiaries and which Judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled or stayed pending appeal, or are not discharged within thirty (30) days after the expiration
of such stay; provided, however, any Judgment which is covered by
15
insurance or an indemnity from a credit worthy party shall not be included in calculating the $250,000 amount set forth above so long as the Company provides evidence, reasonably satisfactory to
the Holder, that such Judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such Judgment;
(xiii) the Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or
within any applicable grace period, any payment with respect to any Indebtedness in excess of $250,000 due to any third party (other than, with respect to unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the
case may be) in good faith by proper proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or is otherwise in breach or violation of any agreement for monies owed or owing in an
amount in excess of $250,000, which breach or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or event that would, with or without the
passage of time or the giving of notice, result in a default or event of default under any agreement binding the Company or any Subsidiary, which default or event of default would or is likely to have a material adverse effect on the business,
assets, operations (including results thereof), liabilities, properties, condition (including financial condition) or prospects of the Company or any of its Subsidiaries, individually or in the aggregate;
(xiv) other than as specifically set forth in another clause of this Section 4(a), the Company or any Subsidiary breaches
any representation or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality limitations, which may not be breached in any respect) or any covenant or other term or condition of
any Transaction Document, except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of five (5) consecutive Trading Days;
(xv) an intentionally false or inaccurate certification by the Company that either (A) the Equity Conditions are
satisfied, (B) the Optional Redemption Equity Conditions are satisfied (C) there has been no Equity Conditions Failure, (D) there has been no Optional Redemption Equity Conditions Failure or (E) as to whether any Event of Default
has occurred;
(xvi) any breach or failure in any respect by the Company or any Subsidiary to comply with any provision of
Section 15 of this Note or Section 2.18 of either of the Supplemental Indentures, except with respect to clauses (j) through (p) of Section 15 of this Note, to the extent such breach is capable of being cured, only if such
breach of failure remains uncured for a period of five (5) consecutive Trading Days;
16
(xvii) any provision of any Transaction Document (shall at any time for any
reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be
commenced by the Company or any Subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Company or any Subsidiary shall deny in writing that it has any
liability or obligation purported to be created under any Transaction Document to which it is a party;
(xviii) any
Material Adverse Change occurs; or
(xix) any Event of Default (as defined in the Other Notes) occurs with respect to any
Other Notes.
(b) Notice of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with
respect to this Note or any Other Note, the Company shall within one (1) Business Day deliver written notice thereof via facsimile or electronic mail and overnight courier (with next day delivery specified) (an Event of Default
Notice) to the Holder and the Trustee (such notice being delivered in compliance with the Indenture). The obligation of the Company to deliver an Event of Default Notice is in addition to, and may not be substituted by, the Trustees
delivery of notice of the same Event of Default to the Holder in accordance with Section 601 of the Indenture. At any time after the earlier of the Holders receipt of an Event of Default Notice and the Holder becoming aware of an Event of
Default (such earlier date, the Event of Default Right Commencement Date) and ending (such ending date, the Event of Default Right Expiration Date, and each such period, an Event of Default Redemption
Right Period) on the fifteenth (15th) Trading Day after the later of (x) the date such Event of Default is cured and (y) the Holders receipt of an Event of Default
Notice that includes (I) a reasonable description of the applicable Event of Default, (II) a certification as to whether, in the opinion of the Company, such Event of Default is capable of being cured and, if applicable, a reasonable
description of any existing plans of the Company to cure such Event of Default and (III) a certification as to the date the Event of Default occurred and, if cured on or prior to the date of such Event of Default Notice, the applicable Event of
Default Right Expiration Date, the Holder may require the Company to redeem (regardless of whether such Event of Default has been cured on or prior to the Event of Default Right Expiration Date) all or any portion of this Note by delivering written
notice thereof (the Event of Default Redemption Notice) to the Company and the Trustee, which Event of Default Redemption Notice shall indicate the portion of this Note the Holder is electing to redeem. Each portion of this Note
subject to redemption by the Company pursuant to this Section 4(b) shall be redeemed by the Company at a price equal to the greater of (i) the product of (A) the Conversion Amount to be redeemed multiplied by (B) the Redemption
Premium and (ii) the product of (A) the Conversion Rate with respect to the Conversion Amount in effect at such time as the Holder delivers an Event of Default Redemption Notice multiplied by (B) the product of (x) the Redemption
Premium multiplied by (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date immediately preceding such Event of Default and ending on the date the Company makes the entire
17
payment required to be made under this Section 4(b) (the Event of Default Redemption Price). Redemptions required by this Section 4(b) shall be made in accordance
with the provisions of Section 13. To the extent redemptions required by this Section 4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be
voluntary prepayments. Notwithstanding anything to the contrary in this Section 4, but subject to Section 3(d), until the Event of Default Redemption Price (together with any Late Charges thereon) is paid in full, the Conversion Amount
submitted for redemption under this Section 4(b) (together with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to the terms of this Note. [INSERT IN SERIES B NOTE ONLY: In the event of
a partial redemption of this Note pursuant hereto, the Principal amount redeemed shall be deducted from the Installment Amount(s) relating to the applicable Installment Date(s) as set forth in the Event of Default Redemption Notice.] In the event of
the Companys redemption of any portion of this Note under this Section 4(b), the Holders damages would be uncertain and difficult to estimate because of the parties inability to predict future interest rates and the
uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the
Holders actual loss of its investment opportunity and not as a penalty. Any redemption upon an Event of Default shall not constitute an election of remedies by the Holder, and all other rights and remedies of the Holder shall be preserved.
(c) Mandatory Redemption upon Bankruptcy Event of Default. Notwithstanding anything to the contrary herein, and
notwithstanding any conversion that is then required or in process, upon any Bankruptcy Event of Default, whether occurring prior to or following the Maturity Date, the Company shall immediately pay to the Holder an amount in cash representing the
product of (i) all outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges on such Principal and Interest, multiplied by (ii) the Redemption Premium, in addition to any and all other amounts due hereunder,
without the requirement for any notice or demand or other action by the Holder or any other person or entity, provided that the Holder may, in its sole discretion, waive such right to receive payment upon a Bankruptcy Event of Default, in whole or
in part, and any such waiver shall not affect any other rights of the Holder hereunder, including any other rights in respect of such Bankruptcy Event of Default, any right to conversion, and any right to payment of the Event of Default Redemption
Price or any other Redemption Price, as applicable. The Company shall promptly provide written notice to the Trustee of any redemption that has occurred pursuant to this Section 4(c).
5. RIGHTS UPON FUNDAMENTAL TRANSACTION.
(a) Assumption. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor
Entity assumes in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5(a) pursuant to written agreements in
18
form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes
a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including, without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding
and the interest rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking to the Notes, and satisfactory to the Holder and (ii) the Successor Entity (including its Parent Entity) is a
publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the
date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the Company shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of a Fundamental Transaction, the Successor
Entity shall deliver to the Holder confirmation that there shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction, in lieu of the shares of Common Stock (or other securities,
cash, assets or other property (except such items still issuable under Sections 6 and 17, which shall continue to be receivable thereafter) issuable upon the conversion or redemption of the Notes prior to such Fundamental Transaction, such shares of
the publicly traded common stock (or their equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Note been converted
immediately prior to such Fundamental Transaction (without regard to any limitations on the conversion of this Note), as adjusted in accordance with the provisions of this Note. Notwithstanding the foregoing, the Holder may elect, at its sole
option, by delivery of written notice to the Company to waive this Section 5(a) to permit the Fundamental Transaction without the assumption of this Note. The provisions of this Section 5 shall apply similarly and equally to successive
Fundamental Transactions and shall be applied without regard to any limitations on the conversion of this Note.
(b)
Notice of a Change of Control; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior to the consummation of a Change of Control (the Change of Control Date), but not
prior to the public announcement of such Change of Control, the Company shall deliver written notice thereof via facsimile or electronic mail and overnight courier to the Holder and the Trustee (a Change of Control Notice). At any
time during the period beginning after the Holders receipt of a Change of Control Notice or the Holder becoming aware of a Change of Control if a Change of Control Notice is not delivered to the Holder in accordance with the immediately
preceding sentence (as applicable) and ending on the later of twenty (20) Trading Days after (A) consummation of such Change of Control or (B) the date of receipt of such Change of Control Notice, the Holder may require the Company to
redeem all or any portion of this Note by delivering written notice thereof
19
(Change of Control Redemption Notice) to the Company and the Trustee, which Change of Control Redemption Notice shall indicate the Conversion Amount the Holder is electing to
redeem. The portion of this Note subject to redemption pursuant to this Section 5 shall be redeemed by the Company in cash at a price equal to the greatest of (i) the product of (A) the Change of Control Redemption Premium multiplied
by (B) the Conversion Amount being redeemed, (ii) the product of (A) the Change of Control Redemption Premium multiplied by (B) the product of (x) the Conversion Amount being redeemed multiplied by (y) the quotient
determined by dividing (I) the greatest Closing Sale Price of the shares of Common Stock during the period beginning on the date immediately preceding the earlier to occur of (1) the consummation of the applicable Change of Control and
(2) the public announcement of such Change of Control and ending on the date the Holder delivers the Change of Control Redemption Notice by (II) the Conversion Price then in effect and (iii) the product of (A) the Change of Control
Redemption Premium multiplied by (B) the product of (x) the Conversion Amount being redeemed multiplied by (y) the quotient of (I) the aggregate cash consideration and the aggregate cash value of any non-cash consideration per
share of Common Stock to be paid to the holders of the shares of Common Stock upon consummation of such Change of Control (any such non-cash consideration constituting publicly-traded securities shall be valued at the highest of the Closing Sale
Price of such securities as of the Trading Day immediately prior to the consummation of such Change of Control, the Closing Sale Price of such securities on the Trading Day immediately following the public announcement of such proposed Change of
Control and the Closing Sale Price of such securities on the Trading Day immediately prior to the public announcement of such proposed Change of Control) divided by (II) the Conversion Price then in effect (the Change of Control Redemption
Price). Redemptions required by this Section 5 shall be made in accordance with the provisions of Section 13 and shall have priority to payments to stockholders in connection with such Change of Control. To the extent redemptions
required by this Section 5(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in
this Section 5, but subject to Section 3(d), until the Change of Control Redemption Price (together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 5(b) (together with
any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. [INSERT IN SERIES B NOTE ONLY: In the event of a partial redemption of this Note pursuant hereto, the Principal amount
redeemed shall be deducted from the Installment Amount(s) relating to the applicable Installment Date(s) as set forth in the Change of Control Redemption Notice.] In the event of the Companys redemption of any portion of this Note under this
Section 5(b), the Holders damages would be uncertain and difficult to estimate because of the parties inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity
for the Holder. Accordingly, any redemption premium due under this Section 5(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holders actual loss of its investment opportunity and not as a penalty.
20
6. RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.
(a) Purchase Rights. In addition to any adjustments pursuant to Section 7 below, if at any time the Company grants,
issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to all or substantially all of the record holders of any class of Common Stock (the Purchase Rights),
then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete
conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note) immediately prior to the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that to the extent that the Holders right to
participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent (and shall not be
entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time or times,
if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such
initial Purchase Right or on any subsequent Purchase Right to be held similarly in abeyance) to the same extent as if there had been no such limitation).
(b) Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the
consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a Corporate Event), the
Company shall make appropriate provision to ensure that the Holder will thereafter have the right to receive upon a conversion of this Note, at the Holders option (i) in addition to the shares of Common Stock receivable upon such
conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without
taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares
of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such consideration (as opposed
to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holder. The provisions of this
Section 6 shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Note.
21
7. RIGHTS UPON ISSUANCE OF OTHER SECURITIES.
(a) Adjustment of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Subscription Date the
Company issues or sells, or in accordance with this Section 7(a) is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but
excluding any Excluded Securities issued or sold or deemed to have been issued or sold) for a consideration per share (the New Issuance Price) less than a price equal to the Conversion Price in effect immediately prior to such
issue or sale or deemed issuance or sale (such Conversion Price then in effect is referred to herein as the Applicable Price) (the foregoing a Dilutive Issuance), then, immediately after such Dilutive Issuance,
the Conversion Price then in effect shall be reduced to the New Issuance Price. For all purposes of the foregoing (including, without limitation, determining the adjusted Conversion Price and the New Issuance Price under this Section 7(a)), the
following shall be applicable:
(i) Issuance of Options. If the Company in any manner grants or sells any Options
and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or
otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such
price per share. For purposes of this Section 7(a)(i), the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option or otherwise pursuant to the terms thereof (other than cash paid in lieu of issuing fractional shares of Common Stock or fractional Convertible Securities) shall be equal to (1) the lower of
(x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise
or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable upon the
exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof, minus (2) the sum of all amounts paid or payable to the
holder of such Option (or any other Person) upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to
the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of
22
the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the terms
thereof or upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the
lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall
be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 7(a)(ii), the lowest price per share
for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if
any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security or otherwise pursuant to the terms
thereof and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum
of all amounts paid or payable to the holder of such Convertible Security (or any other Person) (other than cash paid in lieu of issuing fractional shares of Common Stock or fractional Convertible Securities) upon the issuance or sale of such
Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion
Price shall be made upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such issue or sale of such Convertible Securities
is made upon exercise of any Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 7(a), except as contemplated below, no further adjustment of the Conversion Price shall be
made by reason of such issue or sale.
(iii) Change in Option Price or Rate of Conversion. If the purchase or
exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or
exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 7(b)), the Conversion
Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or
23
Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate (as the case may be) at the time initially
granted, issued or sold. For purposes of this Section 7(a)(iii), if the terms of any Option or Convertible Security that was outstanding as of the Subscription Date are increased or decreased in the manner described in the immediately preceding
sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant
to this Section 7(a) shall be made if such adjustment would result in an increase of the Conversion Price then in effect.
(iv) Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued
in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the Primary Security, and such Option and/or Convertible Security and/or Adjustment Right, the
Secondary Securities), together comprising one integrated transaction (or one or more transactions if such issuances or sales or deemed issuances or sales of securities of the Company either (A) have at least one investor or
purchaser in common, (B) are consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of financing), the consideration per share of Common Stock with respect to such Primary Security shall be deemed
to be equal to the difference of (x) the lowest price per share for which one share of Common Stock was issued in such integrated transaction (or was deemed to be issued pursuant to Section 7(a)(i) or 7(a)(ii) above, as applicable) solely
with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (A) the Black Scholes Consideration Value of each such Option, if any, (B) the fair market value (as determined by the Holder in
good faith) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right, if any, and (C) the fair market value (as determined by the Holder) of such Convertible Security, if any, in each case, as determined on a per share
basis in accordance with this Section 7(a)(iv). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of
determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the net amount of consideration received by the
Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security,
but not for the purpose of the calculation of the Black Scholes Consideration Value), the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded
securities, in which case the amount of consideration received by the Company for such securities will be the average VWAP of such security for the five (5) Trading Day period immediately preceding the date of receipt. If any shares of Common
Stock, Options or Convertible
24
Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity (for the purpose of determining the consideration paid
for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value), the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets
and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined
jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the Valuation Event), the fair value of such consideration will
be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the
Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
(v) Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling
them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record
date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of
subscription or purchase (as the case may be).
(b) Adjustment of Conversion Price upon Subdivision or Combination of
Common Stock. Without limiting any provision of Section 5 or Section 7(a), if the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend, stock combination, recapitalization or other
similar transaction) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. Without limiting any provision
of Section 5 or Section 7(a), if the Company at any time on or after the Subscription Date combines (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant to this Section 7(b) shall become effective
immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this Section 7(b) occurs during the period that a Conversion Price is calculated hereunder, then the calculation of such
Conversion Price shall be adjusted appropriately to reflect such event.
(c) Holders Right of Adjusted Conversion
Price. In addition to and not in limitation of the other provisions of this Section 7 or Section 4(q) of the Securities Purchase Agreement, if the Company in any manner issues or sells or enters into any
25
agreement to issue or sell, any Common Stock, Options or Convertible Securities (any such securities, Variable Price Securities), that are issuable pursuant to such agreement
or convertible into or exchangeable or exercisable for shares of Common Stock pursuant to such Options or Convertible Securities, as applicable, at a price which varies or may vary with the market price of the shares of Common Stock, including by
way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends and similar transactions) (each of the formulations for such
variable price being herein referred to as, the Variable Price), the Company shall provide written notice thereof via facsimile or electronic mail and overnight courier to the Holder on the date of such agreement and/or the
issuance of such shares of Common Stock, Convertible Securities or Options, as applicable. From and after the date the Company enters into such agreement or issues any such Variable Price Securities, the Holder shall have the right, but not the
obligation, in its sole discretion to substitute the Variable Price for the Conversion Price upon conversion of this Note by designating in the Conversion Notice delivered upon any conversion of this Note that solely for purposes of such conversion
the Holder is relying on the Variable Price rather than the Conversion Price then in effect. The Holders election to rely on a Variable Price for a particular conversion of this Note shall not obligate the Holder to rely on a Variable Price
for any future conversion of this Note.
(d) Stock Combination Event Adjustments. If at any time and from time to
time on or after the Subscription Date there occurs any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (each, a Stock Combination Event, and such date
thereof, the Stock Combination Event Date) and the Event Market Price is less than the Conversion Price then in effect (after giving effect to the adjustment in Section 7(b) above), then on the twentieth (20th) Trading
Day immediately following such Stock Combination Event Date, the Conversion Price then in effect on such twentieth (20th) Trading Day (after giving effect to the adjustment in Section 7(b) above) shall be reduced (but in no event
increased) to the Event Market Price. For the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result in an increase in the Conversion Price hereunder, no adjustment shall be made.
(e) Other Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof
are not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated by the provisions of this Section 7 but not expressly provided for by such provisions
(excluding, for avoidance of doubt, the granting of any cash settled equity-linked awards under an employee benefit plan, such as (without limitation), stock appreciation rights, phantom stock rights or other rights with equity-linked features that
do not provide for the issuance of Common Stock, Convertible Securities or Options), then the Companys board of directors shall in good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect the rights
of the Holder, provided that no such adjustment pursuant to this Section 7(e) will increase the
26
Conversion Price as otherwise determined pursuant to this Section 7, provided further that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder
against such dilution, then the Companys board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be
final and binding absent manifest error and whose fees and expenses shall be borne by the Company.
(f)
Calculations. All calculations under this Section 7 shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.
(g) Voluntary Adjustment by Company. The Company may at any time during the term of this Note, with the prior written
consent of the Required Holders, reduce the then current Conversion Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.
(h) [INSERT IN SERIES A NOTE: Adjustments. If immediately following the close of business on [March
, 2016] (the Adjustment Date), the Conversion Price then in effect exceeds the price equal to the quotient of (x) the sum of the VWAP of the Common Stock for each of the five (5) consecutive
Trading Days immediately preceding the Adjustment Date, divided by (y) five (5) (the Adjusted Conversion Price, and such period, the Adjustment Measuring Period), the Conversion Price hereunder shall
be reset to the Adjusted Conversion Price as of such Adjustment Date (each, a Conversion Price Adjustment). Notwithstanding the foregoing, to the extent the Holder delivers one or more Conversion Notices to the Company during the
Adjustment Measuring Period with respect to a Conversion Price Adjustment, in addition to the shares of Common Stock issued or issuable to the Holder with respect to each such Conversion Notice, on the later of (A) the applicable Share Delivery
Date with respect to such Conversion Notice and (B) the applicable Adjustment Date, the Holder shall receive an additional number of shares of Common Stock equal to the difference of (x) the quotient of (I) the Conversion Amount with
respect to such Conversion Notice, divided by (II) the Adjusted Conversion Price, less (y) the number of shares of Common Stock issued or otherwise issuable to the Holder with respect to such Conversion Notice. Except as otherwise provided in
this Section 7(h), the Adjusted Conversion Price, if any, shall not apply to any Conversion Amount converted into Common Stock prior to such Adjustment Date.][INSERT IN SERIES B NOTES: [Reserved].
8. [INSERT IN SERIES A NOTE: [Reserved][INSERT IN SERIES B NOTE: INSTALLMENT CONVERSION.
(a) General. On each applicable Installment Date, provided there has been no Equity Conditions Failure, the Company
shall pay to the Holder of this Note the applicable Installment Amount due on such date by converting such Installment Amount
27
in accordance with this Section 8 (an Installment Conversion). Promptly following the close of the Principal Market (or other principal trading market in which the Common
Stock is then trading) on the Trading Day prior to each Installment Date, the Company shall deliver written notice (each, an Installment Notice, and such date, the Installment Notice Date), to each holder of
Series B Notes and such Installment Notice shall (i) specify the applicable Installment Amount of such holders Note to be converted pursuant to an Installment Conversion (each, an Installment Conversion Amount),
(ii) specify the applicable Installment Conversion Price, (iii) specify the number of shares of Common Stock to be issued to the Holder in such Installment Conversion (the Installment Shares) and (iv) certify that
either (A) there is not then an Equity Conditions Failure as of the applicable Installment Notice Date or (B) if there is an Equity Conditions Failure as of the applicable Installment Notice Date, unless the Holder waives such Equity
Conditions Failure, no Installment Conversion shall occur on such Installment Date and the applicable Installment Conversion Amount shall be deferred to the last Installment Date (or such other Installment Date as the Holder may elect in writing to
the Company). Each Installment Notice shall be irrevocable. If the Company does not timely deliver an Installment Notice in accordance with this Section 8 with respect to a particular Installment Date, then the Company shall be deemed to have
delivered an Installment Notice on the applicable Installment Notice Date with a certification that there is not then an Equity Conditions Failure in connection with such Installment Conversion.
(b) Mechanics of Delivery of Installment Shares. Subject to Section 3(d), no later than three (3) Trading Days
(or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the applicable Installment Date) (the Installment Share Delivery Deadline) after the
applicable Installment Date, the Company shall deliver to the Holders account with DTC such Installment Shares issued upon such Installment Conversion in accordance with the conversion procedures set forth in Section 3 hereunder,
mutatis mutandis (with Installment Conversion Price replacing Conversion Price and Installment Notice replacing Conversion Notice for all purposes hereunder with respect to such Installment
Conversion). Subject to Section 3(d), the Person or Persons entitled to receive the shares of Common Stock issuable in an Installment Conversion shall be treated for all purposes as the record holder or holders of such Installment Shares on the
applicable Installment Date. The Company shall pay any and all taxes that may be payable with respect to the issuance and delivery of any Installment Shares in any Installment Conversion hereunder. Notwithstanding anything to the contrary in this
Section 8(b), but subject to Section 3(d), until the Company delivers Common Stock representing the Installment Conversion Amount to the Holder, the Installment Conversion Amount may be converted by the Holder into Installment Shares
pursuant to Section 3. In the event that the Holder elects to convert the Installment Conversion Amount prior to the applicable Installment Date as set forth in the immediately preceding sentence, the Installment Conversion Amount so converted
shall be deducted from the Installment Amount(s) relating to the applicable Installment Date(s) as set forth in the applicable Conversion Notice.
28
(c) Deferred Installment Amount. Notwithstanding any provision of this
Section 8(c) to the contrary, the Holder may, at its option and in its sole discretion, deliver a written notice to the Company no later than the Trading Day immediately prior to the applicable Installment Date electing to have the payment of
all or any portion of an Installment Amount payable on such Installment Date deferred (such amount deferred, the Deferral Amount, and such deferral, each a Deferral) until any subsequent Installment Date
selected by the Holder, in its sole discretion, in which case, the Deferral Amount shall be added to, and become part of, such subsequent Installment Amount and such Deferral Amount shall continue to accrue Interest hereunder. Any notice delivered
by the Holder pursuant to this Section 8(c) shall set forth (i) the Deferral Amount and (ii) the date that such Deferral Amount shall now be payable.
(d) Acceleration of Installment Amounts. Notwithstanding anything herein to the contrary, during the period commencing
on an Installment Date (a Current Installment Date) and ending on the Trading Day immediately prior to the next Installment Date (each, an Installment Period), at the option of the Holder, at one or more times,
the Holder may convert other Installment Amounts (each, an Acceleration), in whole or in part, at the Installment Conversion Price of such Current Installment Date in accordance with the conversion procedures set forth in
Section 3 hereunder, mutatis mutandis (with the applicable Installment Conversion Price replacing Conversion Price for all purposes hereunder with respect to such Acceleration). Notwithstanding the foregoing, with
respect to any given Installment Period, the Holder may not elect to effect any Acceleration during such Installment Period if the sum of (x) the Installment Conversion with respect to such Installment Date and (y) the sum of all
Accelerations of the Holder during such Installment Period exceeds the applicable Maximum Acceleration Amount.
(e)
Blocker Notice; Designated Specified Amounts. Notwithstanding the foregoing, at any time the Holder delivers (via facsimile or otherwise) to the Company a written notice (a Blocker Notice) (A) stating that such
Installment Conversion would result in a violation of Section 3(d)(i) and (B) specifying the portion of the applicable Installment Amount with respect to which such Installment Conversion would result in a violation of Section 3(d)(i)
if such Installment Conversion were effected (such amount so specified is referred to herein as the Designated Specified Amount), the Installment Amount of the Holder for such Current Installment Date shall be automatically
reduced by such Designated Specified Amount and the Installment Amount of the Holder for the last Installment Date (or such other Installment Date as specified in writing by the Holder) (the Designated Specified Deferral Installment
Date) shall be automatically increased by such Designated Specified Amount. At the Holders option, at any time prior to the next Installment Date, (A) the Holder may reduce the Designated Specified Amount of shares of Common
Stock covered by such Blocker Notice, in whole or in part, by delivery of one or more written notices to the Company (each, a Withdrawal Notice, and each date, Withdrawal Notice Date) and elect to convert the
Designated Specified Amount (or such lesser amount as set forth in such Withdrawal Notice) at the Installment Conversion Price with respect to the applicable Installment
29
Date in accordance with this Section 8 (each, a Withdrawn Designated Specified Amount), (B) the Company shall convert each Withdrawn Designated Specified Amount in
accordance with the conversion procedures set forth in Section 3 hereunder, mutatis mutandis (with Installment Conversion Price replacing Conversion Price and Withdrawal Notice replacing Conversion
Notice for all purposes hereunder with respect to such conversion), and (C) the applicable Designated Specified Deferral Installment Date shall be decreased by the applicable Withdrawn Designated Specified Amount.
9. [INSERT IN SERIES A NOTE: [Reserved][INSERT IN SERIES B NOTE: HOLDERS RIGHT OF OPTIONAL REDEMPTION. At any time the Company
sells any Restricted Assets, the Holder shall have the right, in its sole discretion, to require that the Company redeem (a Holder Optional Redemption) up an aggregate Conversion Amount of this Note equal to 83 1/3% of the
Available Holder Optional Redemption Amount by delivering written notice thereof (an Holder Optional Redemption Notice and the date the Holder delivers such notice, the Holder Optional Redemption Notice Date)
which notice shall state (i) the portion of the Conversion Amount that is being redeemed (the Holder Optional Redemption Amount) and (ii) the date on which the Holder Optional Redemption shall occur which date shall be
not less than five (5) Business Days from the Holder Optional Redemption Notice Date (the Holder Optional Redemption Date). The portion of this Note subject to redemption pursuant to this Section 9 shall be redeemed by
the Company in cash at a price equal to 120% of the Holder Optional Redemption Amount (the Holder Optional Redemption Price). Each Holder Optional Redemption made pursuant to this Section 9 shall be made in accordance with
Section 13.]
10. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its
Certificate of Incorporation (as defined in the Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase Agreement) or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution,
issue or sale of securities, or any other voluntary action, knowingly avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take
all action as may be required to protect the rights of the Holder of this Note. Without limiting the generality of the foregoing or any other provision of this Note or the other Transaction Documents, the Company (a) shall not increase the par
value of any shares of Common Stock receivable upon conversion of this Note above the Conversion Price then in effect, (b) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the conversion of this Note, and (c) shall, so long as any of the Series [A][B] Notes are outstanding, take all action necessary to reserve and keep available out of its authorized and
unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Series [A][B] Notes, the maximum number of shares of Common Stock as shall from time to time be necessary to effect the conversion of the Series [A][B] Notes
then outstanding (without regard to any limitations on conversion). Notwithstanding anything herein to the contrary, if after the six (6) month anniversary of the Issuance Date, the Holder is not permitted to convert this Note in full for any
reason (other than pursuant to restrictions set forth
30
in Section 3(d)(i) hereof), the Company shall use its best efforts to promptly remedy such failure, including, without limitation, obtaining such consents or approvals as necessary to effect
such conversion into shares of Common Stock.
11. RESERVATION OF AUTHORIZED SHARES.
(a) Reservation. The Company shall initially reserve out of its authorized and unissued shares of Common Stock a number
of shares of Common Stock for the Notes equal to 125% of the maximum number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Notes as of the Issuance Date (without regard to any limitations on
conversions and assuming the Notes remain outstanding until the Maturity Date). From and after the Required Reservation Increase Date (as defined in the Securities Purchase Agreement), the Company shall take all action necessary to reserve and keep
available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Notes, at least equal to 150% of the maximum number of shares of Common Stock as shall from time to time be necessary to effect the
conversion of all of the Notes then outstanding (without regard to any limitations on conversions and assuming the Notes remain outstanding until the Maturity Date) (the Required Reserve Amount); provided that at no time shall the
number of shares of Common Stock reserved pursuant to this Section 11(a) be reduced other than proportionally in connection with any conversion or redemption of the Notes or such other event covered by Section 7(b) above. The Required
Reserve Amount (including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among the holders of the Notes based on the original principal amount of the Notes held by each holder on the Closing Date
(without regard to any limitations on conversion) or increase in the number of reserved shares, as the case may be (the Authorized Share Allocation). In the event that a holder shall sell or otherwise transfer any of such
holders Notes, each transferee shall be allocated a pro rata portion of such holders Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Notes shall be allocated to the
remaining holders of Notes, pro rata based on the principal amount of the Notes then held by such holders.
(b)
Insufficient Authorized Shares. If, notwithstanding Section 11(a), and not in limitation thereof, at any time while any of the Notes remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of
Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve Amount (an Authorized Share Failure), then the Company shall
promptly take all action necessary to increase the Companys authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting the generality
of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a
meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the
31
Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders approval of such increase in authorized shares of Common Stock and
to cause its board of directors to recommend to the stockholders that they approve such proposal. In the event that the Company is prohibited from issuing shares of Common Stock upon any conversion due to the failure by the Company to have
sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the Authorized Failure Shares), in lieu of delivering such Authorized
Failure Shares to the Holder, the Company shall pay cash in exchange for the redemption of such portion of the Conversion Amount convertible into such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such
number of Authorized Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable Conversion Notice with respect to such Authorized
Failure Shares to the Company and ending on the date of such issuance and payment under this Section 11(a); and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of Authorized Failure Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith (collectively, the Authorization Failure Cancellation
Amount; provided, that no Authorization Failure Cancellation Amount shall be due and payable to the Holder to the extent that (x) on or prior to the applicable Share Delivery Deadline, the Authorized Share Allocation of the Holder is
increased (whether by assignment by a holder of Notes and/or Warrants of all, or any portion, of such holders Authorized Share Allocation or otherwise) (an Authorized Share Allocation Increase) and (y) after giving
effect to such Authorization Share Allocation Increase, the Company delivers the applicable Authorization Failure Shares to the Holder (or its designee) on or prior to the applicable Share Delivery Deadline. Nothing contained in this Section 11
shall limit any obligations of the Company under any provision of the Securities Purchase Agreement.
12. [INSERT IN SERIES A NOTES:
REDEMPTIONS AT THE COMPANYS ELECTION.
(a) Company Optional Redemption. At any time no Optional
Redemption Equity Conditions Failure exists, the Company shall have the right to redeem all, but not less than all, of the Conversion Amount then remaining under this Note (the Company Optional Redemption Amount) on the Company
Optional Redemption Date (each as defined below) (a Company Optional Redemption). The portion of this Note subject to redemption pursuant to this Section 12(a) shall be redeemed by the Company in cash at a price (the
Company Optional Redemption Price) equal to the Conversion Amount being redeemed as of the Company Optional Redemption Date plus any applicable Make-Whole Amount. The Company may exercise its right to require redemption under this
Section 12(a) by delivering a written notice thereof by facsimile or overnight courier to all, but not less than all, of the holders of Series A Notes and the Trustee (the Company Optional Redemption Notice and the date all
of the holders of Series A Notes and the Trustee received such notice is referred
32
to as the Company Optional Redemption Notice Date). Unless a Company Optional Redemption Notice is cancelled as provided in clause (i)(B) below, the Company may deliver only
one Company Optional Redemption Notice hereunder and such Company Optional Redemption Notice shall be irrevocable. The Company Optional Redemption Notice shall (x) state the date on which the Company Optional Redemption shall occur (the
Company Optional Redemption Date) which date shall not be less than twenty (20) calendar days nor more than thirty (30) calendar days following the Company Optional Redemption Notice Date, (y) certify that there has
been no Optional Redemption Equity Conditions Failure and (z) state the aggregate Conversion Amount of the Series A Notes which are being redeemed in such Company Optional Redemption from the Holder and all of the other holders of the Series A
Notes pursuant to this Section 12(a) (and analogous provisions under the Other Series A Notes) on the Company Optional Redemption Date. Notwithstanding anything herein to the contrary, (i) if no Optional Redemption Equity Conditions
Failure has occurred as of the Company Optional Redemption Notice Date but an Optional Redemption Equity Conditions Failure occurs at any time prior to the Company Optional Redemption Date, (A) the Company shall provide the Holder a subsequent
notice to that effect and (B) unless the Holder waives the Optional Redemption Equity Conditions Failure, the Company Optional Redemption shall be cancelled and the applicable Company Optional Redemption Notice shall be null and void and
(ii) at any time prior to the date the Company Optional Redemption Price is paid, in full, the Company Optional Redemption Amount may be converted, in whole or in part, by the Holders into Common Shares pursuant to Section 3. All
Conversion Amounts converted by the Holder after the Company Optional Redemption Notice Date shall reduce the Company Optional Redemption Amount of this Note required to be redeemed on the Company Optional Redemption Date. Redemptions made pursuant
to this Section 12(a) shall be made in accordance with Section 13.
(b) Pro Rata Redemption Requirement.
If the Company elects to cause a Company Optional Redemption of this Note pursuant to Section 12(a), then it must simultaneously take the same action with respect to all of the Other Series A Notes, pro rata.][INSERT IN SERIES B NOTES:
[Reserved]
13. REDEMPTIONS.
(a) Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within
five (5) Business Days after the Companys receipt of the Holders Event of Default Redemption Notice. [INSERT IN SERIES A NOTES: The Company shall deliver the applicable Company Optional Redemption Price on the Company Optional
Redemption Date. ] [INSERT IN SERIES B NOTE ONLY: The Company shall deliver the applicable Holder Optional Redemption Price to the Holder in cash on the applicable Holder Optional Redemption Date.] If the Holder has submitted a Change of Control
Redemption Notice in accordance with Section 5(b), the Company shall deliver the applicable Change of Control Redemption Price to the Holder in cash concurrently with the consummation of such Change of Control if such notice is received prior
to the consummation of such Change of Control and within five (5) Business Days after the Companys receipt of such notice otherwise.
33
Notwithstanding anything herein to the contrary, in connection with any redemption hereunder at a time the Holder is entitled to receive a cash payment under any of the other Transaction
Documents, at the option of the Holder delivered in writing to the Company, the applicable Redemption Price hereunder shall be increased by the amount of such cash payment owed to the Holder under such other Transaction Document and, upon payment in
full or conversion in accordance herewith, shall satisfy the Companys payment obligation under such other Transaction Document. In the event of a redemption of less than all of the Conversion Amount of this Note, the Company shall promptly
cause to be issued and delivered to the Holder a new Note (in accordance with Section 20(d)) representing the outstanding Principal which has not been redeemed. In the event that the Company does not pay the applicable Redemption Price to the
Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or
any portion of this Note representing the Conversion Amount that was submitted for redemption and for which the applicable Redemption Price (together with any Late Charges thereon) has not been paid. Upon the Companys receipt of such notice,
(x) the applicable Redemption Notice shall be null and void with respect to such Conversion Amount, (y) the Company shall immediately return this Note, or issue a new duly authenticated Note (in accordance with Section 20(d)), to the
Holder, and in each case the principal amount of this Note or such new Note (as the case may be) shall be increased by an amount equal to the difference between (1) the applicable Redemption Price (as the case may be, and as adjusted
pursuant to this Section 13, if applicable) minus (2) the Principal portion of the Conversion Amount submitted for redemption and (z) the Conversion Price of this Note or such new Notes (as the case may be) shall be automatically
adjusted with respect to each conversion effected thereafter by the Holder to the lowest of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided, (B) [70]% of the lowest Closing Bid Price of
the Common Stock during the period beginning on and including the date on which the applicable Redemption Notice is delivered to the Company and ending on and including the date on which the applicable Redemption Notice is voided and (C) [70]%
of the quotient of (I) the sum of the five (5) lowest VWAPs of the Common Stock during the twenty (20) consecutive Trading Day period ending and including the Trading Day immediately preceding the applicable Conversion Date divided by
(II) five (5) (it being understood and agreed that all such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period). The Holders delivery of a
notice voiding a Redemption Notice and exercise of its rights following such notice shall not affect the Companys obligations to make any payments of Late Charges which have accrued prior to the date of such notice with respect to the
Conversion Amount subject to such notice.
(b) Redemption by Other Holders. Upon the Companys receipt of
notice from any of the holders of the Other Notes for redemption or repayment as a result of an event or occurrence substantially similar to the events or occurrences described in Section 4(b) or Section 5(b) (each, an Other
Redemption Notice), the Company shall immediately, but no later than one (1) Business Day of its receipt thereof, forward to the
34
Holder by facsimile or electronic mail a copy of such notice (whether or not the Company agrees that such event or occurrence has occurred and/or is continuing). If the Company receives a
Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day period beginning on and including the date which is three (3) Business Days prior to the Companys receipt of the Holders applicable
Redemption Notice and ending on and including the date which is three (3) Business Days after the Companys receipt of the Holders applicable Redemption Notice and the Company is unable to redeem all principal, interest and other
amounts designated in such Redemption Notice and such Other Redemption Notices received during such seven (7) Business Day period, then the Company shall redeem a pro rata amount from each holder of the Notes (including the Holder) based on the
principal amount of the Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received by the Company during such seven (7) Business Day period.
(c) The Company shall promptly provide written notice to the Trustee of any Redemption Notice delivered hereunder.
14. VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law (including, without
limitation, the Delaware General Corporation Law) and as expressly provided in this Note.
15. COVENANTS. Until all of the Notes
have been converted, redeemed or otherwise satisfied in accordance with their terms:
(a) Rank. All payments due
under this Note (a) shall rank pari passu with all Other Notes and (b) shall be senior to all other Indebtedness of the Company and its Subsidiaries (other than Permitted Senior Indebtedness in accordance with Section [2.20] of the
Series [A][B] Supplemental Indenture).
(b) Incurrence of Indebtedness. The Company shall not, and the Company shall
cause each of its Subsidiaries to not, directly or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness (other than (i) the Indebtedness evidenced by this Note and the Other Notes (including, for the avoidance of doubt,
any amounts added to the principal amounts of the Notes in accordance with the terms of the Notes in effect as of the initial Issuance Date) and (ii) other Permitted Indebtedness).
(c) Existence of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively,
Liens) other than Permitted Liens.
(d) Restricted Payments. The Company shall not, and the
Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market
purchases, tender offers, private
35
transactions or otherwise), all or any portion of any Indebtedness (other than the Permitted Senior Indebtedness and the Notes) whether by way of payment in respect of principal of (or premium,
if any) or interest on, such Indebtedness if at the time such payment is due or is otherwise made or, after giving effect to such payment, (i) an event constituting an Event of Default has occurred and is continuing or (ii) an event that
with the passage of time and without being cured would constitute an Event of Default has occurred and is continuing.
(e)
Restriction on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its
capital stock (other than dividends paid by wholly-owned Subsidiaries to the Company or to another wholly-owned Subsidiary).
(f) Restriction on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to
not, directly or indirectly, sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any assets or rights of the Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a
series of related transactions, other than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Company and its Subsidiaries in the ordinary course of business consistent with
past practice and (ii) sales of inventory and product in the ordinary course of business. Notwithstanding the foregoing, the Company may transfer (A) the Krillion Assets and (B) the intellectual property assets described on Schedule
II hereto (consisting of all non-core intellectual property of the Company and its Subsidiaries) (the Other IP Assets) to one or more bona fide third party purchasers each in an arms-length transaction at a fair market
price (as determined in accordance with Schedule III attached hereto).
(g) Sale of Assets; Investment Banker. The
Company shall sell (x) the Krillion Assets by no later than June 30, 2015 and (y) the Other IP Assets by no later than December 31, 2015. Commencing no later than March 30, 2015 and so long as this Note remains outstanding, the
Company shall engage an investment bank, reasonably satisfactory to the holders of Series B Notes, to explore strategic alternatives with the Company (including, without limitation, financing alternatives and/or a potential sale of the Company or
any of its Subsidiaries, a line of business and/or other assets of the Company or any of its Subsidiaries.
(h) Reverse
Stock Split. If the Company receives any written notice by the Principal Market that the Company has failed to satisfy the minimum trading price requirements of the Principal Market and, as of the compliance deadline required by the Principal
Market in such written notice (each, a Principal Market Deadline), the
36
Company still fails to satisfy such minimum trading price requirement, the Company shall, no later than such Principal Market Deadline, consummate a reverse stock split such that, after giving
effect to such reverse stock split, the Company shall then be in compliance with the minimum trading price requirements of the Principal Market.
(i) Maturity of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not,
directly or indirectly, permit any Indebtedness of the Company or any of its Subsidiaries, other than Permitted Senior Indebtedness, to mature or accelerate prior to the Maturity Date.
(j) Change in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to
not, directly or indirectly, engage in any material line of business substantially different from those lines of business conducted by or publicly contemplated to be conducted by the Company and each of its Subsidiaries on the Subscription Date or
any business substantially related or incidental thereto. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure or purpose.
(k) Preservation of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to
maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or
leased by it or in which the transaction of its business makes such qualification necessary.
(l) Maintenance of
Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties which are necessary or useful in the proper conduct of its business in good working order and condition,
ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture
thereof or thereunder.
(m) Maintenance of Intellectual Property. The Company will, and will cause each of its
Subsidiaries to, take all action necessary or advisable to maintain all of the Intellectual Property Rights (as defined in the Securities Purchase Agreement) of the Company and/or any of its Subsidiaries that are necessary or material to the conduct
of its business in full force and effect.
(n) Maintenance of Insurance. The Company shall maintain, and cause each
of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its
properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance
with sound business practice by companies in similar businesses similarly situated.
37
(o) Transactions with Affiliates. The Company shall not, nor shall it
permit any of its Subsidiaries to, enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the
rendering of services of any kind) with any affiliate, except necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable
arms length transaction with a Person that is not an affiliate thereof.
(p) Restricted Issuances. The Company
shall not, directly or indirectly, without the prior written consent of the holders of a majority in aggregate principal amount of the Notes then outstanding, (i) issue any Notes (other than as contemplated by the Securities Purchase Agreement,
the Indentures, the Supplemental Indentures and the Notes) or (ii) issue any other securities that would cause a breach or default under the Notes or the Warrants.
(q) Limits on 2015 Expenditures. During the 2015 fiscal year, the Company shall not incur General and Administrative
Expenses and Research and Development Expenses, in the aggregate, in excess of the greater of (i) $21.9 million and (ii) 26% of Revenue.
(r) Independent Investigation. At the request of the Holder either (x) at any time when an Event of Default has
occurred and is continuing, (y) upon the occurrence of an event that with the passage of time or giving of notice would constitute an Event of Default or (z) at any time the Holder reasonably believes an Event of Default may have occurred
or be continuing, the Company shall hire an independent, reputable investment bank selected by the Company and approved by the Holder to investigate as to whether any breach of this Note has occurred (the Independent
Investigator). If the Independent Investigator determines that such breach of this Note has occurred, the Independent Investigator shall notify the Company of such breach and the Company shall deliver written notice to each holder of a
Series [A][B] Note of such breach. In connection with such investigation, the Independent Investigator may, during normal business hours, inspect all contracts, books, records, personnel, offices and other facilities and properties of the Company
and its Subsidiaries and, to the extent available to the Company after the Company uses reasonable efforts to obtain them, the records of its legal advisors and accountants (including the accountants work papers) and any books of account,
records, reports and other papers not contractually required of the Company to be confidential or secret, or subject to attorney-client or other evidentiary privilege, and the Independent Investigator may make such copies and inspections thereof as
the Independent Investigator may reasonably request. The Company shall furnish the Independent Investigator with such financial and operating data and other information with respect to the business and properties of the Company as the Independent
Investigator may reasonably request. The Company shall permit the Independent Investigator to discuss the affairs, finances and accounts of the Company with, and to
38
make proposals and furnish advice with respect thereto to, the Companys officers, directors, key employees and independent public accountants or any of them (and by this provision the
Company authorizes said accountants to discuss with such Independent Investigator the finances and affairs of the Company and any Subsidiaries), all at such reasonable times, upon reasonable notice, and as often as may be reasonably requested.
16. SUBORDINATION. This Note and the rights and obligations evidenced hereby are subordinate in the manner and to the extent set forth
in the Series [A][B] Supplemental Indenture. The terms and conditions of Section 2.20 of the Series [A][B] Supplemental Indenture are incorporated herein, mutatis mutandis.
17. DISTRIBUTION OF ASSETS. Except to the extent subject to adjustments pursuant to Section 7 above, if the Company shall declare
or make any dividend or other distributions of its assets (or rights to acquire its assets) to any or all holders of shares of Common Stock, by way of return of capital or otherwise (including without limitation, any distribution of cash, stock or
other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (the Distributions), then the Holder will be entitled to such
Distributions as if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note) immediately prior to the
date on which a record is taken for such Distribution or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for such Distributions (provided, however, that to the extent that the
Holders right to participate in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (and
shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to such extent) and the portion of such Distribution shall be held in abeyance for the Holder until such time or
times as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times, if any, the Holder shall be granted such rights (and any rights under this Section 17 on such
initial rights or on any subsequent such rights to be held similarly in abeyance) to the same extent as if there had been no such limitation).
18. AMENDING THE TERMS OF THIS NOTE. The prior written consent of the Holder and the Trustee (if such amendment adversely affects the
rights, privileges and immunities of the Trustee) shall be required for any change, waiver or amendment to this Note.
19.
TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder without restriction and without the consent of the Company [INSERT IN SERIES A NOTE ONLY:,
subject only to the provisions of Section 2(g) of the Securities Purchase Agreement]
20. REISSUANCE OF THIS NOTE.
(a) Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company along with a duly
executed copy of the transfer instrument attached
39
hereto as Exhibit III, whereupon the Company will forthwith issue and, following due authentication of such new Note, deliver upon the order of the Holder a new Note (in accordance with
Section 20(d)), registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new, duly authenticated Note (in accordance
with Section 20(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(ii) following
conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note. The Trustee shall have no responsibility for the amount of Principal set forth
on the Note. In accordance with Section 3(c)(iii) hereof, the Register shall be conclusive and binding on all Holders.
(b) Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification
undertaking by the Holder to the Company and the Trustee in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and, following due authentication of such new Note,
deliver to the Holder a new Note (in accordance with Section 20(d)) representing the outstanding Principal.
(c)
Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new, duly authenticated Note or Notes (in accordance with Section 20(d) and
in principal amounts of at least $1,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such
surrender.
(d) Issuance of New Notes. Whenever the Company is required to issue a new duly authenticated Note
pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued
pursuant to Section 20(a) or Section 20(c) as set forth in the Register, the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed
the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note,
(iv) shall have the same rights and conditions as this Note, (v) shall represent accrued and unpaid Interest and Late Charges on the Principal and Interest of this Note, from the Issuance Date and (vi) shall be duly authenticated by
the Trustee in accordance with the Indenture.
21. REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
The remedies provided in this Note shall be cumulative and in
40
addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive
relief), and nothing herein shall limit the Holders right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no
characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the
Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an
injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder and
the Trustee that is requested by the Holder to enable the Holder to confirm the Companys compliance with the terms and conditions of this Note (including, without limitation, compliance with Section 7).
22. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or
enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization,
receivership of the Company or other proceedings affecting Company creditors rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection
with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys fees and disbursements. The Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or
limited, by the fact that the purchase price paid for this Note was less than the original Principal amount hereof.
23. CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the initial Holder and shall not be construed against any such Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not
form part of, or affect the interpretation of, this Note. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms
including, includes, include and words of like import shall be construed broadly as if followed by the words without limitation. The terms herein, hereunder, hereof
and words of like import refer to this entire Agreement instead of just the provision in which they are found. Unless expressly indicated otherwise, all section references are to sections of this Note. Terms used in this Note and not otherwise
defined herein, but defined in the other Transaction Documents, shall have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the Holder and the Company.
41
24. FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the
exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or
privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party. Notwithstanding the foregoing, nothing contained in this Section 24 shall permit any waiver of any provision of
Section 3(d).
25. DISPUTE RESOLUTION.
(a) Submission to Dispute Resolution.
(i) In the case of a dispute relating to a Bid Price, a Closing Bid Price, a Closing Sale Price, a Conversion Price, [INSERT IN
SERIES B NOTES ONLY: an Installment Conversion Price,] a VWAP or a fair market value or the arithmetic calculation of a Conversion Rate, or the applicable Redemption Price (as the case may be) (including, without limitation, a dispute relating to
the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute to the other party via facsimile or electronic mail (A) if by the Company, within two (2) Business Days after the
occurrence of the circumstances giving rise to such dispute or (B) if by the Holder at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to promptly resolve such dispute
relating to such Bid Price, such Closing Bid Price, such Closing Sale Price, such Conversion Price, [INSERT IN SERIES B NOTES ONLY: an Installment Conversion Price,] such VWAP or such fair market value, or the arithmetic calculation of such
Conversion Rate or such applicable Redemption Price (as the case may be), at any time after the second (2nd) Business Day following such initial notice by the Company or the Holder (as the
case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its sole option, select an independent, reputable investment bank reasonably satisfactory to the Company to resolve such dispute.
(ii) The Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so
delivered in accordance with the first sentence of this Section 25 and (B) written documentation supporting its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which the Holder selected such investment bank (the Dispute Submission Deadline) (the documents referred to in the immediately
preceding clauses (A) and (B) are collectively referred to herein as the Required Dispute Documentation) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required
Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or
other support to such investment bank with respect to such dispute and such investment bank
42
shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in
writing by both the Company and the Holder or otherwise requested by such investment bank, neither the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment bank in connection
with such dispute (other than the Required Dispute Documentation).
(iii) The Company and the Holder shall cause such
investment bank to determine the resolution of such dispute and notify the Company and the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of such
investment bank shall be borne solely by the Company, and such investment banks resolution of such dispute shall be final and binding upon all parties absent manifest error.
(b) Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 25 constitutes an
agreement to arbitrate between the Company and the Holder (and constitutes an arbitration agreement) under § 7501, et seq. of the New York Civil Practice Law and Rules (CPLR) and that the Holder is authorized to apply for an
order to compel arbitration pursuant to CPLR § 7503(a) in order to compel compliance with this Section 25, (ii) a dispute relating to a Conversion Price includes, without limitation, disputes as to (A) whether an issuance or sale
or deemed issuance or sale of Common Stock occurred under Section 7(a), (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of
Common Stock was an issuance or sale or deemed issuance or sale of Excluded Securities, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (E) whether a Dilutive Issuance occurred,
(iii) the terms of this Note and each other applicable Transaction Document shall serve as the basis for the selected investment banks resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly
authorized) to make all findings, determinations and the like that such investment bank determines are required to be made by such investment bank in connection with its resolution of such dispute and in resolving such dispute such investment bank
shall apply such findings, determinations and the like to the terms of this Note and any other applicable Transaction Documents, (iv) the Holder (and only the Holder), in its sole discretion, shall have the right to submit any dispute described
in this Section 25 to any state or federal court sitting in The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 25 and (v) nothing in this Section 25 shall limit the Holder
from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to any matters described in this Section 25). Notwithstanding the foregoing, the Trustee shall have the right (but not the obligation)
to participate in such dispute resolution proceedings, at the sole cost and expense of the Company.
43
26. NOTICES; CURRENCY; PAYMENTS.
(a) Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice
shall be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Note (other than payments of interest or conversion in
accordance with the terms of this Note), including in reasonable detail a description of such action and the reason therefore. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately
upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a
record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any grant, issuances, or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to
holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in
conjunction with such notice being provided to the Holder.
(b) Currency. All dollar amounts referred to in this
Note are in United States Dollars (U.S. Dollars), and all amounts owing under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent
amount in accordance with the Exchange Rate on the date of calculation. Exchange Rate means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange rate as
published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period
of time).
(c) Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this
Note, unless otherwise expressly set forth herein, such payment shall be made in lawful money of the United States of America by a certified check drawn on the account of the Company and sent via overnight courier service to such Person at such
address as previously provided to the Company in writing (which address, in the case of each of the Buyers, shall initially be as set forth on the Schedule of Buyers attached to the Securities Purchase Agreement), provided that the Holder may elect
to receive a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such request and the Holders wire transfer instructions. Whenever any amount expressed to be due by
the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day. Any amount of Principal or other amounts due under the Transaction Documents which is not paid
when due shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of eighteen percent (18%) per annum from the date such amount was due until the same is paid in full
(Late Charge).
27. CANCELLATION. After all Principal, accrued Interest, Late Charges and other amounts at any
time owed on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
44
28. WAIVER OF NOTICE. To the extent permitted by law, the Company hereby irrevocably
waives demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities Purchase Agreement.
29. GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Except as otherwise required by Section 25 above, the Company 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, 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 brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Nothing contained herein (i) shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Companys obligations
to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder or (ii) shall limit, or shall be deemed or construed to limit, any provision of
Section 25. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION
CONTEMPLATED HEREBY.
30. JUDGMENT CURRENCY.
(a) If for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes
necessary to convert into any other currency (such other currency being hereinafter in this Section 30 referred to as the Judgment Currency) an amount due in U.S. dollars under this Note, the conversion shall be made at the
Exchange Rate prevailing on the Trading Day immediately preceding:
(i) the date actual payment of the amount due, in the
case of any proceeding in the courts of New York or in the courts of any other jurisdiction that will give effect to such conversion being made on such date: or
(ii) the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the
date as of which such conversion is made pursuant to this Section 30(a)(ii) being hereinafter referred to as the Judgment Conversion Date).
45
(b) If in the case of any proceeding in the court of any jurisdiction referred to
in Section 30(a)(ii) above, there is a change in the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay such adjusted amount as may be necessary to
ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate prevailing on the date of payment, will produce the amount of US dollars which could have been purchased with the amount of Judgment Currency stipulated in the
judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(c) Any amount due from the
Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Note.
31. SEVERABILITY. If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court
of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the
prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s).
32. MAXIMUM PAYMENTS. Without limiting Section [9(d)] of the Securities Purchase Agreement,
nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.
33. CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a) 1933 Act means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) 1934 Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
46
(c) Adjustment Right means any right granted with respect to
any securities issued in connection with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 7) of shares of Common Stock (other than rights of the type described in Section 6(a) hereof) that
could result in a decrease in the net consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).
(d) Affiliate means, with respect to any Person, any other Person that directly or indirectly controls, is
controlled by, or is under common control with, such Person, it being understood for purposes of this definition that control of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary
voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
(e) Alternate Conversion Price means, with respect to any Alternate Conversion that price which shall be the
lower of (i) the applicable Conversion Price as in effect on the applicable Conversion Date of the applicable Alternate Conversion and (ii) 85% of the quotient of (x) the sum of the VWAP of the Common Stock for each Trading Day during
the five (5) consecutive Trading Day period ending and including the Trading Day immediately preceding the Trading Day of the delivery or deemed delivery of the applicable Conversion Notice, divided by (II) five (5) (such period, the
Alternate Conversion Measuring Period). All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or
increases the Common Stock during such Alternate Conversion Measuring Period.
(f) Approved Stock Plan
means any employee benefit plan which has been approved by the board of directors of the Company prior to or subsequent to the Subscription Date pursuant to which shares of Common Stock and standard options to purchase Common Stock may be issued to
any employee, officer or director for services provided to the Company in their capacity as such.
(g) Attribution
Parties means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly
managed or advised by the Holders investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as
a Group together with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Companys Common Stock would or could be aggregated with the Holders and the other Attribution Parties for purposes
of Section 13(d) of the 1934 Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.
47
(h) [INSERT IN SERIES A NOTES: [Reserved]][INSERT IN SERIES B NOTES:
Available Holder Optional Redemption Amount means, with respect to sales of Restricted Assets after the Subscription Date, the difference of (x) the Holder Pro Rata Amount of the aggregate net proceeds of all such sales of
Restricted Assets, less (y) the aggregate Holder Optional Redemption Amount previously redeemed by the Company in Holder Optional Redemption by the Holder hereunder; provided, that the foregoing shall not apply to the initial $750,000 of the
aggregate gross proceeds of any sales of Restricted Assets to the extent the Company uses such proceeds for any of the working capital purposes described on Schedule I attached hereto.]
(i) Black Scholes Consideration Value means the value of the applicable Option, Convertible Security or
Adjustment Right (as the case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the OV function on Bloomberg utilizing (i) an underlying price per share equal to the
Closing Sale Price of the Common Stock on the Trading Day immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option, Convertible Security or Adjustment Right (as the case may
be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of such Option,
Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be).
(j) Bloomberg means Bloomberg, L.P.
(k) Business Day means any day other than Saturday, Sunday or other day on which commercial banks in The
City of New York are authorized or required by law to remain closed.
(l) Change of Control means any
Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification of the
shares of Common Stock in which holders of a majority of the Companys voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold
publicly traded securities and, directly or indirectly, are, in all material respects, the holders of a majority of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of
directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification, or (iii) pursuant to a migratory merger effected solely for the purpose of changing the
jurisdiction of incorporation of the Company or any of its Subsidiaries.
48
(m) Change of Control Redemption Premium means 125%.
(n) Closing Bid Price and Closing Sale Price means, for any security as of any date, the
last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid
price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing
bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the pink sheets by OTC Markets
Group Inc. (formerly Pink Sheets LLC). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of
such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in
accordance with the procedures in Section 25. All such determinations shall be appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions during such period.
(o) Closing Date shall have the meaning set forth in the Securities Purchase Agreement, which date is the
date the Company initially issued Notes pursuant to the terms of the Securities Purchase Agreement.
(p) Common
Stock means (i) the Companys shares of common stock, $0.00001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of
such common stock.
(q) Convertible Securities means any stock or other security (other than Options)
that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.
(r) Eligible Market means The New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the
Nasdaq Global Market, the OTCQB or the Principal Market.
49
(s) Equity Conditions means, with respect to any given date of
determination: (i) on each day during the period beginning thirty calendar days prior to such applicable date of determination and ending on and including such applicable date of determination (the Equity Conditions Measuring
Period) either (x) one or more registration statements shall be effective and the prospectus contained therein shall be available on such applicable date of determination (with, for the avoidance of doubt, any shares of Common Stock
previously sold pursuant to such prospectus deemed unavailable) for the issuance to the Holder or resale by the Holder, as applicable, of all shares of Common Stock to be issued in connection with the event requiring this determination (each, a
Required Minimum Securities Amount) without any restrictive legend, or the applicable Required Minimum Securities Amount of shares of Common Stock shall be eligible for either (A) issuance to the Holder without any
restrictive legend or (B) resale by the Holder pursuant to Rule 144, in either case, without the need for registration under any applicable federal or state securities laws and no Current Information Failure exists or is continuing;
(ii) the applicable Required Minimum Securities Amount of shares of Common Stock may be issued to the Holder in full without violating Section 3(d) hereof; (iii) the Company shall have no knowledge of any fact that would reasonably be
expected to cause (x) any Registration Statement required to be filed pursuant to the Registration Rights Agreement to not be effective or the prospectus contained therein to not be available for the issuance to the Holder or resale by the
Holder, as applicable, of the applicable Required Minimum Securities Amount of shares of Common Stock or (y) the applicable Required Minimum Securities Amount of shares of Common Stock to not be eligible for either (A) issuance to the
Holder without any restrictive legend or (B) resale by the Holder pursuant to Rule 144, in either case, without the need for registration under any applicable federal or state securities and no Current Information Failure exists or is
continuing; (iv) the Holder shall not be in (and no other holder of Notes shall be in) possession of any material, non-public information provided to any of them by the Company, any of its Subsidiaries or any of their respective affiliates,
employees, officers, representatives, agents or the like; (v) on each day during the Equity Conditions Measuring Period, the Company otherwise shall have been in compliance with each, and shall not have breached any representation or warranty
in any material respect (other than representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any covenant or other term or condition of any Transaction Document, including, without
limitation, the Company shall not have failed to timely make any payment pursuant to any Transaction Document; (vi) on the applicable date of determination (A) no Authorized Share Failure shall exist or be continuing and the applicable
Required Minimum Securities Amount of shares of Common Stock are available under the Certificate of Incorporation and reserved by the Company to be issued pursuant to the Notes and (B) the applicable Required Minimum Securities Amount of shares
of Common Stock may be issued in full without resulting in an Authorized Share Failure; (vii) on each day during the Equity Conditions Measuring Period, there shall not have occurred and there shall not exist an Event of Default or an event
that with the passage of time or giving of notice would constitute an Event of Default; and (viii) no Material Adverse Change then exists.
50
(t) [INSERT IN SERIES A NOTES: Equity Conditions Failure means
that on any day during the period commencing twenty (20) Trading Days prior to the applicable Interest Notice Due Date through the applicable Interest Date, the Equity Conditions have not been satisfied (or waived in writing by the Holder).]
[INSERT IN SERIES B NOTES: Equity Conditions Failure means that on any day during the period commencing twenty
(20) Trading Days prior to the applicable Installment Notice Date through the later of the applicable Installment Date and the date on which the applicable shares of Common Stock are actually delivered to the Holder, the Equity Conditions have
not been satisfied (or waived in writing by the Holder).]
(u) Event Market Price means, with respect to
any Stock Combination Event Date, 85% of the quotient determined by dividing (x) the sum of the VWAP of the Common Stock for each Trading Day during the five (5) consecutive Trading Day period ending and including the Trading Day
immediately preceding the twentieth (20th) Trading Day after such Stock Combination Event Date, divided by (y) five (5).
(v) Excluded Securities means (i) shares of Common Stock or standard options to purchase Common Stock
issued to directors, officers, consultants or employees of the Company in their capacity as such pursuant to an Approved Stock Plan (as defined above), provided that (A) all such issuances (taking into account the shares of Common Stock
issuable upon exercise of such options) after the Subscription Date pursuant to this clause (i) do not, in the aggregate, in any two year period after the Subscription Date, exceed more than 3% of the Common Stock outstanding immediately prior
to the Subscription Date in any two year period and (B) except as provided for in accordance with the terms thereof in effect on the Subscription Date, the exercise price of any such options is not lowered, none of such options are amended to
increase the number of shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner that adversely affects any of the Buyers; (ii) shares of Common Stock issued upon the
conversion or exercise of Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior to the Subscription Date, provided that (except
as provided for in accordance with the terms thereof in effect on the Subscription Date) the conversion price of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are
covered by clause (i) above) is not lowered, none of such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to increase
the number of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause
(i) above) are otherwise materially changed in any manner that adversely affects any of the Buyers; (iii) shares of Common Stock issuable upon conversion or otherwise pursuant to the terms of the Notes; (iv) the shares of Common Stock
issuable upon exercise of the Warrants; provided, that the terms of the Warrants are not amended, modified or changed on or after the Subscription Date (other than antidilution adjustments pursuant to the terms
51
thereof in effect as of the Subscription Date), [INSERT IN SERIES A NOTES: (v) a Subsequent Placement (as defined in the Securities Purchase Agreement) of Common Stock (or units of shares of
Common Stock and warrants to purchase Common Stock) with an aggregate purchase price not to exceed $1 million; and (vi)][INSERT IN SERIES B NOTES: and (v)] the Placement Agent Warrants (as defined in the Securities Purchase Agreement); provided that
the exercise of the Placement Agent Warrants is made solely pursuant to the exercise provisions of the Placement Agent Warrants in effect as of the Closing, the exercise price of the Placement Agent Warrants is not lowered (other than adjustments
provided for in accordance with the terms of the Placement Agent Warrants in effect on the Closing Date), none of the Placement Agent Warrants are amended to increase the number of shares issuable thereunder and none of the terms or conditions of
the Placement Agent Warrants are otherwise materially changed in any manner that adversely affects any of the Buyers.
(w)
Fundamental Transaction means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into
(whether or not the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or any of its significant
subsidiaries (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its Common Stock be subject to or party
to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated
as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common
Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at
least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock
calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or
(z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize,
recapitalize or reclassify its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject
Entities in the aggregate to be or become
52
the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer,
exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any
manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common
Stock not held by all such Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power
represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company
to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the
entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
(x) GAAP means United States generally accepted accounting principles, consistently applied.
(y) General and Administrative Expenses means [means, with respect to any period, the aggregate general and
administrative costs of the Company and/or any of its Subsidiaries, as determined in accordance with GAAP].
(z)
Group means a group as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(aa) [INSERT IN SERIES A NOTES: [Reserved]][INSERT IN SERIES B NOTES: Holder Pro Rata Amount means a
fraction (i) the numerator of which is the original Principal amount of this Note on the Closing Date and (ii) the denominator of which is the aggregate original principal amount of all Notes issued to the Buyers pursuant to the Securities
Purchase Agreement on the Closing Date.]
(bb) Indenture means that certain Indenture for Senior Debt
Securities dated as of the Closing Date, by and between the Company and the Trustee, as may be amended, modified or supplemented from time to time, including, without limitation, by any Supplemental Indenture (as defined below).
(cc) [INSERT IN SERIES A NOTES: [Reserved]][INSERT IN SERIES B NOTES: Installment Amount means, with respect
to any Installment Date, the sum
53
of (A) (I) with respect to any Installment Date other than the Maturity Date, the lesser of (X) the Holder Pro Rata Amount of $200,000, and (Y) the Principal amount then
outstanding under this Note as of such Installment Date, and (II) with respect to the Installment Date that is the Maturity Date, the Principal amount then outstanding under this Note as of such Installment Date (in each case, as any such
Installment Amount may be reduced pursuant to the terms of this Note, whether upon conversion, redemption or otherwise), (B) any Deferral Amount deferred pursuant to Section 8(c) and included in such Installment Amount in accordance
therewith, (C) any Designated Specified Amount deferred pursuant to Section (e) and included in such Installment Amount in accordance therewith and (D) in each case of clauses (A) through (C) above, the sum of any accrued
and unpaid Interest as of such Installment Date under this Note and accrued and unpaid Late Charges, if any, under this Note as of such Installment Date. In the event the Holder shall sell or otherwise transfer any portion of this Note, the
transferee shall be allocated a pro rata portion of the each unpaid Installment Amount hereunder.]
(dd) [INSERT IN SERIES
A NOTES: [Reserved]][INSERT IN SERIES B NOTES: Installment Conversion Price means, with respect to any Installment Date, the lowest of (i) the Conversion Price then in effect, and (ii) 80% of the quotient of (A) the
sum of the VWAP of the Common Stock for each Trading Day during the five (5) consecutive Trading Day period ending and including the Trading Day immediately prior to the such Installment Date, divided by (B) five (5). All such
determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any such measuring period.]
(ee) [INSERT IN SERIES A NOTES: [Reserved]][INSERT IN SERIES B NOTES: Installment Date means
(i) [April , 2015] and (ii) thereafter, the first Trading Day of the calendar month immediately following the previous Installment Date until the Maturity Date.
(ff) [INSERT IN SERIES A NOTES: Interest Conversion Price means, for any Interest Date, the lower of
(i) the Conversion Price then in effect and (ii) 80% of the quotient of (x) the sum of the VWAP of the Common Stock for each of the five (5) consecutive Trading Days immediately preceding such Interest Date, divided by
(y) five (5). All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any such measuring period.][INSERT IN SERIES B NOTES: [Reserved]]
(gg) [INSERT IN SERIES A NOTES: Interest Date means January 1, April 1, July 1 and
October 1 of each year (each, an Interest Date)]
[INSERT IN SERIES B NOTES: Interest
Date means, with respect to any given calendar month, (x) if prior to the Maturity Date, such Installment Date, if any, in such calendar month or (y) if on or after the Maturity Date, the first Trading Day of such calendar
month.]
(hh) Interest Rate means [INSERT IN SERIES A NOTES: eight percent (8%) per annum] [INSERT
IN SERIES B NOTES: ten percent (10%) per annum], as may be adjusted from time to time in accordance with Section 2.
54
(ii) Krillion Assets means the assets purchased in connection
with that certain acquisition of Krillion, Inc. by the Company and any improvements thereto post-acquisition, along with all intellectual property rights (including patents) related thereto.
(jj) Major Market means The New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the
Nasdaq Global Market or the Principal Market.
(kk) [INSERT IN SERIES A NOTES: Make-Whole Amount means,
with respect to any Company Optional Redemption, either (i) if the applicable Company Optional Redemption Date is scheduled to occur prior to the first anniversary of the Closing Date, an amount equal to the amount of Interest that would accrue
under this Note at the Interest Rate then in effect assuming for calculation purposes only that the Conversion Amount of the Note outstanding as of the Company Optional Redemption Date remains outstanding through the first anniversary of the Closing
Date or (ii) if the applicable Company Optional Redemption Date is scheduled to occur on or after the first anniversary of the Closing Date, zero.]
(ll) [INSERT IN SERIES A NOTES: [Reserved]] [INSERT IN SERIES B NOTES: Maximum Acceleration Amount means,
with respect to any applicable Installment Date, the amount set forth in the table below opposite the applicable average volume (the 5-Day Volume) calculated as the quotient of (x) the aggregate daily trading volume (as
reported on Bloomberg) of the Common Stock on the Principal Market on each Trading Day during the five (5) Trading Day period ending on the Trading Day immediately preceding such Installment Date, divided by (y) five (5):
|
|
|
|
|
5-Day Volume |
|
Maximum Acceleration Amount |
|
Less than or equal to 100,000 |
|
$ |
200,000 |
|
Greater than 100,000, but less than or equal to 150,000 |
|
$ |
233,000 |
|
Greater than 150,000, but less than or equal to 200,000 |
|
$ |
266,000 |
|
Greater than 200,000 |
|
$ |
300,000 |
|
(mm) Material Adverse Change shall mean, as of any time of determination,
during the period commencing on the Subscription Date and ending on such time of determination, a material adverse change and/or a material adverse development in the business, assets, liabilities, properties, operations (including results thereof),
condition
55
(financial or otherwise) or prospects of the Company or any of its Subsidiaries; provided that none of the following will constitute, or be considered in determining whether there has been, a
Material Adverse Change: any event, change, circumstance, effect or other matter resulting from or related to (i) any outbreak or escalation of war or major hostilities or any act of terrorism, (ii) changes in laws, GAAP or enforcement or
interpretation thereof, (iii) changes that generally affect the industries and markets in which the Company operates, (iv) changes in financial markets, general economic conditions (including prevailing interest rates, exchange rates,
commodity prices and fuel costs) or political conditions, or (v) any action taken or failed to be taken pursuant to or in accordance with any Transaction Document at the written request of, or consented to in writing by, the Holder.
(nn) Maturity Date shall mean [INSERT IN SERIES A NOTES: April 11, 2018] [INSERT IN SERIES B NOTES:
August 1, 2016]; provided, however, the Maturity Date may be extended at the option of the Holder (such notice to be delivered in writing to the Trustee) (i) in the event that, and for so long as, an Event of Default shall have occurred
and be continuing or any event shall have occurred and be continuing that with the passage of time and the failure to cure would result in an Event of Default or (ii) through the date that is twenty (20) Business Days after the
consummation of a Fundamental Transaction in the event that a Fundamental Transaction is publicly announced or a Fundamental Transaction Notice is delivered prior to the Maturity Date, provided further that if a Holder elects to convert some or all
of this Note pursuant to Section 3 hereof, and the Conversion Amount would be limited pursuant to Section 3(d) hereunder, the Maturity Date shall automatically be extended until such time as such provision shall not limit the conversion of
this Note.
(oo) INSERT IN SERIES A NOTES: Optional Redemption Equity Conditions means, with respect to
any given date of determination: (i) on each day during the period beginning thirty calendar days prior to such applicable date of determination and ending on and including such applicable date of determination (the Optional Redemption
Equity Conditions Measuring Period) (A) one or more Registration Statements shall be effective and the prospectus contained therein shall be available on such applicable date of determination (with, for the avoidance of doubt, any
shares of Common Stock previously sold pursuant to such prospectus deemed unavailable) for the issuance to the Holder or resale by the Holder, as applicable, of all shares of Common Stock to be issued in connection with the event requiring this
determination (or issuable upon conversion of the Conversion Amount being redeemed in the event requiring this determination (without regard to any limitations on conversion set forth herein)) (each, a Required Minimum Redemption Share
Amount) or (B) all Underlying Securities (as defined in the Securities Purchase Agreement) shall be eligible for either (x) issuance without any restrictive legend or (y) resale pursuant to Rule 144 (as defined in the
Securities Purchase Agreement), in either case, without the need for registration under any applicable federal or state securities laws (in each case, disregarding any limitation on conversion of the Notes and exercise of the Warrants) and no
Current Information Failure (as defined in the Registration Rights Agreement) exists
56
or is continuing; (ii) on each day during the Optional Redemption Equity Conditions Measuring Period, the Common Stock (including all Underlying Securities) is listed or designated for
quotation (as applicable) on an Eligible Market and shall not have been suspended from trading on an Eligible Market (other than suspensions of not more than two (2) days and occurring prior to the applicable date of determination due to
business announcements by the Company) nor shall delisting or suspension by an Eligible Market have been threatened (with a reasonable prospect of delisting occurring after giving effect to all applicable notice, appeal, compliance and hearing
periods) or reasonably likely to occur or pending as evidenced by either (A) a writing by such Eligible Market or (B) the Company falling below the minimum listing maintenance requirements of the Eligible Market on which the Common Stock
is then listed or designated for quotation (as applicable); (iii) during the Optional Redemption Equity Conditions Measuring Period, the Company shall have delivered all shares of Common Stock issuable upon conversion of this Note on a timely
basis as set forth in Section 3 hereof and all other shares of capital stock required to be delivered by the Company on a timely basis as set forth in the other Transaction Documents; (iv) any shares of Common Stock to be issued in
connection with the event requiring determination (or issuable upon conversion of the Conversion Amount being redeemed in the event requiring this determination) may be issued in full without violating Section 3(d) hereof; (v) any shares
of Common Stock to be issued in connection with the event requiring determination (or issuable upon conversion of the Conversion Amount being redeemed in the event requiring this determination (without regards to any limitations on conversion set
forth herein)) may be issued in full without violating the rules or regulations of the Eligible Market on which the Common Stock is then listed or designated for quotation (as applicable); (vi) on each day during the Optional Redemption Equity
Conditions Measuring Period, no public announcement of a pending, proposed or intended Fundamental Transaction shall have occurred which has not been abandoned, terminated or consummated; (vii) the Company shall have no knowledge of any fact
that would reasonably be expected to cause (A) any Registration Statement required to be filed pursuant to the Registration Rights Agreement to not be effective or the prospectus contained therein to not be available for the issuance to the
Holder or resale by the Holder, as applicable, of the applicable Required Minimum Redemption Share Amount of Underlying Securities of the Holder or (B) any Underlying Securities of the Holder to not be eligible for either (x) issuance to
the Holder without any restrictive legend or (y) resale by the Holder pursuant to Rule 144, in either case, without the need for registration under any applicable federal or state securities laws (in each case, disregarding any limitation on
conversion of the Notes and exercise of the Warrants) and no Current Information Failure exists or is continuing; (viii) the Holder shall not be in (and no other holder of Notes shall be in) possession of any material, non-public information
provided to any of them by the Company, any of its Subsidiaries or any of their respective affiliates, employees, officers, representatives, agents or the like; (ix) on each day during the Optional Redemption Equity Conditions Measuring Period,
the Company otherwise shall have been in compliance with each, and shall not have breached any representation or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality, which may
not be breached in any respect) or any covenant or other term or condition of any
57
Transaction Document, including, without limitation, the Company shall not have failed to timely make any payment pursuant to any Transaction Document; (x) on each Trading Day during the
Optional Redemption Equity Conditions Measuring Period, there shall not have occurred any Volume Failure or Price Failure as of such applicable date of determination; (xi) on the applicable date of determination (A) no Authorized Share
Failure shall exist or be continuing and the applicable Required Minimum Redemption Share Amount of shares of Common Stock are available under the Certificate of Incorporation and reserved by the Company to be issued pursuant to the Notes and
(B) all shares of Common Stock to be issued in connection with the event requiring this determination (or issuable upon conversion of the Conversion Amount being redeemed in the event requiring this determination (without regards to any
limitations on conversion set forth herein)) may be issued in full without resulting in an Authorized Share Failure; (xii) on each day during the Optional Redemption Equity Conditions Measuring Period, there shall not have occurred and there
shall not exist an Event of Default or an event that with the passage of time or giving of notice would constitute an Event of Default; (xiii) the shares of Common Stock issuable pursuant the event requiring the satisfaction of the Optional
Redemption Equity Conditions are duly authorized and listed and eligible for trading without restriction on an Eligible Market; (xiv) no Material Adverse Change then exists and (xv) either no Permitted Senior Indebtedness remains
outstanding or such holders of Permitted Senior Indebtedness have consented to such Company Optional Redemption. ][INSERT IN SERIES B NOTES: [Reserved]
(pp) INSERT IN SERIES A NOTES: Optional Redemption Equity Conditions Failure means that on any day during
the period commencing twenty (20) Trading Days prior to the applicable Company Optional Redemption Notice Date through the later of the applicable Company Optional Redemption Date and the date on which the applicable shares of Common Stock are
actually delivered to the Holder, the Optional Redemption Equity Conditions have not been satisfied (or waived in writing by the Holder).][INSERT IN SERIES B NOTES: [Reserved]
(qq) Options means any rights, warrants or options to subscribe for or purchase shares of Common Stock or
Convertible Securities.
(rr) Parent Entity of a Person means an entity that, directly or indirectly,
controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market
capitalization as of the date of consummation of the Fundamental Transaction.
(ss) Permitted
Indebtedness means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) Indebtedness set forth on Schedule 3(s) to the Securities Purchase Agreement, as in effect as of the Subscription Date, (iii) Indebtedness
secured by Permitted Liens or unsecured but as described in clauses (iv) and (v) of the definition of Permitted Liens and (iv) Permitted Senior Indebtedness.
58
(tt) Permitted Liens means (i) any Lien for taxes not yet
due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of law with
respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation of law, such as materialmens liens, mechanics liens and other similar liens, arising in the ordinary course of business with respect to a
liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase
price of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the
property so acquired and improvements thereon, and the proceeds of such equipment, in either case, with respect to Indebtedness in an aggregate amount not to exceed $300,000.00, (v) Liens incurred in connection with the extension, renewal or
refinancing of the Indebtedness secured by Liens of the type described in clause (iv) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of
the Indebtedness being extended, renewed or refinanced does not increase, (vi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of custom duties in connection with the importation of goods,
(vii) Liens arising from a Judgment in circumstances not constituting an Event of Default under Section 4(a)(xii), (viii) Liens with respect to Permitted Senior Indebtedness and (ix) any Lien arising out of the Indenture for the
benefit of the Trustee as security for the performance of the obligations of the Company thereunder.
(uu)
Permitted Senior Indebtedness means the principal of (and premium, if any), interest on, and all fees and other amounts (including, without limitation, any reasonable out-of-pocket costs, enforcement expenses (including reasonable
out-of-pocket legal fees and disbursements), collateral protection expenses and other reimbursement or indemnity obligations relating thereto) payable by Company and/or its Subsidiaries under or in connection with that certain Loan and Security
Agreement by and among the Company, Krillion, Inc., Screamin Media Group, Inc. and Square 1 Bank (the Current Senior Lender), dated August 3, 2011 (as amended through and including the Subscription Date) (or any credit
facility refinancing or replacing such Indebtedness, including, without limitation, that certain Financing and Security Agreement, by and between Fast Pay Partners LLC or its affiliate (the Potential Successor Senior Lender) and
the Company); provided, however, that (i) the aggregate outstanding principal amount of any such Indebtedness permitted hereunder (taking into account the maximum principal amounts which may be advanced under the loan documents
evidencing such Permitted Senior Indebtedness) shall not at any time exceed $12 million, (ii) the total interest and fees thereunder per annum shall not exceed 10% per annum (not including any applicable default or penalty rate) and
(iii) no Dilutive Issuance occurs in connection with any amendment, modification, extension or other refinancing of any such Indebtedness.
(vv) Person means an individual, a limited liability company, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
59
(ww) Price Failure means, with respect to a particular date of
determination, the VWAP of the Common Stock on any Trading Day during any Trading Day during the twenty (20) Trading Day period ending on the Trading Day immediately preceding such date of determination fails to exceed $3.00 (as adjusted for
stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions occurring after the Subscription Date). All such determinations to be appropriately adjusted for any stock splits, stock dividends, stock
combinations, recapitalizations or other similar transactions during any such measuring period.
(xx) Prime
Rate shall mean as of a particular date, the prime rate of interest as published on that date in The Wall Street Journal (Eastern Edition), and generally defined therein as the base rate on corporate loans posted by at least 75% of
the nations 30 largest banks. If The Wall Street Journal is not published on a date for which the Prime Rate must be determined, the Prime Rate shall be the prime rate published in The Wall Street Journal on the nearest-preceding date on
which The Wall Street Journal was published.
(yy) Principal Market means the Nasdaq Capital Market.
(zz) Redemption Notices means, collectively, the Event of Default Redemption Notices, [INSERT IN SERIES
B NOTES ONLY: the Holder Optional Redemption Notices] [INSERT IN SERIES A NOTES ONLY: the Company Optional Redemption Notices] and the Change of Control Redemption Notices, and each of the foregoing, individually, a Redemption
Notice.
(aaa) Redemption Premium means 125%.
(bbb) Redemption Prices means, collectively, Event of Default Redemption Prices, [INSERT IN SERIES B NOTES
ONLY: the Holder Optional Redemption Prices,] [INSERT IN SERIES A NOTES ONLY: the Company Optional Redemption Prices] and the Change of Control Redemption Price, and each of the foregoing, individually, a Redemption Price.
(ccc) Registration Rights Agreement means that certain registration rights agreement, dated as of the
Closing Date, by and among the Company and the initial holders of the Series A Notes relating to, among other things, the registration of the resale of the Common Stock issuable upon conversion of the Series A Notes or otherwise pursuant to the
terms of the Series A Notes and exercise of the Warrants, as may be amended from time to time.
(ddd) Research and
Development Expenses means, with respect to any period, the aggregate research and development costs of the Company and/or any of its Subsidiaries, as determined in accordance with GAAP.
60
(eee) Restricted Assets means all assets of the Company and
its Subsidiaries, other than (i) advertising inventory on the website of the Company or any of its Subsidiaries sold in the ordinary course of business (consistent with past practices), (ii) licenses of software products by the Company or
any of its Subsidiaries in the ordinary course of business (consistent with past practices), (iii) inventory of the Company or any of its Subsidiaries sold in the ordinary course of business (consistent with past practices).
(fff) Revenue means, with respect to any given cash flow, receivable or other general intangible, the
revenue directly attributable thereto of the Company or any of its Subsidiaries, as determined in accordance with GAAP.
(ggg) SEC means the United States Securities and Exchange Commission or the successor thereto.
(hhh) Securities Purchase Agreement means that certain securities purchase agreement, dated as of the
Subscription Date, by and among the Company and the initial holders of the Notes pursuant to which the Company issued the Notes, as may be amended from time to time.
(iii) Series [B][A] Notes shall have the meaning ascribed to such term in the Series [A][B] Supplemental
Indenture, and shall include all notes issued in exchange therefor or replacement thereof.
(jjj) Series [A][B]
Supplemental Indenture shall have the meaning ascribed to such term in the Securities Purchase Agreement.
(kkk)
Subordinated Payment Amounts means, at any time Permitted Senior Indebtedness remains outstanding, any cash amount, if any, then payable to the Holder pursuant to any Transaction Document (other than Principal, Interest and Late
Charges with respect to Principal and Interest hereunder) that is not permitted by the Company to be paid to the Holder in cash due to the Series [A][B] Supplemental Indenture or any other subordination provisions of this Note related to the
Permitted Senior Indebtedness.
(lll) Subscription Date means
, 2015.
(mmm)
Subject Entity means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(nnn) Successor Entity means the Person (or, if so elected by the Holder, the Parent Entity) formed by,
resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.
(ooo) Supplemental Indentures shall have the meaning ascribed to such term in the Securities Purchase
Agreement.
61
(ppp) Trading Day means, as applicable, (x) with respect
to all price or trading volume determinations relating to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the
principal securities exchange or securities market on which the Common Stock is then traded, provided that Trading Day shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5
hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then
during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price determinations relating to the Common Stock, any
day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
(qqq)
Trustee means U.S. Bank National Association, in its capacity as trustee under the Indenture, or any successor or any additional trustee appointed with respect to the Notes pursuant to the Indenture.
(rrr) Volume Failure means, with respect to a particular date of determination, the quotient of (i) the
sum of the aggregate daily trading volume (as reported on Bloomberg) of the Common Stock on the Principal Market on each Trading Day during the twenty (20) Trading Day period ending on the Trading Day immediately preceding such date of
determination, divided by (ii) twenty (20) (such period, the Volume Failure Measuring Period), is less than 175,000 shares of Common Stock. All such determinations to be appropriately adjusted for any stock splits, stock
dividends, stock combinations, recapitalizations or other similar transactions during such Volume Failure Measuring Period.
(sss) VWAP means, for any security as of any date, the dollar volume-weighted average price for such
security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded) during the period beginning at
9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its HP function (set to weighted average) or, if the foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar
volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the pink
sheets by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 25. All such
determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.
(ttt) Warrants has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include
all warrants issued in exchange therefor or replacement thereof.
62
34. DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with
the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall within two
(2) Business Days after any such receipt or delivery publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public
information relating to the Company or any of its Subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all
matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this Section 34 shall limit any obligations of the Company, or any rights of the Holder,
under Section [4(l)] of the Securities Purchase Agreement.
35. TRUSTEE. The rights, privileges and immunities of the Trustee set
forth in Section 2.22 of the Series [A][B] Supplemental Indenture are incorporated herein, mutatis mutandis.
[signature
page follows]
63
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date
set out above.
|
|
|
LOCAL CORPORATION |
|
|
By: |
|
|
|
|
Name: |
|
|
Title: |
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture and the
Series [A][B] Supplemental Indenture.
Dated:
, 201
|
|
|
U.S. BANK NATIONAL ASSOCIATION,
as Trustee |
|
|
By: |
|
|
|
Authorized Signatory |
Senior Convertible Note - Signature Page
EXHIBIT I
LOCAL CORPORATION
CONVERSION NOTICE
Reference is made to the Senior Convertible Note (the Note) issued to the undersigned by Local Corporation, a Delaware
corporation (the Company). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Common Stock, $0.00001 par
value per share (the Common Stock), of the Company, as of the date specified below. Capitalized terms not defined herein shall have the meaning as set forth in the Note.
|
|
|
Aggregate Principal to be converted: |
|
|
|
|
Aggregate accrued and unpaid Interest and accrued and unpaid Late Charges with respect to such portion of the Aggregate Principal and such Aggregate
Interest to be converted: |
|
|
|
|
Subordinated Payment Amount (if any): |
|
|
|
|
AGGREGATE CONVERSION AMOUNT TO BE
CONVERTED: |
|
|
Please confirm the following information:
|
|
|
|
|
Number of shares of Common Stock to be issued: |
|
|
|
|
|
|
|
Installment Amount(s) to be reduced (and corresponding Installment Date(s)) and amount of reduction: |
|
|
¨ |
If this Conversion Notice is being delivered after the Alternate Conversion Eligibility Date, check here if Holder is electing to use the following Alternate Conversion Price in this
conversion: . |
¨ |
If this Conversion Notice is being delivered with respect to an Acceleration or if this is a Withdrawal Notice, check here if Holder is electing to use the following Installment Conversion
Price: |
Please issue the Common Stock into which the Note is being converted to Holder, or for its benefit, as follows:
|
¨ |
Check here if requesting delivery as a certificate to the following name and to the following address: |
|
¨ |
Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows: |
|
|
|
DTC Participant: |
|
|
|
|
DTC Number: |
|
|
|
|
Account Number: |
|
|
|
|
|
|
|
Date: , |
|
|
|
|
|
|
|
Name of Registered Holder |
|
|
|
|
|
By: |
|
|
|
|
|
|
Name: |
|
|
|
|
Title: |
|
|
E-mail Address:
EXHIBIT II
ACKNOWLEDGMENT
The
Company hereby acknowledges this Conversion Notice and hereby directs to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated , 20 from the Company and acknowledged and agreed to by
.
|
|
|
LOCAL CORPORATION |
|
|
By: |
|
|
|
|
Name: |
|
|
Title: |
EXHIBIT III
ASSIGNMENT OF NOTES
Reference is made to the Senior Convertible Note (the Note) issued to the undersigned by Local Corporation, a Delaware
corporation (the Company). Capitalized terms not defined herein shall have the meaning as set forth in the Note.
FOR
VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto (the Assignee)
$ in aggregate Principal [and in accrued and unpaid interest] of the Note (the Assigned
Note), and does hereby irrevocably direct U.S. Bank National Association, in its capacity as trustee for the Notes (the Trustee) to transfer the Assigned Note on the Register to the Assignee.
Please Insert Social Security or Other Identifying Number of Assignee:
|
|
|
|
|
Date: , |
|
|
|
|
|
|
|
Name of Registered Holder |
|
|
|
|
|
By: |
|
|
|
|
|
|
Name: |
|
|
|
|
Title: |
|
|
E-mail Address:
NOTICE: The
signature to this assignment must correspond with the name as written upon the face of the Note in every particular, without alteration or enlargement or any change whatever.
Schedule I
Permitted Uses of Initial $750,000 of Proceeds from Sales of Restricted Assets
As set forth in Section 4(g) to the Securities Purchase Agreement (including the uses set forth in Schedule 4(g) thereto.
Schedule II
List of Other IP Assets
Other IP Assets
consist of the patents listed on Schedule 3(y) to the Securities Purchase Agreement.
Schedule III
Asset Valuation
The Company agrees, for
purposes of any transfer of Krillion Assets permitted by Section 15(f) hereunder, that the fair market value of the Krillion Assets shall not be less than $3 million.
Any consideration paid or owed to the Company or any of its Subsidiaries in any sale of Krillion Assets or Other IP Assets, as applicable, other than cash due
on the date of such sale, shall be valued in accordance with Section 7(a)(iv), mutatis mutandis.
Exhibit 10.1
[FORM OF WARRANT]
NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF
REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE
FACE HEREOF PURSUANT TO SECTION 1(a) OF THIS WARRANT.
LOCAL CORPORATION
WARRANT TO PURCHASE COMMON STOCK
Warrant No.:
Date of Issuance: [ ], 2015
(Issuance Date)
Local Corporation, a Delaware corporation (the Company), hereby certifies that, for
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, [BUYER], the registered holder hereof or its permitted assigns (the Holder), is entitled, subject to the terms set forth below, to
purchase from the Company, at the Exercise Price (as defined below) then in effect, upon exercise of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the
Warrant), at any time or times on or after the Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date (as defined below),
1 (subject to adjustment as provided herein) fully paid and non-assessable
shares of Common Stock (as defined below) (the Warrant Shares, and such number of Warrant Shares, the Warrant Number). Except as otherwise defined herein, capitalized terms in this Warrant shall have the
meanings set forth in Section 17. This Warrant is one of the Warrants to Purchase Common Stock (the SPA Warrants) issued pursuant to Section 1 of that certain Securities Purchase Agreement, dated as of March 9, 2015
(the Subscription Date), by and among the Company and the investors (the Buyers) referred to therein, as amended from time to time (the Securities Purchase Agreement).
1. EXERCISE OF WARRANT.
(a) Mechanics of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in
Section 1(f)), this Warrant may be exercised by the Holder on any day on or after the Issuance Date (an Exercise Date), in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form
attached hereto as Exhibit A (the Exercise Notice), of the Holders election to exercise this Warrant. Within one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver
payment to the Company of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares as to which this Warrant was so exercised (the Aggregate Exercise Price) in cash or
via wire transfer of immediately available funds if the Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant to a Cashless Exercise (as defined in Section 1(d)). The Holder shall not be required to
deliver the original of this Warrant in order to effect an exercise hereunder. Execution and delivery of an Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original of this
Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. Execution and delivery of an Exercise Notice for all of the then-remaining Warrant Shares shall have the same effect as cancellation of
the original of this Warrant after delivery of the Warrant Shares in accordance with the terms hereof. On or before the first (1st) Trading Day following the date on which the Company has
received an Exercise Notice, the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of such Exercise Notice, in the form attached hereto as Exhibit B, to the Holder and the Companys transfer
agent (the Transfer Agent). On or before the third (3rd) Trading Day following the date on which the Company has received such Exercise Notice (or such earlier date as
required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade of such Warrant Shares initiated on the applicable Exercise Date), the Company shall (X) provided that the Transfer Agent is
participating in The Depository Trust Company (DTC) Fast Automated Securities Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to
such exercise to the Holders or its designees balance account with DTC through its Deposit/Withdrawal at Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program,
issue and deliver to the Holder or, at the Holders instruction pursuant to the Exercise Notice, the Holders agent or designee, in each case, sent by reputable overnight courier to the address as specified in the applicable Exercise
Notice, a certificate, registered in the Companys share register in the name of the Holder or its designee (as indicated in the applicable Exercise Notice), for the number of shares of Common Stock to which the Holder is entitled pursuant to
such exercise. Upon delivery of an Exercise Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such
Warrant Shares are credited to the Holders DTC account or the date of delivery of the certificates evidencing such Warrant Shares (as the case may be). If this Warrant is submitted in connection with any exercise pursuant to this
Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise and upon surrender of this Warrant to the Company by the Holder, then,
at the request of the Holder, the Company shall as soon as practicable and in no event later than three (3) Business Days after any
2
exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of Warrant
Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but
rather the number of shares of Common Stock to be issued shall be rounded up to the nearest whole number. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and
expenses of the Transfer Agent) that may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant. Notwithstanding the foregoing, except in the case where an exercise of this Warrant is validly made
pursuant to a Cashless Exercise), the Companys failure to deliver Warrant Shares to the Holder on or prior to the later of ((i) three (3) Trading Days after receipt of the applicable Exercise Notice (or such earlier date as required
pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade of such Warrant Shares initiated on the applicable Exercise Date) and (ii) one (1) Trading Day after the Companys receipt of the
Aggregate Exercise Price (or valid notice of a Cashless Exercise (such later date, the Share Delivery Deadline) shall not be deemed to be a breach of this Warrant. Notwithstanding anything to the contrary contained in this Warrant
or the Registration Rights Agreement, after the effective date of the Registration Statement (as defined in the Registration Rights Agreement) and prior to the Holders receipt of the notice of a Grace Period (as defined in the Registration
Rights Agreement), the Company shall cause the Transfer Agent to deliver unlegended shares of Common Stock to the Holder (or its designee) in connection with any sale of Registrable Securities (as defined in the Registration Rights Agreement) with
respect to which the Holder has entered into a contract for sale, and delivered a copy of the prospectus included as part of the particular Registration Statement to the extent applicable, and for which the Holder has not yet settled.
(b) Exercise Price. For purposes of this Warrant, Exercise Price means $0.6510, subject to adjustment as provided
herein.
(c) Companys Failure to Timely Deliver Securities. If the Company shall fail, for any reason or for no reason, on or
prior to the Share Delivery Deadline, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, to issue and deliver to the Holder (or its designee) a certificate for the number of Warrant
Shares to which the Holder is entitled and register such Warrant Shares on the Companys share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, to credit the balance account of the
Holder or the Holders designee with DTC for such number of Warrant Shares to which the Holder is entitled upon the Holders exercise of this Warrant (as the case may be) or (II) if a Registration Statement covering the resale of the
Warrant Shares that are the subject of the Exercise Notice (the Unavailable Warrant Shares) is not available for the resale of such Unavailable Warrant Shares and the Company fails to promptly, but in no event later than as
required pursuant to the Registration Rights Agreement (x) so notify the Holder and (y) deliver the Warrant Shares electronically without any restrictive legend by crediting such
3
aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holders or its designees balance account with DTC through its Deposit/Withdrawal At
Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a Notice Failure and together with the event described in clause (I) above, a Delivery Failure),
then, in addition to all other remedies available to the Holder, (X) the Company shall pay in cash to the Holder on each day after the Share Delivery Date and during such Delivery Failure an amount equal to 2% of the product of (A) the sum
of the number of shares of Common Stock not issued to the Holder on or prior to the Share Delivery Deadline and to which the Holder is entitled, and (B) any trading price of the Common Stock selected by the Holder in writing as in effect at any
time during the period beginning on the applicable Exercise Date and ending on the applicable Share Delivery Date, and (Y) the Holder, upon written notice to the Company, may void its Exercise Notice with respect to, and retain or have
returned, as the case may be, any portion of this Warrant that has not been exercised pursuant to such Exercise Notice; provided that the voiding of an Exercise Notice shall not affect the Companys obligations to make any payments which have
accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery Deadline either (I) the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, the Company shall fail to issue and deliver to the Holder (or its designee) and register such shares of Common Stock on the Companys share register or, if the Transfer Agent is participating in the DTC Fast
Automated Securities Transfer Program, the Transfer Agent shall fail to credit the balance account of the Holder or the Holders designee with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holders
exercise hereunder or pursuant to the Companys obligation pursuant to clause (ii) below or (II) a Notice Failure occurs, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a Buy-In), then the Company shall, within three
(3) Trading Days after the Holders request and in the Holders discretion, either (i) pay cash to the Holder in an amount equal to the Holders total purchase price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased) (the Buy-In Price), at which point the Companys obligation to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit the
balance account of such Holder or such Holders designee with DTC for the number of Warrant Shares to which the Holder is entitled upon the Holders exercise hereunder (as the case may be) (and to issue such Warrant Shares) shall
terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such Warrant Shares or credit the balance account of such Holder or such Holders designee with DTC for the
number of Warrant Shares to which the Holder is entitled upon the Holders exercise hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number
of Warrant Shares multiplied by (B) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Exercise Notice and ending on the date of such issuance and payment under this
clause (ii) (the Buy-In Payment Amount). Subject to Section 14, nothing shall limit the Holders right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the Companys failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the exercise of
this Warrant as required pursuant to the terms hereof.
4
(d) Cashless Exercise. Notwithstanding anything contained herein to the contrary (other
than Section 1(f) below), the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate
Exercise Price, elect instead to receive upon such exercise the Net Number of Warrant Shares determined according to the following formula (a Cashless Exercise):
|
|
|
|
|
Net Number = |
|
(A x B) - (A x C) |
|
|
|
D |
|
|
For purposes of the foregoing formula:
A= the total number of shares with respect to which this Warrant is then being exercised.
B = the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the date of the applicable Exercise Notice.
C = the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.
D = as applicable: (i) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the date of the applicable
Exercise Notice if such Exercise Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 1(a) hereof on a Trading Day
prior to the opening of regular trading hours (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) the Bid Price of the Common Stock as of the time of the
Holders execution of the applicable Exercise Notice if such Exercise Notice is executed during regular trading hours on a Trading Day and is delivered within two (2) hours thereafter pursuant to Section 1(a) hereof, or
(iii) the Closing Sale Price of the Common Stock on the date of the applicable Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and delivered pursuant to Section 1(a) hereof
after the close of regular trading hours on such Trading Day.
For purposes of Rule 144(d) promulgated under the 1933 Act, as
in effect on the date hereof, it is intended that the Warrant Shares issued in a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this
Warrant was originally issued pursuant to the Securities Purchase Agreement.
5
(e) Disputes. In the case of a dispute as to the determination of the Exercise Price or
the arithmetic calculation of the number of Warrant Shares to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance with
Section 13.
(f) Limitations on Exercises.
(i) Beneficial Ownership. The Company shall not effect the exercise of any portion of this Warrant, and the Holder shall
not have the right to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any such exercise shall be null and void and treated as if never made, to the extent that after giving effect to such exercise, the
Holder together with the other Attribution Parties collectively would beneficially own in excess of 9.99% (or such other percentage or amount as elected by the Holder on the signature page of the Holder to the Securities Purchase Agreement) (the
Maximum Percentage) of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the
Holder and the other Attribution Parties shall include the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which
the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised portion of this Warrant beneficially owned by the Holder or any of the other
Attribution Parties and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any convertible notes or convertible preferred stock or warrants, including
other SPA Warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 1(f)(i). For purposes of this Section 1(f)(i),
beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining the number of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Warrant without exceeding
the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Companys most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other
public filing with the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common Stock
outstanding (the Reported Outstanding Share Number). If the Company receives an Exercise Notice from the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share
Number, the Company shall (i) notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Exercise Notice would otherwise cause the Holders beneficial ownership, as determined
pursuant to this Section 1(f)(i), to exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of Warrant Shares to be acquired pursuant to such Exercise Notice (the number of shares by which such purchase is
reduced, the Reduction Shares) and (ii) as soon as reasonably practicable, the
6
Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason at any time, upon the written or oral request of the Holder made or delivered at
any time on during the period commencing on 9:30 A.M., New York time and ending on 8:00 P.M., New York time on a Business Day, the Company shall, no later than the next Business Day, confirm orally and in writing or by electronic mail to the Holder
the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the
Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon exercise of this Warrant results in the Holder and the
other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so
issued by which the Holders and the other Attribution Parties aggregate beneficial ownership exceeds the Maximum Percentage (the Excess Shares) shall be deemed null and void and shall be cancelled ab initio, and the
Holder shall not have the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the issuance of the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by the
Holder for the Excess Shares. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this Warrant in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including
for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any
subsequent determination of exercisability. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(f)(i) to the extent necessary to correct this
paragraph or any portion of this paragraph which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 1(f)(i) or to make changes or supplements necessary or desirable to properly give
effect to such limitation. The limitation contained in this paragraph may not be waived and shall apply to a successor holder of this Warrant.
(ii) Principal Market Regulation. The Company shall not issue any shares of Common Stock upon the exercise of this
Warrant if the issuance of such shares of Common Stock (taken together with the issuance of such shares upon the exercise of the SPA Warrants and the conversion of the Notes or otherwise pursuant to the terms of the Notes) would exceed the aggregate
number of shares of Common Stock which the Company may issue upon exercise or conversion (as the case may be) of the SPA Warrants and the Notes without breaching the Companys obligations under the rules or regulations of the Principal Market
(the number of shares which may be issued without violating such rules and regulations, the Exchange Cap), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders
as required by the applicable rules of the Principal Market for issuances of shares of Common Stock in excess of such amount or (B) obtains a written opinion from outside
7
counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Holder or (C) obtains a waiver from the Principal Market of the applicable
rules of such Principal Market for the issuance of shares of Common Stock in excess of such amount. Until such approval or such written opinion is obtained, no Buyer shall be issued in the aggregate, upon conversion or exercise (as the case may be)
of any Notes or any of the SPA Warrants, shares of Common Stock in an amount greater than the product of (i) the Exchange Cap as of the Issuance Date multiplied by (ii) the quotient of (1) the original principal amount of Notes issued
to such Buyer pursuant to the Securities Purchase Agreement on the Closing Date (as defined in the Securities Purchase Agreement) divided by (2) the aggregate original principal amount of all Notes issued to the Buyers pursuant to the
Securities Purchase Agreement on the Closing Date (with respect to each Buyer, the Exchange Cap Allocation). In the event that any Buyer shall sell or otherwise transfer any of such Buyers SPA Warrants, the transferee shall
be allocated a pro rata portion of such Buyers Exchange Cap Allocation with respect to such portion of such SPA Warrants so transferred, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of
the Exchange Cap Allocation so allocated to such transferee. Upon conversion and exercise in full of a holders Notes and SPA Warrants, the difference (if any) between such holders Exchange Cap Allocation and the number of shares of
Common Stock actually issued to such holder upon such holders conversion in full of such Notes and such holders exercise in full of such SPA Warrants shall be allocated to the respective Exchange Cap Allocations of the remaining holders
of Notes and SPA Warrants on a pro rata basis in proportion to the shares of Common Stock underlying the Notes and SPA Warrants then held by each such holder. At any time after the earlier to occur of (x) the Principal Market Stockholder
Approval Date as defined in the Securities Purchase Agreement) and (y) the Stockholder Meeting Deadline (as defined in the Securities Purchase Agreement , in the event that the Company is prohibited from issuing any shares of Common Stock
pursuant to this Section 1(f)(ii) (the Exchange Cap Shares), in lieu of issuing and delivering such Exchange Cap Shares to the Holder, the Company shall pay cash to the Holder in exchange for the cancellation of such portion
of this Warrant exercisable into such Exchange Cap Shares at a price equal to the sum of (x) the product of (A) such number of Exchange Cap Shares and (B) the greatest Closing Sale Price of the Common Stock on any Trading Day during
the period commencing on the date the Holder delivers the applicable Exercise Notice with respect to such Exchange Cap Shares to the Company and ending on the date immediately preceding the date of such payment under this Section 1(f)(ii) and
(y) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Exchange Cap Shares, any Buy-In Payment Amount, brokerage commissions and other
out-of-pocket expenses, if any, of the Holder incurred in connection therewith (collectively, the Exchange Cap Share Cancellation Amount); provided, that no Exchange Cap Share Cancellation Amount shall be due and payable to the
Holder to the extent that (x) on or prior to the applicable Share Delivery Deadline, the Exchange Cap Allocation of a Holder is increased (whether by assignment by a holder of Notes and/or SPA Warrants or all, or any portion, of such
holders Exchange Cap Allocation or otherwise) (each, an Exchange Cap Allocation Increase) and (y) after giving effect to such Exchange Cap Allocation Increase, the Company delivers the applicable Exchange Cap Shares to
the Holder (or its designee) on or prior to the applicable Share Delivery Deadline.
8
(g) Reservation of Authorized Shares
(i) Reservation. The Company shall initially reserve out of its authorized and unissued shares of Common Stock a number
of shares of Common Stock for the SPA Warrants equal to 125% of the maximum number of shares of Common Stock as shall be necessary to satisfy the Companys obligation to issue shares of Common Stock under the SPA Warrants (without regard to any
limitations on exercise) as of the Issuance Date. From and after the Required Reservation Increase Date (as defined in the Securities Purchase Agreement), the Company shall at all times keep reserved for issuance under this Warrant a number of
shares of Common Stock at least equal to 150% of the maximum number of shares of Common Stock as shall be necessary to satisfy the Companys obligation to issue shares of Common Stock under the SPA Warrants then outstanding (without regard to
any limitations on exercise) (the Required Reserve Amount); provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 1(g)(i) be reduced other than proportionally in connection with
any exercise or redemption of SPA Warrants or such other event covered by Section 2(a) below. The Required Reserve Amount (including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among the
holders of the SPA Warrants based on number of shares of Common Stock issuable upon exercise of SPA Warrants held by each holder on the Closing Date (without regard to any limitations on exercise) or increase in the number of reserved shares, as the
case may be (the Authorized Share Allocation). In the event that a holder shall sell or otherwise transfer any of such holders SPA Warrants, each transferee shall be allocated a pro rata portion of such holders
Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any SPA Warrants shall be allocated to the remaining holders of SPA Warrants, pro rata based on the number of shares of Common Stock
issuable upon exercise of the SPA Warrants then held by such holders (without regard to any limitations on exercise).
(ii)
Insufficient Authorized Shares. If, notwithstanding Section 1(g)(i), and not in limitation thereof, at any time while any of the SPA Warrants remain outstanding, the Company does not have a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve the Required Reserve Amount (an Authorized Share Failure), then the Company shall promptly take all action necessary to increase the Companys authorized shares of
Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all the SPA Warrants then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the
occurrence of an Authorized Share Failure, but in no event later than ninety (90) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of
authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders approval of such increase in authorized
9
shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal. In the event that the Company is prohibited from issuing shares of
Common Stock upon an exercise of this Warrant due to the failure by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the
Authorization Failure Shares), in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the cancellation of such portion of this Warrant exercisable into such Authorized
Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date
the Holder delivers the applicable Exercise Notice with respect to such Authorization Failure Shares to the Company and ending on the date of such issuance and payment under this Section 1(g); and (ii) to the extent the Holder purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorization Failure Shares, any Buy-In Payment Amount, brokerage commissions and other out-of-pocket expenses, if any, of the
Holder incurred in connection therewith (collectively, the Authorization Failure Cancellation Amount; provided, that no Authorization Failure Cancellation Amount shall be due and payable to the Holder to the extent that
(x) on or prior to the applicable Share Delivery Deadline, the Authorized Share Allocation of a Holder is increased (whether by assignment by a holder of Notes and/or SPA Warrants or all, or any portion, of such holders Authorized Share
Allocation or otherwise) (an Authorized Share Allocation Increase) and (y) after giving effect to such Authorization Share Allocation Increase, the Company delivers the applicable Authorization Failure Shares to the Holder
(or its designee) on or prior to the applicable Share Delivery Deadline. Nothing contained in this Section 1(g) shall limit any obligations of the Company under any provision of the Securities Purchase Agreement.
(h) Right of Alternate Exercise.
(i) General. Notwithstanding anything herein to the contrary, at any time during any Event of Default Redemption Right
Period (as defined in the Notes) (assuming, for such purpose, that the Notes remain outstanding as of such time of determination), the Company shall within one (1) Business Day deliver written notice thereof via facsimile and overnight courier
(with next day delivery specified) (each, an Alternate Exercise Eligibility Notice) to the Holder. At any time after the occurrence of any Event of Default (each, an Alternate Exercise Eligibility Date), the
Holder may, at such Holders option, exercise (each, a Alternate Exercise) all, or any part of, this Warrant (such portion of this Warrant being exercised, the Alternate Exercise Amount) into Common Stock
at the Alternate Exercise Price.
(ii) Mechanics. At any time after the Alternate Exercise Eligibility Date, the
Holder may voluntarily exercise any Alternate Exercise Amount pursuant to Section 1(a) (with Alternate Exercise Price replacing Exercise Price for all purposes hereunder with respect to such Alternate Exercise) by
designating in the Exercise Notice delivered pursuant to Section 1(a) that the Holder is electing to use the Alternate Exercise Price for
10
such Exercise. Notwithstanding anything to the contrary in this Section 1(h), but subject to Section 1(f), until the Company delivers Common Stock representing the Alternate Exercise
Amount to the Holder, such Alternate Exercise Amount may be exercised by the Holder into Common Stock pursuant to Section 1(a) without regard to this Section 1(h).
2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant
are subject to adjustment from time to time as set forth in this Section 2.
(a) Stock Dividends and Splits. Without limiting
any provision of Section 2(b) or Section 4, if the Company, at any time on or after the date of the Securities Purchase Agreement, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by any stock split, stock dividend, recapitalization or otherwise) its then outstanding shares of Common Stock into a
larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) its then outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause
(ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this paragraph occurs during the period that an Exercise Price is
calculated hereunder, then the calculation of such Exercise Price shall be adjusted appropriately to reflect such event.
(b)
Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or after the date of the Securities Purchase Agreement, the Company issues or sells, or in accordance with this Section 2 is deemed to have issued or sold, any shares
of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Excluded Securities issued or sold or deemed to have been issued or sold) for a consideration per share
(the New Issuance Price) less than a price equal to the Exercise Price in effect immediately prior to such issuance or sale or deemed issuance or sale (such Exercise Price then in effect is referred to as the Applicable
Price) (the foregoing a Dilutive Issuance), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the
foregoing (including, without limitation, determining the adjusted Exercise Price and the New Issuance Price under this Section 2(b)), the following shall be applicable:
(i) Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for
which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof
is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share.
11
For purposes of this Section 2(b)(i), the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or
exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof (other than cash paid in lieu of issuing fractional shares of Common Stock or fractional Convertible Securities) shall
be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such
Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of
Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof minus (2) the sum of all
amounts paid or payable to the holder of such Option (or any other Person) upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such
Option or otherwise pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of
the Exercise Price shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or
exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the
Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this
Section 2(b)(ii), the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof shall be equal to (1) the lower of
(x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such
Convertible Security and otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof or
otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible Security plus the value of any other
consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person) (other than cash paid in lieu of issuing fractional shares of Common Stock or fractional Convertible Securities). Except
as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock upon
12
conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise
of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 2(b), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issuance
or sale.
(iii) Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any
Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of
Common Stock increases or decreases at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 2(a)), the Exercise Price in effect at the time of such
increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or
decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 2(b)(iii), if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of this
Warrant are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed
to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 2(b) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.
(iv) Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued
in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the Primary Security, and such Option and/or Convertible Security and/or Adjustment Right, the
Secondary Securities), together comprising one integrated transaction, the aggregate consideration per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the
lowest price per share for which one share of Common Stock was issued (or was deemed to be issued pursuant to Section 2(b)(i) or 2(b)(ii) above, as applicable) in such integrated transaction (or one or more transactions if such issuances or
sales or deemed issuances or sales of securities of the Company either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of
financing) solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market value (as determined by
the Holder) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right, if any, and (III) the fair market value (as determined by the Holder) of such Convertible Security, if any, in each case, as determined on a per share
basis in accordance with this Section 2(b)(iv). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of
determining the consideration paid
13
for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the net amount of consideration
received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company (for the purpose of determining the
consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be the fair value of such consideration, except where such consideration consists of
publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date
of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor (for
the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the fair value of such portion of the
net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or publicly traded securities will be
determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the Valuation Event), the fair value of such
consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the
Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
(v) Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling
them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record
date will be deemed to be the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of
subscription or purchase (as the case may be).
(c) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to this Section 2(a), the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder
for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise contained herein).
(d) Holders Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities. In addition to
and not in limitation of the other provisions of
14
this Section 2, if the Company in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock, Options or Convertible Securities (any such securities,
Variable Price Securities) after the Subscription Date that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price which varies or may vary with the market
price of the Common Shares, including by way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends and similar
transactions) (each of the formulations for such variable price being herein referred to as, the Variable Price), the Company shall provide written notice thereof via facsimile and overnight courier to the Holder on the date of
such agreement and the issuance of such Convertible Securities or Options. From and after the date the Company enters into such agreement or issues any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its
sole discretion to substitute the Variable Price for the Exercise Price upon exercise of this Warrant by designating in the Exercise Notice delivered upon any exercise of this Warrant that solely for purposes of such exercise the Holder is relying
on the Variable Price rather than the Exercise Price then in effect. The Holders election to rely on a Variable Price for a particular exercise of this Warrant shall not obligate the Holder to rely on a Variable Price for any future exercises
of this Warrant.
(e) Stock Combination Event Adjustment. If at any time and from time to time on or after the Issuance Date there
occurs any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (each, a Stock Combination Event, and such date thereof, the Stock Combination Event
Date) and the Event Market Price is less than the Exercise Price then in effect (after giving effect to the adjustment in clause (b) above), then on the twentieth (20th) Trading Day immediately following such Stock Combination
Event, the Exercise Price then in effect on such twentieth (20th) Trading Day (after giving effect to the adjustment in clause (b) above) shall be reduced (but in no event increased) to the Event Market Price. For the avoidance of doubt,
if the adjustment in the immediately preceding sentence would otherwise result in an increase in the Exercise Price hereunder, no adjustment shall be made.
(f) Other Events. In the event that the Company (or any Subsidiary (as defined in the Securities Purchase Agreement)) shall take any
action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated by the provisions of this Section 2 but not expressly
provided for by such provisions (excluding, for avoidance of doubt, the granting of any cash settled equity-linked awards under an employee benefit plan, such as (without limitation), stock appreciation rights, phantom stock rights or other rights
with equity-linked features that do not provide for the issuance of Common Stock, Convertible Securities or Options), then the Companys board of directors shall in good faith determine and implement an appropriate adjustment in the Exercise
Price and the number of Warrant Shares (if applicable) so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 2(e) will increase the Exercise Price or decrease the number of Warrant Shares as
otherwise determined pursuant to this Section 2, provided further that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the Companys board of directors and the
Holder shall agree, in good faith, upon an independent
15
investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding and whose fees and expenses shall be borne by the Company.
(g) Calculations. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any
such shares shall be considered an issuance or sale of Common Stock.
(h) Voluntary Adjustment By Company. The Company may at any
time during the term of this Warrant, with the prior written consent of the Required Holders (as defined in the Securities Purchase Agreement), reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the
Board of Directors of the Company.
(i) Adjustments. If immediately following the close of business on [March
, 2016] (the Adjustment Date), the Exercise Price then in effect exceeds the price equal to the quotient of (x) the sum of the VWAP of the Common Stock for each of the five (5) consecutive Trading
Days immediately preceding the Adjustment Date, divided by (y) five (5) (the Adjusted Exercise Price, and such period, the Adjustment Measuring Period), the Exercise Price hereunder shall be reset to
the Adjusted Exercise Price as of such Adjustment Date (each, a Exercise Price Adjustment). Notwithstanding the foregoing, to the extent the Holder delivers one or more Exercise Notices to the Company during the Adjustment
Measuring Period with respect to a Exercise Price Adjustment, in addition to the shares of Common Stock issued or issuable to the Holder with respect to each such Exercise Notice, on the later of (A) the applicable Share Delivery Date with
respect to such Exercise Notice and (B) the applicable Adjustment Date, the Holder shall receive an additional number of shares of Common Stock equal to the difference of (x) the quotient of (I) the Exercise Amount with respect to
such Exercise Notice, divided by (II) the Adjusted Exercise Price, less (y) the number of shares of Common Stock issued or otherwise issuable to the Holder with respect to such Exercise Notice. Except as otherwise provided in this
Section 2(i), the Adjusted Exercise Price, if any, shall not apply to any portion of this Warrant exercised into Warrant Shares prior to such Adjustment Date.
3. RIGHTS UPON DISTRIBUTION OF ASSETS. Except to the extent subject to adjustments pursuant to Section 2 above, if the Company shall declare or
make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other
securities, property, options, evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a Distribution), at any
time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date on which a record is
taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of
16
Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holders right to participate in any such
Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (and shall not be entitled to beneficial ownership
of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right
thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or
on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).
4. PURCHASE RIGHTS;
FUNDAMENTAL TRANSACTIONS.
(a) Purchase Rights. In addition to any adjustments pursuant to Section 2 above, if at any time
the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the Purchase Rights), then
the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights (provided, however, that to the extent
that the Holders right to participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such
extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to such extent) and such Purchase Right to such extent shall be held in abeyance for the benefit
of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase
Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).
(b) Fundamental Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor
Entity assumes in writing all of the obligations of the Company under this Warrant and the other Transaction Documents (as defined in the Securities Purchase Agreement) in accordance with the provisions of this Section 4(b) pursuant to written
agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by
a written instrument substantially similar in form and substance to this Warrant, including, without limitation, which is exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and
receivable upon exercise of this Warrant (without regard to any
17
limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such adjustments to the number of shares of capital stock and such exercise price being for
the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction) and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose common stock
is quoted on or listed for trading on an Eligible Market. Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of the applicable Fundamental
Transaction, the provisions of this Warrant and the other Transaction Documents referring to the Company shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of each Fundamental Transaction, the Successor Entity shall
deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or
other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of
publicly traded common stock (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised
immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant. Notwithstanding the foregoing, and without limiting
Section 1(f) hereof, the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 4(b) to permit the Fundamental Transaction without the assumption of this Warrant. In addition to and not in
substitution for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares
of Common Stock (a Corporate Event), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the
applicable Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall
continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or
subscription rights) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any
limitations on the exercise of this Warrant). Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder.
18
(c) Black Scholes Value.
(i) Fundamental Transaction Redemption. Notwithstanding the foregoing and the provisions of Section 4(b) above, at
the request of the Holder delivered at any time commencing on the earliest to occur of (x) the public disclosure of any Fundamental Transaction, (y) the consummation of any Fundamental Transaction and (z) the Holder first becoming
aware of any Fundamental Transaction through the date that is ninety (90) days after the public disclosure of the consummation of such Fundamental Transaction by the Company pursuant to a Current Report on Form 8-K filed with the SEC, the
Company or the Successor Entity (as the case may be) shall purchase this Warrant from the Holder on the date of such request by paying to the Holder cash in an amount equal to the Black Scholes Value.
(ii) Event of Default Redemption. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the
request of the Holder delivered at any time after the occurrence of an Event of Default (as defined in the Notes) (assuming for such purpose that the Notes remain outstanding), the Company or the Successor Entity (as the case may be) shall purchase
this Warrant from the Holder on the date of such request by paying to the Holder cash in an amount equal to the Event of Default Black Scholes Value.
(d) Application. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and
Corporate Events and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without regard to any limitations on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the
benefit of the Maximum Percentage, applied however with respect to shares of capital stock registered under the 1934 Act and thereafter receivable upon exercise of this Warrant (or any such other warrant)).
5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation (as defined in
the Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase Agreement) or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issuance or sale of securities, or any other
voluntary action, knowingly avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect
the rights of the Holder. Without limiting the generality of the foregoing, the Company (a) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect,
(b) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (c) shall, in accordance
with Section 1(g) above, so long as any of the SPA Warrants are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of
the SPA Warrants, 200% of the maximum number of shares of Common Stock as shall from time to time be necessary to effect the exercise of the SPA Warrants then outstanding (without regard to any limitations on exercise).
19
6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder,
solely in its capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon
the Holder, solely in its capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive upon the
due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the
Company generally, contemporaneously with the giving thereof to the stockholders.
7. REISSUANCE OF WARRANTS.
(a) Transfer of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the
Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by
the Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not
being transferred.
(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in
accordance with Section 7(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.
(c)
Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such
surrender; provided, however, no warrants for fractional shares of Common Stock shall be given.
(d) Issuance of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to
20
purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the
Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance
date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.
8. NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant (other than the issuance of shares of Common Stock upon exercise in accordance with
the terms hereof), including in reasonable detail a description of such action and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon each adjustment of
the Exercise Price and the number of Warrant Shares, setting forth in reasonable detail, and certifying, the calculation of such adjustment(s), (ii) at least fifteen (15) days prior to the date on which the Company closes its books or
takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or
other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public
prior to or in conjunction with such notice being provided to the Holder, (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental Transaction and (iv) within one (1) Business Day of the occurrence of an
Event of Default (as defined in the Notes), setting forth in reasonable detail any material events with respect to such Event of Default and any efforts by the Company to cure such Event of Default. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information regarding the Company or any of its Subsidiaries, the Company shall simultaneously file such notice with the SEC (as defined in the Securities Purchase Agreement) pursuant to a Current
Report on Form 8-K. It is expressly understood and agreed that the time of execution specified by the Holder in each Exercise Notice shall be definitive and may not be disputed or challenged by the Company.
9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant (other than Section 1(f)) may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party.
10. SEVERABILITY. If any provision of this Warrant is prohibited by law or otherwise determined
to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the
invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without material change, the original
21
intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or
unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
11. GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to the Company at the address set forth in Section 9(f) of the Securities Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. The
Company 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, 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 brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing
contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Companys obligations to the Holder, to realize on any collateral
or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
12. CONSTRUCTION; HEADINGS.
This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect
the interpretation of, this Warrant. Terms used in this Warrant but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date (as defined in the Securities Purchase Agreement) in such other
Transaction Documents unless otherwise consented to in writing by the Holder.
22
13. DISPUTE RESOLUTION.
(a) Submission to Dispute Resolution.
(i) In the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price, Black Scholes Consideration
Value, Event of Default Black Scholes Value, Black Scholes Value or fair market value or the arithmetic calculation of the number of Warrant Shares (as the case may be) (including, without limitation, a dispute relating to the determination of any
of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute to the other party via facsimile (A) if by the Company, within two (2) Business Days after the occurrence of the circumstances giving rise to such
dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to promptly resolve such dispute relating to such Exercise Price, such Closing Sale
Price, such Bid Price, such Black Scholes Consideration Value, Event of Default Black Scholes Value, Black Scholes Value or such fair market value or such arithmetic calculation of the number of Warrant Shares (as the case may be), at any time after
the second (2nd) Business Day following such initial notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the
Holder may, at its sole option, select an independent, reputable investment bank reasonably satisfactory to the Company to resolve such dispute.
(ii) The Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so
delivered in accordance with the first sentence of this Section 13 and (B) written documentation supporting its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which the Holder selected such investment bank (the Dispute Submission Deadline) (the documents referred to in the immediately
preceding clauses (A) and (B) are collectively referred to herein as the Required Dispute Documentation) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required
Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or
other support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission
Deadline). Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support
to such investment bank in connection with such dispute (other than the Required Dispute Documentation).
(iii) The Company
and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The
fees and expenses of such investment bank shall be borne solely by the Company, and such investment banks resolution of such dispute shall be final and binding upon all parties absent manifest error.
23
(b) Miscellaneous. The Company expressly acknowledges and agrees that (i) this
Section 13 constitutes an agreement to arbitrate between the Company and the Holder (and constitutes an arbitration agreement) under the rules then in effect under § 7501, et seq. of the New York Civil Practice Law and Rules
(CPLR) and that the Holder is authorized to apply for an order to compel arbitration pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13, (ii) a dispute relating to the Exercise Price
includes, without limitation, disputes as to (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 2(b), (B) the consideration per share at which an issuance or deemed issuance of Common
Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded Securities, (D) whether an agreement, instrument, security or the like constitutes
and Option or Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the terms of this Warrant and each other applicable Transaction Document shall serve as the basis for the selected investment banks resolution of
the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such investment bank determines are required to be made by such investment bank in connection
with its resolution of such dispute (including, without limitation, determining (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 2(b), (B) the consideration per share at which an
issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded Securities, (D) whether an agreement,
instrument, security or the like constitutes and Option or Convertible Security and (E) whether a Dilutive Issuance occurred) and in resolving such dispute such investment bank shall apply such findings, determinations and the like to the terms
of this Warrant and any other applicable Transaction Documents, (iv) the Holder (and only the Holder), in its sole discretion, shall have the right to submit any dispute described in this Section 13 to any state or federal court sitting in
The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 13 and (v) nothing in this Section 13 shall limit the Holder from obtaining any injunctive relief or other equitable remedies
(including, without limitation, with respect to any matters described in this Section 13).
14. REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS,
BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant and the other Transaction Documents, at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Warrant (subject to adjustment for any
cash amount previously paid by the Company with respect to such breach or default to the Holder). The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts
set forth or provided for herein with respect to payments, exercises and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation
of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened
24
breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is reasonably requested by the Holder to enable the Holder to confirm the Companys compliance with the terms and
conditions of this Warrant (including, without limitation, compliance with Section 2 hereof). The issuance of shares and certificates for shares as contemplated hereby upon the exercise of this Warrant shall be made without charge to the Holder
or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name
other than the Holder or its agent on its behalf.
15. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Warrant is placed in
the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the holder otherwise takes action to collect amounts due under this Warrant or to enforce the provisions of this Warrant or
(b) there occurs any bankruptcy, reorganization, receivership of the company or other proceedings affecting company creditors rights and involving a claim under this Warrant, then the Company shall pay the costs incurred by the Holder for
such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys fees and disbursements.
16. TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company, except as may otherwise be
required by Section 2(g) of the Securities Purchase Agreement.
17. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms
shall have the following meanings:
(a) 1933 Act means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
(b) 1934 Act means the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
(c) Adjustment Right means any right granted with respect to any securities issued in
connection with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 2) of shares of Common Stock (other than rights of the type described in Section 3 and 4 hereof) that could result in a
decrease in the net consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).
(d) Affiliate means, with respect to any Person, any other Person that directly or indirectly controls, is
controlled by, or is under common control with, such Person, it being understood for purposes of this definition that control of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary
voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
25
(e) Alternate Exercise Price means, with respect to any Alternate Exercise
that price which shall be the lower of (i) the applicable Exercise Price as in effect on the applicable Exercise Date of the applicable Alternate Exercise and (ii) 85% of the quotient of (x) the sum of the VWAP of the Common Stock for
each Trading Day during the five (5) consecutive Trading Day period ending and including the Trading Day immediately preceding the Trading Day of the delivery or deemed delivery of the applicable Exercise Notice, divided by (II) five
(5) (such period, the Alternate Exercise Measuring Period). All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that
proportionately decreases or increases the Common Stock during such Alternate Exercise Measuring Period.
(f) Approved
Stock Plan means any employee benefit plan which has been approved by the board of directors of the Company prior to or subsequent to the date hereof pursuant to which shares of Common Stock and standard options to purchase Common Stock
may be issued to any employee, officer or director for services provided to the Company in their capacity as such.
(g)
Attribution Parties means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date,
directly or indirectly managed or advised by the Holders investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Companys Common Stock would or could be aggregated with the Holders and the other
Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.
(h) Bid Price means, for any security as of the particular time of determination, the bid price for such security on
the Principal Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange or trading market for such security, the bid price of such security on the principal securities
exchange or trading market where such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply, the bid price of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination, the average of the bid prices of any market makers for such
security as reported in the pink sheets by OTC Markets Group Inc. (formerly Pink Sheets LLC) as of such time of determination. If the Bid Price cannot be calculated for a security as of the particular time of determination on any of the
foregoing bases, the Bid Price of such security as of such time of determination shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of
such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction
during such period.
26
(i) Black Scholes Consideration Value means the value of the applicable
Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the OV function on Bloomberg utilizing (i) an underlying
price per share equal to the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option or Convertible Security (as the
case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of such
Option, Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the HVT function on
Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be).
(j) Black Scholes Value means the value of the unexercised portion of this Warrant remaining on the date of the
Holders request pursuant to Section 4(c)(i), which value is calculated using the Black Scholes Option Pricing Model obtained from the OV function on Bloomberg utilizing (i) an underlying price per share equal to the
greater of (1) the highest Closing Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the announcement of the applicable Fundamental Transaction (or the consummation of the applicable Fundamental
Transaction, if earlier) and ending on the Trading Day of the Holders request pursuant to Section 4(c)(i) and (2) the sum of the price per share being offered in cash in the applicable Fundamental Transaction (if any) plus the value
of the non-cash consideration being offered in the applicable Fundamental Transaction (if any), (ii) a strike price equal to the Exercise Price in effect on the date of the Holders request pursuant to Section 4(c)(i), (iii) a
risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holders request pursuant to Section 4(c)(i) and (2) the remaining
term of this Warrant as of the date of consummation of the applicable Fundamental Transaction or as of the date of the Holders request pursuant to Section 4(c)(i) if such request is prior to the date of the consummation of the applicable
Fundamental Transaction, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the Trading Day immediately following the earliest to occur of (A) the public disclosure of the applicable Fundamental Transaction, (B) the consummation of the applicable Fundamental Transaction and (C) the date on which
the Holder first became aware of the applicable Fundamental Transaction.
(k) Bloomberg means Bloomberg, L.P.
(l) Business Day means any day other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed.
27
(m) Closing Sale Price means, for any security as of any date, the last
closing trade price for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such
security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal securities
exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing does not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the ask prices of any market makers for such security as reported in the pink sheets by OTC Markets Group Inc. (formerly Pink
Sheets LLC). If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company
and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
(n)
Common Stock means (i) the Companys shares of common stock, $0.0001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a
reclassification of such common stock.
(o) Convertible Securities means any stock or other security
(other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.
(p) Eligible Market means The New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq
Global Market, the OTCQB or the Principal Market.
(q) Event Market Price means, with respect to any Stock
Combination Event Date, the quotient determined by dividing (x) the sum of the VWAP of the Common Stock for each Trading Day during the five (5) consecutive Trading Day period ending and including the Trading Day immediately preceding the
twentieth (20th) Trading Day after such Stock Combination Event Date, divided by (y) five (5).
(r) Event of Default
Black Scholes Value means the value of the unexercised portion of this Warrant remaining on the date of the Holders request pursuant to Section 4(c)(ii), which value is calculated using the Black Scholes Option Pricing Model
obtained from the OV function on Bloomberg utilizing (i) an underlying price per share equal to the highest Closing Sale Price of the Common Stock during the period beginning on the date of the occurrence of the Event of Default
through the date all Events of Default have been cured (assuming for such purpose that the Notes remain outstanding) or, if earlier, the Trading Day of the Holders request pursuant to Section 4(c)(ii), (ii) a strike price equal to
the Alternate Exercise Price in effect on the date of the Holders request pursuant to Section 4(c)(ii), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the
remaining
28
term of this Warrant as of the date of the Holders request pursuant to Section 4(c)(ii) and (2) the remaining term of this Warrant as of the date of the occurrence of such Event
of Default, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as
of the Trading Day immediately following later of (x) the date of the occurrence of such Event of Default and (y) the date of the public announcement of such Event of Default.
(s) Excluded Securities means (i) shares of Common Stock or standard options to purchase Common Stock issued to
directors, officers or employees of the Company in their capacity as such pursuant to an Approved Stock Plan (as defined below), provided that (A) all such issuances (taking into account the shares of Common Stock issuable upon exercise of such
options) after the date hereof pursuant to this clause (i) do not, in the aggregate, in any two year period after the Subscription Date, exceed more than 3% of the Common Stock outstanding immediately prior to the Subscription Date in any two
year period and (B) except as provided for in accordance with the terms thereof in effect on the Subscription Date, the exercise price of any such options is not lowered, none of such options are amended to increase the number of shares
issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner that adversely affects any of the Buyers; (ii) shares of Common Stock issued upon the conversion or exercise of
Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior to the Subscription Date, provided that (except as provided for in
accordance with the terms thereof in effect on the Subscription Date) the conversion price of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause
(i) above) is not lowered, none of such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to increase the number of
shares issuable thereunder and none of the terms or conditions of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are
otherwise materially changed in any manner that adversely affects any of the Buyers; (iii) shares of Common Stock issuable upon conversion or otherwise pursuant to the terms of the Notes, (iv) the shares of Common Stock issuable upon
exercise of the SPA Warrants; (v) a Subsequent Placement (as defined in the Securities Purchase Agreement) of Common Stock (or units of shares of Common Stock and warrants to purchase Common Stock) with an aggregate purchase price not to exceed
$1 million; and (vi) the Placement Agent Warrants (as defined in the Securities Purchase Agreement); provided that the exercise of the Placement Agent Warrants is made solely pursuant to the exercise provisions of the Placement Agent Warrants
in effect as of the Closing, the exercise price of the Placement Agent Warrants is not lowered (other than adjustments provided for in accordance with the terms of the Placement Agent Warrants in effect on the Closing Date), none of the Placement
Agent Warrants are amended to increase the number of shares issuable thereunder and none of the terms or conditions of the Placement Agent Warrants are otherwise materially changed in any manner that adversely affects any of the Buyers.
29
(t) Expiration Date means the date that is the fifth (5th) anniversary of the Issuance Date or, if such date falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a Holiday), the
next date that is not a Holiday.
(u) Fundamental Transaction means (A) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or any of its significant subsidiaries (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or
(iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by
the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated
with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity
making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share
purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the
aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party
to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities become collectively the
beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall, directly or indirectly,
including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the beneficial owner (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and
outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this Warrant calculated as if any shares of Common
Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow
such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or
30
indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a
manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to
correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
(v) Group means a group as that term is used in Section 13(d) of the 1934 Act and as defined in
Rule 13d-5 thereunder.
(w) Notes has the meaning ascribed to such term in the Securities Purchase
Agreement, and shall include all notes issued in exchange therefor or replacement thereof.
(x) Options
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(y)
Parent Entity of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one
such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(z) Person means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization, any other entity or a government or any department or agency thereof.
(aa) Principal
Market means the Nasdaq Capital Market.
(bb) Registration Rights Agreement means that certain
registration rights agreement, dated as of the Closing Date, by and among the Company and the initial holders of the Series A Notes (as defined in the Securities Purchase Agreement) relating to, among other things, the registration of the resale of
the Common Stock issuable upon conversion of the Series A Notes or otherwise pursuant to the terms of the Series A Notes and exercise of the SPA Warrants, as may be amended from time to time.
(cc) SEC means the United States Securities and Exchange Commission or the successor thereto.
(dd) Subject Entity means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or
Group.
(ee) Successor Entity means the Person (or, if so elected by the Holder, the Parent Entity) formed by,
resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.
31
(ff) Trading Day means any day on which the Common Stock is traded on
the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that Trading
Day shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or
market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in
writing by the Holder.
(gg) VWAP means, for any security as of any date, the dollar volume-weighted
average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded) during
the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its HP function (set to weighted average) or, if the foregoing does not apply, the dollar volume-weighted
average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if
no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the
pink sheets by OTC Markets Group Inc. (formerly Pink Sheets LLC). If VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such
determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
[signature page follows]
32
IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be
duly executed as of the Issuance Date set out above.
|
|
|
LOCAL CORPORATION |
|
|
By: |
|
|
|
|
Name: |
|
|
Title: |
EXHIBIT A
EXERCISE NOTICE
TO BE
EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
LOCAL CORPORATION
The
undersigned holder hereby exercises the right to purchase of the shares of Common Stock (Warrant Shares) of Local Corporation, a
Delaware corporation (the Company), evidenced by Warrant to Purchase Common Stock No. (the Warrant). Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.
1. Form of Exercise Price. The Holder intends that payment of the Aggregate Exercise
Price shall be made as:
|
|
|
|
|
|
|
|
|
|
|
a Cash Exercise with respect to |
|
|
|
|
|
|
Warrant Shares; and/or |
|
|
|
|
|
|
|
|
|
|
a Cashless Exercise with respect to |
|
|
|
|
|
|
Warrant Shares. |
|
|
In the event that the Holder has elected a Cashless Exercise with respect to some or all of the Warrant
Shares to be issued pursuant hereto, the Holder hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at
[a.m.][p.m.] on the date set forth below and (ii) if applicable, the Bid Price as of such time of execution of this
Exercise Notice was $ .
|
|
|
¨ |
|
If this Exercise Notice is being delivered after the Alternate Exercise Eligibility Date, check here if Holder is electing to use the following Alternate Exercise Price in this exercise:
. |
2. Payment of Exercise Price. In the event that the Holder has elected a Cash Exercise with
respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of $ to the Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to Holder, or its designee or agent as specified below,
Warrant Shares in accordance with the terms of the Warrant. Delivery shall be made to Holder, or for its benefit, as follows:
¨ Check here if requesting delivery as a certificate to the following name and to the
following address:
|
|
|
¨ |
|
Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows: |
|
|
|
|
|
DTC Participant: |
|
|
|
|
DTC Number: |
|
|
|
|
Account Number: |
|
|
|
|
|
|
|
Date: , |
|
|
Name of Registered Holder |
|
|
By: |
|
|
|
|
Name: |
|
|
|
|
Title: |
|
|
|
|
|
|
|
Tax ID: |
|
|
|
|
|
|
|
Facsimile: |
|
|
EXHIBIT B
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated , 201 , from the Company and acknowledged and agreed to by
.
|
|
|
LOCAL CORPORATION |
|
|
By: |
|
|
|
|
Name: |
|
|
Title: |
Exhibit 10.2
FORM OF REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this Agreement), dated as of
, 2015, is by and among Local Corporation, a Delaware corporation with offices located at 7555 Irvine Center Drive, Irvine CA 92618 (the Company), and the
undersigned buyers (each, a Buyer, and collectively, the Buyers).
RECITALS
A. In connection with the Securities Purchase Agreement by and among the parties hereto, dated as of March 9, 2015 (the
Securities Purchase Agreement), the Company has agreed, upon the terms and subject to the conditions of the Securities Purchase Agreement, to issue and sell to each Buyer (i) the Series A Notes (as defined in the Securities
Purchase Agreement) which will be convertible into Series A Conversion Shares (as defined in the Securities Purchase Agreement) in accordance with the terms of the Series A Notes and (ii) the Warrants (as defined in the Securities Purchase
Agreement) which will be exercisable to purchase Warrant Shares (as defined in the Securities Purchase Agreement) in accordance with the terms of the Warrants.
B. To induce the Buyers to consummate the transactions contemplated by the Securities Purchase Agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the 1933 Act), and applicable state securities laws.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Buyers hereby agree as
follows:
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Securities Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
(a) Business Day means any day other than Saturday, Sunday or any other day on which commercial banks in New York,
New York are authorized or required by law to remain closed.
(b) Closing Date shall have the meaning set forth
in the Securities Purchase Agreement.
(c) Effective Date means the date that the applicable Registration Statement has
been declared effective by the SEC.
(d) Effectiveness Deadline means (i) with respect to the initial Registration
Statement required to be filed pursuant to Section 2(a), the earlier of the (A) 120th calendar day
after the Closing Date (or the 140th calendar day after the Closing Date in the event that such Registration Statement is subject to a limited or full review by the SEC) and (B) 2nd Business
Day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject to further review and (ii) with respect to any additional
Registration Statements that may be required to be filed by the Company pursuant to this Agreement, the earlier of the (A) 120th calendar day following the date on which the Company was
required to file such additional Registration Statement (or the 140th calendar following the date on which the Company was required to file such additional Registration Statement in the event that such Registration Statement is subject to a limited
or full review by the SEC) and (B) 2nd Business Day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be
reviewed or will not be subject to further review.
(e) Filing Deadline means (i) with respect to the initial
Registration Statement required to be filed pursuant to Section 2(a), the 30th calendar day after the Closing Date and (ii) with respect to any additional Registration Statements that
may be required to be filed by the Company pursuant to this Agreement, the date on which the Company was required to file such additional Registration Statement pursuant to the terms of this Agreement.
(f) Investor means a Buyer or any transferee or assignee of any Registrable Securities, Series A Notes or Warrants,
as applicable, to whom a Buyer assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 and any transferee or assignee thereof to whom a transferee or assignee of
any Registrable Securities, Series A Notes or Warrants, as applicable, assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9.
(g) Person means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization or a government or any department or agency thereof.
(h) register,
registered, and registration refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 and the declaration of
effectiveness of such Registration Statement(s) by the SEC.
(i) Registrable Securities means
(i) the Series A Conversion Shares, (ii) the Warrant Shares and (iii) any capital stock of the Company issued or issuable with respect to the Series A Conversion Shares, the Warrant Shares, the Series A Notes or the Warrants,
including, without limitation, (1) as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise and (2) shares of capital stock of the Company into which the shares of Common Stock (as defined in
the Series A Notes) are converted or exchanged and shares of capital stock of a Successor Entity (as defined in the Warrants) into which the shares of Common Stock are converted or exchanged, in each case, without regard to any limitations on
conversion of the Series A Notes or exercise of the Warrants.
2
(j) Registration Statement means a registration statement or
registration statements of the Company filed under the 1933 Act covering Registrable Securities.
(k) Required
Holders means, as of any given time, the holders of at least a majority of the Registrable Securities as of such time (excluding any Registrable Securities held by the Company or any of its Subsidiaries as of such time).
(l) Required Registration Amount means, as of any given date, 125% of the sum of (i) the maximum number of
Series A Conversion Shares then issuable upon conversion of the Series A Notes (assuming for purposes hereof that (x) the Series A Notes are convertible at the Conversion Price (as defined in the Series A Notes) in effect as of such given date,
(y) interest on the Series A Notes shall accrue through April 11, 2017 and will be converted into shares of Common Stock at an interest conversion price equal to the Interest Conversion Price (as defined in the Series A Notes) assuming an
Interest Date (as defined in the Series A Note) as of such given date and (z) any such calculation shall not take into account any limitations on the conversion of the Series A Notes set forth in the Series A Notes) and (ii) the maximum
number of Warrant Shares issuable upon exercise of the Warrants as of such given date (without taking into account any limitations on the exercise of the Warrants set forth therein solely for the purpose of such calculation), all subject to
adjustment as provided in Section 2(d) and/or Section 2(f).
(m) Rule 144 means Rule 144 promulgated
by the SEC under the 1933 Act, as such rule may be amended from time to time, or any other similar or successor rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without
registration.
(n) Rule 415 means Rule 415 promulgated by the SEC under the 1933 Act, as such rule may be
amended from time to time, or any other similar or successor rule or regulation of the SEC providing for offering securities on a continuous or delayed basis.
(o) SEC means the United States Securities and Exchange Commission or any successor thereto.
(a) Mandatory Registration. The Company shall prepare and, as soon
as practicable, but in no event later than the Filing Deadline, file with the SEC an initial Registration Statement on Form S-3 covering the resale of all of the Registrable Securities, provided that such initial Registration Statement shall
register for resale at least the number of shares of Common Stock equal to the Required Registration Amount as of the date such Registration Statement is initially filed with the SEC; provided further that if Form S-3 is unavailable for such a
registration, the Company shall use such other form as is required by Section 2(c). Such initial Registration Statement, and each other Registration Statement required to be filed pursuant to the terms of this Agreement, shall contain (except
if otherwise directed by the Required Holders) the Selling Stockholders and Plan of Distribution sections in substantially the form attached hereto as Exhibit B. The Company shall use its best efforts to
have such initial Registration Statement, and each other Registration Statement required to be filed pursuant to the terms of this Agreement, declared effective by the SEC as soon as practicable, but in no event later than the applicable
Effectiveness Deadline for such Registration Statement.
3
(b) Legal Counsel. Subject to Section 5 hereof, Kelley Drye & Warren LLP,
counsel solely to the lead investor (Legal Counsel) shall review and oversee any registration, solely on behalf of the lead investor, pursuant to this Section 2.
(c) Ineligibility to Use Form S-3. In the event that Form S-3 is not available for the registration of the resale of Registrable
Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form reasonably acceptable to the Required Holders and (ii) undertake to register the resale of the Registrable Securities
on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of all Registration Statements then in effect until such time as a Registration Statement on Form
S-3 covering the resale of all the Registrable Securities has been declared effective by the SEC and the prospectus contained therein is available for use.
(d) Sufficient Number of Shares Registered. In the event the number of shares available under any Registration Statement is
insufficient to cover all of the Registrable Securities required to be covered by such Registration Statement or an Investors allocated portion of the Registrable Securities pursuant to Section 2(h), the Company shall amend such
Registration Statement (if permissible), or file with the SEC a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover at least the Required Registration Amount as of the Trading Day immediately
preceding the date of the filing of such amendment or new Registration Statement, in each case, as soon as practicable, but in any event not later than twenty (20) days after the necessity therefor arises (but taking account of any Staff
position with respect to the date on which the Staff will permit such amendment to the Registration Statement and/or such new Registration Statement (as the case may be) to be filed with the SEC). The Company shall use its best efforts to cause such
amendment to such Registration Statement and/or such new Registration Statement (as the case may be) to become effective as soon as practicable following the filing thereof with the SEC, but in no event later than the applicable Effectiveness
Deadline for such Registration Statement. For purposes of the foregoing provision, the number of shares available under a Registration Statement shall be deemed insufficient to cover all of the Registrable Securities if at any time the
number of shares of Common Stock available for resale under the applicable Registration Statement is less than the product determined by multiplying (i) the Required Registration Amount as of such time by (ii) 0.90. The calculation set
forth in the foregoing sentence shall be made without regard to any limitations on (i) conversion of the Series A Notes (and such calculation shall assume that the Series A Notes are then fully convertible into shares of Common Stock at the
then-prevailing applicable Conversion Price) and (ii) exercise of the Warrants (and such calculation shall assume that the Warrants are then fully exercisable for shares of Common Stock at the then-prevailing applicable Exercise Price).
(e) Effect of Failure to File and Obtain and Maintain Effectiveness of any Registration Statement. If (i) a Registration Statement
covering the resale of all of the Registrable Securities required to be covered thereby (after giving effect to any reduction pursuant to Section 2(f)) and required to be filed by the Company pursuant to this Agreement is (A) not filed
with the SEC on or before the Filing Deadline for such Registration Statement (a
4
Filing Failure) (it being understood that if the Company files a Registration Statement without affording each Investor and Legal Counsel the opportunity to review and comment
on the same as required by Section 3(c) hereof, the Company shall be deemed to not have satisfied this clause (i)(A) and such event shall be deemed to be a Filing Failure) or (B) not declared effective by the SEC on or before the
Effectiveness Deadline for such Registration Statement (an Effectiveness Failure) (it being understood that if on the Business Day immediately following the Effective Date for such Registration Statement the Company shall not have
filed a final prospectus for such Registration Statement with the SEC under Rule 424(b) in accordance with Section 3(b) (whether or not such a prospectus is technically required by such rule), the Company shall be deemed to not have
satisfied this clause (i)(B) and such event shall be deemed to be an Effectiveness Failure), (ii) other than during an Allowable Grace Period (as defined below), on any day after the Effective Date of a Registration Statement sales of all of
the Registrable Securities required to be included on such Registration Statement (disregarding any reduction pursuant to Section 2(f)) cannot be made pursuant to such Registration Statement (including, without limitation, because of a failure
to keep such Registration Statement effective, a failure to disclose such information as is necessary for sales to be made pursuant to such Registration Statement, a suspension or delisting of (or a failure to timely list) the shares of Common Stock
on an Eligible Market (as defined in the Notes), or a failure to register a sufficient number of shares of Common Stock or by reason of a stop order) or the prospectus contained therein is not available for use for any reason (a Maintenance
Failure), or (iii) if a Registration Statement is not effective for any reason or the prospectus contained therein is not available for use for any reason, and either (x) the Company fails for any reason to satisfy the
requirements of Rule 144(c)(1), including, without limitation, the failure to satisfy the current public information requirement under Rule 144(c) or (y) the Company has ever been an issuer described in Rule 144(i)(1)(i) or becomes such an
issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a Current Public Information Failure) as a result of which any of the Investors are unable to sell Registrable Securities
without restriction under Rule 144 (including, without limitation, volume restrictions), then, as partial relief for the damages to any holder by reason of any such delay in, or reduction of, its ability to sell the underlying shares of Common
Stock (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to each holder of Registrable Securities relating to such Registration Statement an amount in cash equal to two percent
(2%) of the product of (x) the number of Registrable Securities of such Investor required hereunder to be included in such Registration Statement and (y) the Closing Sale Price (as defined in the Warrants) as of Trading Day
immediately prior to the date a Registration Delay Payment (as defined below) is due hereunder (1) on the date of such Filing Failure, Effectiveness Failure, Maintenance Failure or Current Public Information Failure, as applicable, and
(2) on every thirty (30) day anniversary of (I) a Filing Failure until such Filing Failure is cured; (II) an Effectiveness Failure until such Effectiveness Failure is cured; (III) a Maintenance Failure until such Maintenance
Failure is cured; and (IV) a Current Public Information Failure until the earlier of (i) the date such Current Public Information Failure is cured and (ii) such time that such public information is no longer required pursuant to
Rule 144 (in each case, pro rated for periods totaling less than thirty (30) days). The payments to which a holder of Registrable Securities shall be entitled pursuant to this Section 2(e) are referred to herein as
Registration Delay Payments, it being understood that no Registration Delay Payments shall be payable to an Investor with respect to a Filing Failure, an Effectiveness Failure, a Maintenance Failure or a
5
Current Public Information Failure to the exent (x) such Registration Delay Payments relate to such Registrable Securities such Investor elects not to include in such Registration Statement
or (y) such Investor fails to timely perform its obligations hereunder. Following the initial Registration Delay Payment for any particular event or failure (which shall be paid on the date of such event or failure, as set forth above), without
limiting the foregoing, if an event or failure giving rise to the Registration Delay Payments is cured prior to any thirty (30) day anniversary of such event or failure, then such Registration Delay Payment shall be made on the third (3rd) Business Day after such cure. In the event the Company fails to make Registration Delay Payments in a timely manner in accordance with the foregoing, such Registration Delay Payments shall
bear interest at the rate of two percent (2%) per month (prorated for partial months) until paid in full. Notwithstanding the foregoing, no Registration Delay Payments shall be owed to an Investor (other than with respect to a Maintenance
Failure resulting from a suspension or delisting of (or a failure to timely list) the shares of Common Stock on the Principal Market) with respect to any period during which all of such Investors Registrable Securities may be sold by such
Investor without restriction under Rule 144 (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable).
(f) Offering. Notwithstanding anything to the contrary contained in this Agreement, in the event the staff of the SEC (the
Staff) or the SEC seeks to characterize any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities by, or on behalf of, the Company, or in any other
manner, such that the Staff or the SEC do not permit such Registration Statement to become effective and used for resales in a manner that does not constitute such an offering and that permits the continuous resale at the market by
the Investors participating therein (or as otherwise may be acceptable to each Investor) without being named therein as an underwriter, then the Company shall reduce the number of shares to be included in such Registration
Statement by all Investors until such time as the Staff and the SEC shall so permit such Registration Statement to become effective as aforesaid. In making such reduction, the Company shall reduce the number of shares to be included by all
Investors on a pro rata basis (based upon the number of Registrable Securities otherwise required to be included for each Investor) unless the inclusion of shares by a particular Investor or a particular set of Investors are resulting in the Staff
or the SECs by or on behalf of the Company offering position, in which event the shares held by such Investor or set of Investors shall be the only shares subject to reduction (and if by a set of Investors on a pro rata basis by
such Investors or on such other basis as would result in the exclusion of the least number of shares by all such Investors); provided, that, with respect to such pro rata portion allocated to any Investor, such Investor may elect the allocation of
such pro rata portion among the Registrable Securities of such Investor. In addition, in the event that the Staff or the SEC requires any Investor seeking to sell securities under a Registration Statement filed pursuant to this
Agreement to be specifically identified as an underwriter in order to permit such Registration Statement to become effective, and such Investor does not consent to being so named as an underwriter in such Registration
Statement, then, in each such case, the Company shall reduce the total number of Registrable Securities to be registered on behalf of such Investor, until such time as the Staff or the SEC does not require such
identification or until such Investor accepts such identification and the manner thereof. Any reduction pursuant to this paragraph will first reduce all Registrable Securities other than those issued pursuant to the Securities Purchase
Agreement. In the event of any reduction in Registrable Securities pursuant to this paragraph, an
6
affected Investor shall have the right to require, upon delivery of a written request to the Company signed by such Investor, the Company to file a registration statement within twenty
(20) days of such request (subject to any restrictions imposed by Rule 415 or required by the Staff or the SEC) for resale by such Investor in a manner acceptable to such Investor, and the Company shall following such
request cause to be and keep effective such registration statement in the same manner as otherwise contemplated in this Agreement for registration statements hereunder, in each case until such time as: (i) all Registrable
Securities held by such Investor have been registered and sold pursuant to an effective Registration Statement in a manner acceptable to such Investor or (ii) all Registrable Securities may be resold by such Investor without
restriction (including, without limitation, volume limitations) pursuant to Rule 144 (taking account of any Staff position with respect to affiliate status) and without the need for current public information required by Rule 144(c)(1)
(or Rule 144(i)(2), if applicable) or (iii) such Investor agrees to be named as an underwriter in any such Registration Statement in a manner acceptable to such Investor as to all Registrable Securities held by such Investor and that have not
theretofore been included in a Registration Statement under this Agreement (it being understood that the special demand right under this sentence may be exercised by an Investor multiple times and with respect to limited amounts of Registrable
Securities in order to permit the resale thereof by such Investor as contemplated above).
(g) Piggyback Registrations. Without
limiting any obligation of the Company hereunder or under the Securities Purchase Agreement, if there is not an effective Registration Statement covering all of the Registrable Securities or the prospectus contained therein is not available for use
and the Company shall determine to prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the 1933 Act of any of its equity securities (other than on Form S-4 or Form S-8
(each as promulgated under the 1933 Act) or their then equivalents relating to equity securities to be issued solely in connection with a business combination subject to Rule 145 under the 1933 Act or equity securities issuable in connection with
the Companys stock option or other employee benefit plans), then the Company shall deliver to each Investor a written notice of such determination and, if within fifteen (15) days after the date of the delivery of such notice, any such
Investor shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Investor requests to be registered; provided, however, the Company shall not be required to register
any Registrable Securities pursuant to this Section 2(g) that are eligible for resale pursuant to Rule 144 without restriction (including, without limitation, volume restrictions) and without the need for current public information required by
Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or that are the subject of a then-effective Registration Statement.
(h)
Allocation of Registrable Securities. The initial number of Registrable Securities included in any Registration Statement and any increase in the number of Registrable Securities included therein shall be allocated pro rata among the
Investors based on the number of Registrable Securities held by each Investor at the time such Registration Statement covering such initial number of Registrable Securities or increase thereof is declared effective by the SEC. In the event that an
Investor sells or otherwise transfers any of such Investors Registrable Securities, each transferee or assignee (as the case may be) that becomes an Investor shall be allocated a pro rata portion of the then-remaining number of Registrable
Securities included in such Registration Statement for such transferor or assignee (as the case may be). Any shares of
7
Common Stock included in a Registration Statement and which remain allocated to any Person which ceases to hold any Registrable Securities covered by such Registration Statement shall be
allocated to the remaining Investors, pro rata based on the number of Registrable Securities then held by such Investors which are covered by such Registration Statement.
(i) No Inclusion of Other Securities. The Company shall in no event include any securities other than Registrable Securities on any
Registration Statement filed in accordance herewith (other than, for the avoidance of doubt, pursuant to Section 2(g)) without the prior written consent of the Required Holders. Until the Applicable Date (as defined in the Securities Purchase
Agreement), the Company shall not enter into any agreement providing any registration rights to any of its security holders, except as otherwise permitted under the Securities Purchase Agreement or with respect to Excluded Securities (as defined in
the Securities Purchase Agreement).
The Company shall use its best efforts to effect the registration
of the Registrable Securities in accordance with the intended method of disposition thereof, and, pursuant thereto, the Company shall have the following obligations:
(a) The Company shall promptly prepare and file with the SEC a Registration Statement with respect to all the Registrable Securities (but in
no event later than the applicable Filing Deadline) and use its best efforts to cause such Registration Statement to become effective as soon as practicable after such filing (but in no event later than the Effectiveness Deadline). Subject to
Allowable Grace Periods, the Company shall keep each Registration Statement effective (and the prospectus contained therein available for use) pursuant to Rule 415 for resales by the Investors on a delayed or continuous basis at then-prevailing
market prices (and not fixed prices) at all times until the earlier of (i) the date as of which all of the Investors may sell all of the Registrable Securities required to be covered by such Registration Statement (disregarding any reduction
pursuant to Section 2(f)) without restriction pursuant to Rule 144 (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable)
or (ii) the date on which the Investors shall have sold all of the Registrable Securities covered by such Registration Statement (the Registration Period). Notwithstanding anything to the contrary contained in this Agreement,
the Company shall ensure that, when filed and at all times while effective, each Registration Statement (including, without limitation, all amendments and supplements thereto) and the prospectus (including, without limitation, all amendments and
supplements thereto) used in connection with such Registration Statement (1) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein
(in the case of prospectuses, in the light of the circumstances in which they were made) not misleading and (2) will disclose (whether directly or through incorporation by reference to other SEC filings to the extent permitted) all material
information regarding the Company and its securities. The Company shall submit to the SEC, within one (1) Business Day after the later of the date that (i) the Company learns that no review of a particular Registration Statement will be
made by the Staff or that the Staff has no further comments on a particular Registration Statement (as the case may be) and (ii) the consent of Legal Counsel is obtained pursuant to Section 3(c) (which consent shall be immediately sought),
a request for acceleration
8
of effectiveness of such Registration Statement to a time and date not later than twenty-four (24) hours after the submission of such request. The Company shall respond in writing to
comments made by the SEC in respect of a Registration Statement as soon as practicable, but in no event later than fifteen (15) days after the receipt of comments by or notice from the SEC that an amendment is required in order for a
Registration Statement to be declared effective.
(b) Subject to Section 3(r) of this Agreement, the Company shall prepare and file
with the SEC such amendments (including, without limitation, post-effective amendments) and supplements to each Registration Statement and the prospectus used in connection with each such Registration Statement, which prospectus is to be filed
pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep each such Registration Statement effective at all times during the Registration Period for such Registration Statement, and, during such period, comply with the
provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company required to be covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in
accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement; provided, however, by 8:30 a.m. (New York time) on the Business Day immediately following each Effective Date, the
Company shall file with the SEC in accordance with Rule 424(b) under the 1933 Act the final prospectus to be used in connection with sales pursuant to the applicable Registration Statement (whether or not such a prospectus is technically required by
such rule). In the case of amendments and supplements to any Registration Statement which are required to be filed pursuant to this Agreement (including, without limitation, pursuant to this Section 3(b)) by reason of the Company filing a
report on Form 10-Q or Form 10-K or any analogous report under the Securities Exchange Act of 1934, as amended (the 1934 Act), the Company shall, if permitted under the applicable rules and regulations of the SEC, have
incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement for the Company to
amend or supplement such Registration Statement.
(c) The Company shall (A) permit Legal Counsel and legal counsel for each
other Investor to review and comment upon (i) each Registration Statement at least five (5) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to each Registration Statement (including, without
limitation, the prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or successor reports, collectively, the Excluded Review Materials)
within a reasonable number of days prior to their filing with the SEC, and (B) not file any Registration Statement or amendment or supplement thereto (other than Excluded Review Materials) in a form to which Legal Counsel or any legal counsel
for any other Investor reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement or any amendment or supplement thereto or to any prospectus contained therein without the prior
consent of Legal Counsel, which consent shall not be unreasonably withheld. The Company shall promptly furnish to Legal Counsel and legal counsel for each other Investor, without charge, (i) copies of any correspondence from the SEC or the
Staff to the Company or its representatives relating to each Registration Statement, provided that such correspondence shall not contain any material, non-public information regarding the Company or any of its Subsidiaries (as defined in the
Securities Purchase Agreement), (ii) after the same is prepared and filed with the SEC, one (1) copy of each Registration Statement and
9
any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor, and
all exhibits and (iii) upon the effectiveness of each Registration Statement, one (1) copy of the prospectus included in such Registration Statement and all amendments and supplements thereto. The Company, Legal Counsel and legal counsel
for each other Investor shall reasonably cooperate in connection with the Companys performance of its obligations pursuant to this Section 3.
(d) The Company shall promptly furnish to each Investor whose Registrable Securities are included in any Registration Statement, without
charge, (i) after the same is prepared and filed with the SEC, at least one (1) copy of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of each Registration Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request from time to time) and (iii) such other documents, including, without limitation, copies of any
preliminary or final prospectus, as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.
(e) The Company shall use its best efforts to (i) register and qualify, unless an exemption from registration and qualification applies,
the resale by Investors of the Registrable Securities covered by a Registration Statement under such other securities or blue sky laws of all applicable jurisdictions in the United States, (ii) prepare and file in those
jurisdictions, such amendments (including, without limitation, post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period,
(iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify Legal
Counsel, legal counsel for each other Investor and each Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable
Securities for sale under the securities or blue sky laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
(f) The Company shall notify Legal Counsel, legal counsel for each other Investor and each Investor in writing of the happening of any event,
as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, may include an untrue statement of a material fact or 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 (provided that in no
10
event shall such notice contain any material, non-public information regarding the Company or any of its Subsidiaries), and, subject to Section 3(r), promptly prepare a supplement or
amendment to such Registration Statement and such prospectus contained therein to correct such untrue statement or omission and deliver ten (10) copies of such supplement or amendment to Legal Counsel, legal counsel for each other Investor and
each Investor (or such other number of copies as Legal Counsel, legal counsel for each other Investor or such Investor may reasonably request). The Company shall also promptly notify Legal Counsel, legal counsel for each other Investor and each
Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be
delivered to Legal Counsel, legal counsel for each other Investor and each Investor by facsimile or e-mail on the same day of such effectiveness and by overnight mail), and when the Company receives written notice from the SEC that a Registration
Statement or any post-effective amendment will be reviewed by the SEC, (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, (iii) of the Companys
reasonable determination that a post-effective amendment to a Registration Statement would be appropriate; and (iv) of the receipt of any request by the SEC or any other federal or state governmental authority for any additional information
relating to the Registration Statement or any amendment or supplement thereto or any related prospectus. The Company shall respond as promptly as practicable to any comments received from the SEC with respect to each Registration Statement or any
amendment thereto (it being understood and agreed that the Companys response to any such comments shall be delivered to the SEC no later than fifteen (15) Business Days after the receipt thereof).
(g) The Company shall (i) use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of each
Registration Statement or the use of any prospectus contained therein, or the suspension of the qualification, or the loss of an exemption from qualification, of any of the Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and (ii) notify Legal Counsel, legal counsel for each other Investor and each Investor who holds Registrable Securities of the issuance
of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
(h) If any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter and such
Investor consents to so being named an underwriter, at the request of any Investor, the Company shall furnish to such Investor, on the date of the effectiveness of such Registration Statement and thereafter from time to time on such dates as an
Investor may reasonably request (i) a letter, dated such date, from the Companys independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the Investors, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to the Investors.
(i) If any Investor may be required under applicable securities law to be
described in any Registration Statement as an underwriter and such Investor consents to so being named an underwriter, upon the written request of such Investor, the Company shall make available for
11
inspection by (i) such Investor, (ii) legal counsel for such Investor and (iii) one (1) firm of accountants or other agents retained by such Investor (collectively, the
Inspectors), all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the Records), as shall be reasonably deemed necessary by each Inspector, and
cause the Companys officers, directors and employees to supply all information which any Inspector may reasonably request; provided, however, each Inspector shall agree in writing to hold in strict confidence and not to make any disclosure
(except to such Investor) or use of any Record or other information which the Companys board of directors determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (1) the disclosure of
such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the 1933 Act, (2) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order
from a court or government body of competent jurisdiction, or (3) the information in such Records has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction Document (as
defined in the Securities Purchase Agreement). Such Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to
the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein (or in any other confidentiality agreement between the
Company and such Investor, if any) shall be deemed to limit any Investors ability to sell Registrable Securities in a manner which is otherwise consistent with applicable laws and regulations.
(j) The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement or is
otherwise required to be disclosed in such Registration Statement pursuant to the 1933 Act, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of
competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction Document. The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at such Investors
expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.
(k) Without
limiting any obligation of the Company under the Securities Purchase Agreement, the Company shall use its best efforts either to (i) cause all of the Registrable Securities covered by each Registration Statement to be listed on each securities
exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, (ii) secure designation and quotation of
all of the Registrable Securities covered by each Registration Statement on an Eligible Market (as defined in the Securities Purchase Agreement), or (iii) if, despite the Companys best efforts to satisfy the preceding clauses (i) or
(ii) the Company is unsuccessful in satisfying the preceding clauses (i) or (ii), without limiting the generality of the foregoing, to use its best efforts to arrange for at least two market makers to
12
register with the Financial Industry Regulatory Authority (FINRA) as such with respect to such Registrable Securities. In addition, the Company shall cooperate with each
Investor and any broker or dealer through which any such Investor proposes to sell its Registrable Securities in effecting a filing with FINRA pursuant to FINRA Rule 5110 as requested by such Investor. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section 3(k).
(l) The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or amounts (as the case may be) as the Investors may reasonably request from time to time and registered in such names as the Investors may request.
(m) If requested by an Investor, the Company shall as soon as practicable after receipt of notice from such Investor and subject to
Section 3(r) hereof, (i) incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably requests to be included therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such
offering; (ii) make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or
make amendments to any Registration Statement or prospectus contained therein if reasonably requested by an Investor holding any Registrable Securities.
(n) The Company shall use its best efforts to cause the Registrable Securities covered by a Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.
(o) The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after
the close of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than the first day of the
Companys fiscal quarter next following the applicable Effective Date of each Registration Statement.
(p) The Company shall
otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.
(q) Within one (1) Business Day after a Registration Statement which covers Registrable Securities is declared effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investors whose Registrable Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared effective by the SEC in the form attached hereto as Exhibit A.
13
(r) Notwithstanding anything to the contrary herein (but subject to the last sentence of this
Section 3(r)), at any time after the Effective Date of a particular Registration Statement, the Company may delay the disclosure of material, non-public information concerning the Company or any of its Subsidiaries the disclosure of which at
the time is not, in the good faith opinion of the board of directors of the Company, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a Grace Period), provided that the Company
shall promptly notify the Investors in writing of the (i) existence of material, non-public information giving rise to a Grace Period (provided that in each such notice the Company shall not disclose the content of such material, non-public
information to any of the Investors) and the date on which such Grace Period will begin and (ii) date on which such Grace Period ends, provided further that (I) no Grace Period shall exceed ten (10) consecutive days and during any
three hundred sixty five (365) day period all such Grace Periods shall not exceed an aggregate of thirty (30) days, (II) the first day of any Grace Period must be at least five (5) Trading Days after the last day of any prior Grace
Period and (III) no Grace Period may exist during the sixty (60) Trading Day period immediately following the Effective Date of such Registration Statement (provided that such sixty (60) Trading Day period shall be extended by the number
of Trading Days during such period and any extension thereof contemplated by this proviso during which such Registration Statement is not effective or the prospectus contained therein is not available for use) (each, an Allowable Grace
Period). For purposes of determining the length of a Grace Period above, such Grace Period shall begin on and include the date the Investors receive the notice referred to in clause (i) above and shall end on and include the later of
the date the Investors receive the notice referred to in clause (ii) above and the date referred to in such notice. The provisions of Section 3(g) hereof shall not be applicable during the period of any Allowable Grace Period. Upon
expiration of each Grace Period, the Company shall again be bound by the first sentence of Section 3(f) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable. Notwithstanding
anything to the contrary contained in this Section 3(r), the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which such Investor has entered into a contract for sale, and delivered a copy of the prospectus included as part of the particular Registration Statement to the extent applicable,
prior to such Investors receipt of the notice of a Grace Period and for which the Investor has not yet settled.
(s) The Company
shall take all other reasonable actions necessary to expedite and facilitate disposition by each Investors of its Registrable Securities pursuant to each Registration Statement.
(t) Neither the Company nor any Subsidiary or affiliate thereof shall identify any Investor as an underwriter in any public disclosure or
filing with the SEC, the Principal Market or any Eligible Market and any Buyer being deemed an underwriter by the SEC shall not relieve the Company of any obligations it has under this Agreement or any other Transaction Document (as defined in the
Securities Purchase Agreement); provided, however, that the foregoing shall not prohibit the Company from including the disclosure found in the Plan of Distribution section attached hereto as Exhibit B in the Registration Statement.
(u) Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on
or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Buyers in this Agreement or otherwise conflicts with the provisions hereof.
14
4. |
Obligations of the Investors. |
(a) At least five (5) Business Days prior to the
first anticipated filing date of each Registration Statement, the Company shall notify each Investor in writing of the information the Company requires from each such Investor with respect to such Registration Statement. It shall be a condition
precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable
Securities and shall execute such documents in connection with such registration as the Company may reasonably request.
(b) Each
Investor, by such Investors acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of each Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investors election to exclude all of such Investors Registrable Securities from such Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f), such Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Investors receipt of
the copies of the supplemented or amended prospectus contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary in this
Section 4(c), the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which such Investor has entered into a contract for sale prior to the Investors receipt of a notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of
Section 3(f) and for which such Investor has not yet settled.
(d) Each Investor covenants and agrees that it will comply with the
prospectus delivery requirements of the 1933 Act as applicable to it in connection with sales of Registrable Securities pursuant to a Registration Statement.
5. |
Expenses of Registration. |
All reasonable expenses, other than underwriting discounts
and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees,
15
FINRA filing fees (if any) and fees and disbursements of counsel for the Company shall be paid by the Company. The Company shall reimburse Legal Counsel and legal counsel to The Tail Wind Fund,
Ltd. for its fees and disbursements in connection with registration, filing or qualification pursuant to Sections 2 and 3 of this Agreement which amount shall be limited to $10,000 for Legal Counsel and $2,500 for legal counsel to The Tail Wind
Fund, Ltd.
(a) To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor and each of its directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding the lack of such title or any other title) and each Person, if any, who controls such Investor within the meaning of the 1933 Act or the 1934 Act and each of the directors, officers, shareholders, members,
partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) of such controlling Persons (each, an
Indemnified Person), against any losses, obligations, claims, damages, liabilities, contingencies, judgments, fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys fees and costs
of defense and investigation), amounts paid in settlement or expenses, joint or several, (collectively, Claims) incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or
appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an Indemnified Person is or may be a party thereto
(Indemnified Damages), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement
or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other blue sky laws of
any jurisdiction in which Registrable Securities are offered (Blue Sky Filing), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading,
(ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under
which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 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 pursuant to a Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, Violations). Subject to
Section 6(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending
any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing to the
16
Company by such Indemnified Person for such Indemnified Person expressly for use in connection with the preparation of such Registration Statement or any such amendment thereof or supplement
thereto and (ii) shall not be available to a particular Investor to the extent such Claim is based on a failure of such Investor to deliver or to cause to be delivered the prospectus made available by the Company (to the extent applicable),
including, without limitation, a corrected prospectus, if such prospectus or corrected prospectus was timely made available by the Company pursuant to Section 3(d) and then only if, and to the extent that, following the receipt of the corrected
prospectus no grounds for such Claim would have existed; and (iii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of any of the Registrable Securities by any of the
Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an Investor is participating,
such Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the
Registration Statement and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each, an Indemnified Party), against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case, to the extent, and only to the extent, that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(c) and the below provisos in this Section 6(b), such Investor will
reimburse an Indemnified Party any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such Claim; provided, however, the indemnity agreement contained in this Section 6(b) and
the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be
unreasonably withheld or delayed, provided further that such Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the
applicable sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of
any of the Registrable Securities by any of the Investors pursuant to Section 9.
(c) Promptly after receipt by an Indemnified
Person or Indemnified Party (as the case may be) under this Section 6 of notice of the commencement of any action or proceeding (including, without limitation, any governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party (as the case may be) shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying
party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified
17
Party (as the case may be); provided, however, an Indemnified Person or Indemnified Party (as the case may be) shall have the right to retain its own counsel with the fees and expenses of such
counsel to be paid by the indemnifying party if: (i) the indemnifying party has agreed in writing to pay such fees and expenses; (ii) the indemnifying party shall have failed promptly to assume the defense of such Claim and to employ
counsel reasonably satisfactory to such Indemnified Person or Indemnified Party (as the case may be) in any such Claim; or (iii) the named parties to any such Claim (including, without limitation, any impleaded parties) include both such
Indemnified Person or Indemnified Party (as the case may be) and the indemnifying party, and such Indemnified Person or such Indemnified Party (as the case may be) shall have been advised by counsel that a conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Person or such Indemnified Party and the indemnifying party (in which case, if such Indemnified Person or such Indemnified Party (as the case may be) notifies the indemnifying party in writing that
it elects to employ separate counsel at the expense of the indemnifying party, then the indemnifying party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party, provided further
that in the case of clause (iii) above the indemnifying party shall not be responsible for the reasonable fees and expenses of more than one (1) separate legal counsel for such Indemnified Person or Indemnified Party (as the case may be).
The Indemnified Party or Indemnified Person (as the case may be) shall reasonably cooperate with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person (as the case may be) which relates to such action or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person (as the
case may be) reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior
written consent; provided, however, the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person (as the case
may be), consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person (as the case
may be) of a release from all liability in respect to such Claim or litigation, and such settlement shall not include any admission as to fault on the part of the Indemnified Party. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person (as the case may be) with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The
failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party (as the case may
be) under this Section 6, except to the extent that the indemnifying party is materially and adversely prejudiced in its ability to defend such action.
(d) The indemnification required by this Section 6 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 Indemnified Damages are incurred.
(e) The indemnity and contribution
agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be
subject to pursuant to the law.
18
To the extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however: (i) no
contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities
which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was
not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the amount of net proceeds received by such seller from the applicable sale of such Registrable Securities
pursuant to such Registration Statement. Notwithstanding the provisions of this Section 7, no Investor shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such
Investor from the applicable sale of the Registrable Securities subject to the Claim exceeds the amount of any damages that such Investor has otherwise been required to pay, or would otherwise be required to pay under Section 6(b), by reason of
such untrue or alleged untrue statement or omission or alleged omission.
8. |
Reports Under the 1934 Act. |
With a view to making available to the Investors the
benefits of Rule 144, the Company agrees to:
(a) make and keep public information available, as those terms are understood and defined in
Rule 144;
(b) file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the
1934 Act so long as the Company remains subject to such requirements (it being understood and agreed that nothing herein shall limit any obligations of the Company under the Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
(c) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the Company, if true, that it has complied with the reporting, submission and posting requirements of Rule 144 and the 1934 Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents so filed by the Company with the SEC if such reports are not publicly available via EDGAR, and (iii) such other information as may be reasonably requested to permit
the Investors to sell such securities pursuant to Rule 144 without registration.
19
9. |
Assignment of Registration Rights. |
All or any portion of the rights under this
Agreement shall be automatically assignable by each Investor to any transferee or assignee (as the case may be) of all or any portion of such Investors Registrable Securities, Series A Notes or Warrants if: (i) such Investor agrees in
writing with such transferee or assignee (as the case may be) to assign all or any portion of such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such transfer or assignment (as the case may be);
(ii) the Company is, within a reasonable time after such transfer or assignment (as the case may be), furnished with written notice of (a) the name and address of such transferee or assignee (as the case may be), and (b) the
securities with respect to which such registration rights are being transferred or assigned (as the case may be); (iii) immediately following such transfer or assignment (as the case may be) the further disposition of such securities by such
transferee or assignee (as the case may be) is restricted under the 1933 Act or applicable state securities laws if so required; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this
sentence such transferee or assignee (as the case may be) agrees in writing with the Company to be bound by all of the provisions contained herein; (v) such transfer or assignment (as the case may be) shall have been made in accordance with the
applicable requirements of the Securities Purchase Agreement, the Indenture (as defined in the Securities Purchase Agreement), the Series A Notes and the Warrants (as the case may be); and (vi) such transfer or assignment (as the case may be)
shall have been conducted in accordance with all applicable federal and state securities laws.
10. |
Amendment of Registration Rights. |
Provisions of this Agreement may be amended only with
the written consent of the Company and the Required Holders. Any amendment effected in accordance with this Section 10 shall be binding upon each Investor and the Company, provided that no such amendment shall be effective to the extent that it
(1) applies to less than all of the holders of Registrable Securities or (2) imposes any obligation or liability on any Investor without such Investors prior written consent (which may be granted or withheld in such Investors
sole discretion). No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any
provision of this Agreement unless the same consideration (other than the reimbursement of legal fees) also is offered to all of the parties to this Agreement.
(a) Solely for purposes of this Agreement, a Person is deemed to be a
holder of Registrable Securities whenever such Person owns, or is deemed to own, of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from such record owner of such Registrable Securities.
(b) Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on
20
file by the sending party) or electronic mail; (iii) with respect to Section 3(c), by electronic mail (provided confirmation of transmission is electronically generated and kept on file
by the sending party); or (iv) one (1) Business Day after deposit with a nationally recognized overnight delivery service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses,
facsimile numbers and e-mail addresses for such communications shall be:
If to the Company:
Local Corporation
7555 Irvine
Center Drive
Irvine, CA 92618
Telephone: (949) 784-0800
Facsimile: (949) 784-0880
Attention: Chief Financial Officer
E-mail: kragun@local.com
With
a copy (for informational purposes only) to:
Christopher M. Bartoli, Esq.
Baker & McKenzie LLP
300
East Randolph Street, Suite 5000
Chicago IL 60601
Telephone: (312) 861-8676
Facsimile: (312) 861-2899
E-mail: Christopher.bartoli@bakermckenzie.com
If to the Transfer Agent:
Computershare Investor Services, Ltd.
211 Quality Circle
College
Station TX 77845-4470
Telephone: 1-800 962-42824
Telephone: (++ 781 575-3120 (outside the U.S.
Facsimile: 1-312 601-2312
Attention: Shareholder Services
E-Mail: Heather.obi@computershare.com
If to Legal Counsel:
Kelley
Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Telephone:
(212) 808-7540
Facsimile: (212) 808-7897
Attention: Michael A. Adelstein, Esq.
E-mail: madelstein@kelleydrye.com
21
If to a Buyer, to its address and e-mail address set forth on the Schedule of Buyers attached to the Securities
Purchase Agreement, with copies to such Buyers representatives as set forth on the Schedule of Buyers, or to such other address, e-mail address and/or facsimile number and/or to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days prior to the effectiveness of such change, provided that Kelley Drye & Warren LLP shall only be provided notices sent to the lead investor. Written confirmation of
receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the senders facsimile machine or electronic mail transmission containing the time, date,
recipient facsimile number or electronic mail address and an image of the first page of such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or
receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
(c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof. The Company and each Investor acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that each party hereto shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement by any other party hereto and to enforce specifically
the terms and provisions hereof (without the necessity of showing economic loss and without any bond or other security being required), this being in addition to any other remedy to which any party may be entitled by law or equity.
(d) All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal
laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than
the State 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, 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 brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
22
(e) If any provision of this Agreement is prohibited by law or otherwise determined to be invalid
or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the
subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the
benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s).
(f) This Agreement, the other Transaction Documents, the
schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein constitute the entire agreement among the parties hereto and thereto solely with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced
herein and therein supersede all prior agreements and understandings among the parties hereto solely with respect to the subject matter hereof and thereof; provided, however, nothing contained in this Agreement or any other Transaction Document
shall (or shall be deemed to) (i) have any effect on any agreements any Investor has entered into with the Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Investor in the Company,
(ii) waive, alter, modify or amend in any respect any obligations of the Company or any of its Subsidiaries or any rights of or benefits to any Investor or any other Person in any agreement entered into prior to the date hereof between or among
the Company and/or any of its Subsidiaries and any Investor and all such agreements shall continue in full force and effect or (iii) limit any obligations of the Company under any of the other Transaction Documents.
(g) Subject to compliance with Section 9 (if applicable), this Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto. This Agreement is not for the benefit of, nor may any provision hereof be enforced by, any Person, other than the parties hereto, their respective permitted successors and assigns and the Persons
referred to in Sections 6 and 7 hereof.
(h) The headings in this Agreement are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms including,
includes, include and words of like import shall be construed broadly as if followed by the words without limitation. The terms herein, hereunder, hereof and words of like
import refer to this entire Agreement instead of just the provision in which they are found.
(i) This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when
23
counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable
document format (.pdf) file of an executed signature page, such signature page 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 signature
page were an original thereof.
(j) Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent and no rules of strict construction will be applied against any party. Notwithstanding anything to the contrary set forth in Section 10, terms used in this Agreement but defined in the other Transaction Documents
shall have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by each Investor.
(l) All consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by the Required Holders, determined as if all of the outstanding Series A Notes then held by the Investors have been converted for Registrable Securities without regard to any limitations on redemption, amortization
and/or conversion of the Series A Notes and the outstanding Warrants then held by Investors have been exercised for Registrable Securities without regard to any limitations on exercise of the Warrants.
(m) This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
(n) The obligations of each Investor under this Agreement and
the other Transaction Documents are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under this Agreement or any other
Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as, and the Company acknowledges that the Investors do
not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Investors are in any way acting in concert or as a group or entity with respect to such obligations or the
transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Investors are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the
transactions contemplated by this Agreement or any of the other the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or
out of any other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect
24
to the obligations of the Company contained herein was solely in the control of the Company, not the action or decision of any Investor, and was done solely for the convenience of the Company and
not because it was required or requested to do so by any Investor. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and an Investor, solely, and not
between the Company and the Investors collectively and not between and among Investors.
[signature page follows]
25
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY: |
|
LOCAL CORPORATION |
|
|
By: |
|
|
|
|
Name: |
|
|
Title: |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
|
|
|
BUYER: |
|
WOLVERINE FLAGSHIP FUND TRADING LIMITED |
|
|
By: |
|
|
|
|
Name: |
|
|
Title: |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
|
|
|
BUYER: |
|
THE TAIL WIND FUND LTD. |
By: |
|
CIM INVESTMENT MANAGEMENT LTD., as investment manager |
|
|
By: |
|
|
|
|
Name: |
|
|
Title: |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
|
|
|
BUYERS: |
|
NEAL I. GOLDMAN |
|
|
Name: |
|
Neal I. Goldman |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
|
BUYER: |
|
|
NORMAN K. FARRA, JR. |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page
to this Registration Rights Agreement to be duly executed as of the date first written above.
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
Ladies and Gentlemen:
[We are][I am] counsel to Local Corporation, a Delaware corporation (the Company), and have represented the Company in
connection with that certain Securities Purchase Agreement (the Securities Purchase Agreement) entered into by and among the Company and the buyers named therein (collectively, the Holders) pursuant to which the
Company issued to the Holders Series A Senior Convertible Notes (the Series A Notes) convertible into the Companys shares of common stock, $0.00001 par value per share (the Common Stock), and warrants
exercisable for shares of Common Stock (the Warrants). Pursuant to the Securities Purchase Agreement, the Company also has entered into a Registration Rights Agreement with the Holders (the Registration Rights
Agreement) pursuant to which the Company agreed, among other things, to register the Registrable Securities (as defined in the Registration Rights Agreement), including the shares of Common Stock issuable upon conversion of the Series A
Notes and exercise of the Warrants, under the Securities Act of 1933, as amended (the 1933 Act). In connection with the Companys obligations under the Registration Rights Agreement, on
, 20 , the Company filed a Registration Statement on Form [S-1][S-3] (File
No. 333- ) (the Registration Statement) with the Securities and Exchange Commission (the SEC) relating to the Registrable Securities
which names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, [we][I] advise you that [a member
of the SECs staff has advised [us][me] by telephone that the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS]] [an order declaring the
Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS]] has been posted on the web site of the SEC at www.sec.gov] and [we][I] have no knowledge, after a review of information
posted on the website of the SEC at http://www.sec.gov/litigation/stoporders.shtml, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933 Act pursuant to the Registration Statement.
This letter shall serve as our standing written comfirmation to you that the shares of Common
Stock underlying the Series A Notes and Warrants are freely transferable by the Holders pursuant to the Registration Statement. You need not require further letters from us to effect any future legend-free issuance or reissuance of such shares
of Common Stock to the Holders as contemplated by the Companys Irrevocable Transfer Agent Instructions dated , 20 .
|
|
|
Very truly yours, |
|
[ISSUERS COUNSEL] |
|
|
By: |
|
|
|
CC: |
Wolverine Flagship Fund Trading Limited |
The Tail Wind Fund Ltd.
Neal I. Goldman
Norman K. Farra,
Jr.
John E. Rehfeld
John
Payne
David Hughes
Fred
Thiel
Kenneth Cragun
Scott
Reinke
Carlos Caponera
Eric
Orrantia
Joseph Lindsay
Brian Singleton
[OTHER BUYERS]
EXHIBIT B
SELLING STOCKHOLDERS
The
shares of common stock being offered by the selling stockholders are those issuable to the selling stockholders upon conversion of the Series A Notes and exercise of the Warrants. For additional information regarding the issuance of the Series A
Notes and the Warrants, see Private Placement of Series A Notes and Warrants above. We are registering the shares of common stock in order to permit the selling stockholders to offer the shares for resale from time to time. Except for
the ownership of the Series A Notes and the Warrants issued pursuant to the Securities Purchase Agreement, the selling stockholders have not had any material relationship with us within the past three years.
The table below lists the selling stockholders and other information regarding the beneficial ownership (as determined under
Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder) of the shares of common stock held by each of the selling stockholders. The second column lists the number of shares of common stock
beneficially owned by the selling stockholders, based on their respective ownership of shares of common stock, Series A Notes and Warrants, as of , 2015, assuming conversion of
the Series A Notes and exercise of the Warrants held by each such selling stockholder on that date but taking account of any limitations on conversion and exercise set forth therein.
The third column lists the shares of common stock being offered by this prospectus by the selling stockholders and does not take in account
any limitations on (i) conversion of the Series A Notes set forth therein or (ii) exercise of the Warrants set forth therein.
In accordance with the terms of a registration rights agreement with the holders of the Series A Notes and the Warrants, this prospectus
generally covers the resale of 125% of the sum of (i) the maximum number of shares of common stock issuable upon conversion of the Series A Notes and (ii) the maximum number of shares of common stock issuable upon exercise of the Warrants,
in each case, determined as if the outstanding Series A Notes and Warrants were converted or exercised (as the case may be) in full (without regard to any limitations on conversion or exercise contained therein solely for the purpose of such
calculation) as of the trading day immediately preceding the date this registration statement was initially filed with the SEC. Because the conversion price of the Series A Notes and the exercise price of the Warrants may be adjusted, the number of
shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus.
Under the terms of the Series A Notes and the Warrants, a selling stockholder may not convert the Series A Notes or exercise the Warrants to
the extent (but only to the extent) such selling stockholder or any of its affiliates would beneficially own a number of shares of our common stock which would exceed 9.99% of the outstanding shares of the Company. The number of shares in the second
column reflects these limitations. The selling stockholders may sell all, some or none of their shares in this offering. See Plan of Distribution.
|
|
|
|
|
|
|
Name of Selling Stockholder |
|
Number of Shares of Common Stock Owned Prior to Offering |
|
Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus |
|
Number of Shares of Common Stock of Owned After Offering |
|
|
|
|
Wolverine Flagship Fund Trading Limited (1) |
|
|
|
|
|
|
The Tail Wind Fund Ltd. (2) |
|
|
|
|
|
|
Norman K. Farra, Jr. |
|
|
|
|
|
|
John E. Rehfeld |
|
|
|
|
|
|
John Payne |
|
|
|
|
|
|
David Hughes |
|
|
|
|
|
|
Fred Thiel |
|
|
|
|
|
|
Kenneth Cragun |
|
|
|
|
|
|
Scott Reinke |
|
|
|
|
|
|
Carlos Caponera |
|
|
|
|
|
|
Eric Orrantia |
|
|
|
|
|
|
Joseph Lindsay |
|
|
|
|
|
|
Brian Singleton |
|
|
|
|
|
|
[Other Buyers] |
|
|
|
|
|
|
PLAN OF DISTRIBUTION
We are registering the shares of common stock issuable upon conversion of the Series A Notes and exercise of the Warrants to permit the resale
of these shares of common stock by the holders of the Series A Notes and Warrants from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common stock,
although we will receive the exercise price of any Warrants not exercised by the selling stockholders on a cashless exercise basis. We will bear all fees and expenses incident to our obligation to register the shares of common stock.
The selling stockholders may sell all or a portion of the shares of common stock held by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agents
commissions. The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale or at negotiated prices. These sales may be
effected in transactions, which may involve crosses or block transactions, pursuant to one or more of the following methods:
|
|
|
on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; |
|
|
|
in the over-the-counter market; |
|
|
|
in transactions otherwise than on these exchanges or systems or in the over-the-counter market; |
|
|
|
through the writing or settlement of options, whether such options are listed on an options exchange or otherwise; |
|
|
|
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
|
|
|
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
|
|
|
purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
|
|
|
an exchange distribution in accordance with the rules of the applicable exchange; |
|
|
|
privately negotiated transactions; |
|
|
|
short sales made after the date the Registration Statement is declared effective by the SEC; |
|
|
|
broker-dealers may agree with a selling security holder to sell a specified number of such shares at a stipulated price per share; |
|
|
|
a combination of any such methods of sale; and |
|
|
|
any other method permitted pursuant to applicable law. |
The selling stockholders may also sell
shares of common stock under Rule 144 promulgated under the Securities Act of 1933, as amended, if available, rather than under this prospectus. In addition, the selling stockholders may transfer the shares of common stock by other means not
described in this prospectus. If the selling stockholders effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the
form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or
commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of common stock or otherwise, the selling stockholders may enter
into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions they assume. The selling stockholders may also sell shares of common stock short and deliver
shares of common stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling stockholders may also loan or pledge shares of common stock to broker-dealers that in turn
may sell such shares.
The selling stockholders may pledge or grant a security interest in some or all of the Series A Notes, Warrants or
shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendment
to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under
this prospectus. The selling stockholders also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for
purposes of this prospectus.
To the extent required by the Securities Act and the rules and regulations thereunder, the selling
stockholders and any broker-dealer participating in the distribution of the shares of common stock may be deemed to be underwriters within the meaning of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares of common stock is made, a prospectus supplement, if required, will be
distributed, which will set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting
compensation from the selling stockholders and any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers.
Under the securities laws of some states, the shares of common stock may be sold in such states
only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or
qualification is available and is complied with.
There can be no assurance that any selling stockholder will sell any or all of the
shares of common stock registered pursuant to the registration statement, of which this prospectus forms a part.
The selling stockholders
and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, to the extent applicable,
Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders and any other participating person. To the extent applicable, Regulation M may also restrict
the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and
the ability of any person or entity to engage in market-making activities with respect to the shares of common stock.
We will pay all
expenses of the registration of the shares of common stock pursuant to the registration rights agreement, estimated to be $[ ] in total, including, without limitation, Securities and Exchange Commission
filing fees and expenses of compliance with state securities or blue sky laws; provided, however, a selling stockholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling stockholders
against liabilities, including some liabilities under the Securities Act in accordance with the registration rights agreements or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against
civil liabilities, including liabilities under the Securities Act that may arise from any written information furnished to us by the selling stockholder specifically for use in this prospectus, in accordance with the related registration rights
agreements or we may be entitled to contribution.
Once sold under the registration statement, of which this prospectus forms a part, the
shares of common stock will be freely tradable in the hands of persons other than our affiliates.
Exhibit 10.3
Tenth Amendment to Loan and Security Agreement
Borrower: |
Local Corporation |
|
Screamin Media Group, Inc. |
THIS TENTH AMENDMENT TO LOAN DOCUMENTS is entered into
between SQUARE 1 BANK (Bank) and the borrower named above (Borrower).
The Parties agree to amend the Loan and
Security Agreement between them, dated August 3, 2011 (as otherwise amended, if at all, the Loan Agreement), as follows, effective as of the date hereof. (Capitalized terms used but not defined in this Amendment, shall have the
meanings set forth in the Loan Agreement.)
1. Modified Financial Covenants. Section 6.7 of the Loan Agreement is amended to
read as follows:
6.7 Financial Covenants. Borrower shall at all times maintain the following financial ratios and covenants:
(a) EBITDA. For the corresponding months set forth in the table immediately below, calculated on a cumulative
year-to-date basis, an Adjusted EBITDA of not less than the amounts shown.
|
|
|
Applicable Month Ending |
|
Minimum Adjusted EBITDA |
January 31, 2015 |
|
($1,500,000) |
February 28, 2015 |
|
($2,000,000) |
(b) Maximum Annual CAPEX. Borrowers Capital Expenditures shall not exceed
$3,500,000 for the fiscal year ending December 31, 2015.
-1-
|
|
|
Square 1 Bank |
|
Tenth Amendment to Loan Agreement |
If necessary, Financial Covenants for any subsequent month(s) of 2015 shall be set (or reset
as appropriate) by Bank in an amendment of this Agreement, which Borrower hereby agrees to execute, following Banks review of Borrowers 2015 financial and operating plan, which shall be approved by Borrowers board of directors and
delivered to Bank, with respect to any such applicable month(s).
2. New Subordinated Debt. Borrower has requested to obtain up to
an additional $9,250,000 in subordinated debt from various third parties (the New Sub Debt) and Bank is agreeable thereto subject to the following terms and conditions: (a) Such new indebtedness be made specifically subject to the
terms and provisions of a subordination agreement or subordination provisions in form and substance acceptable to Bank in its sole discretion, the form of Supplement Indenture presented to Bank being sufficient for such purposes, and (b) no
cash payments with respect to such new indebtedness shall be permitted as long as any Obligations remain outstanding (collectively the receipt by Borrower of such new subordinated debt pursuant to the foregoing terms and conditions is referred to
herein collectively as the New Sub Debt Transaction).
3. Consent to Repurchase of Certain Notes. Notwithstanding the
terms and provisions of Section 7.6 of the Loan Agreement, Borrower shall be permitted to repurchase the outstanding 7% senior convertible notes of Local Corporation totaling up to $6,100,000 as long as the funding of such repurchases is made
only with the proceeds of the New Sub Debt Transaction and as long as no Default or Event of Default is then existing or would otherwise exist upon the closing of any such repurchase transaction.
4. Fee. [Omitted].
5.
Representations True. Borrower represents and warrants to Bank that all representations and warranties set forth in the Loan Agreement, as amended hereby, are true and correct.
6. General Release. In consideration for Bank entering into this Amendment, Borrower hereby irrevocably releases and forever discharges
Bank, and its successors, assigns, agents, shareholders, directors, officers, employees, agents, attorneys, parent corporations, subsidiary corporations, affiliated corporations, affiliates, participants, and each of them (collectively, the
Releasees), from any and all claims, debts, liabilities, demands, obligations, costs, expenses, actions and causes of action, of every nature and description, known and unknown, which Borrower now has or at any time may hold, by reason
of any matter, cause or thing occurred, done, omitted or suffered to be done prior to the date of this Amendment (collectively, the Released Claims). Borrower hereby irrevocably waives the benefits of any and all statutes and rules of
law to the extent the same provide in substance that a general release does not extend to claims which the creditor does not know or suspect to exist in its favor at the time of executing the release and, without limiting the foregoing, and without
limiting the stipulation to governing law in Section 8, Borrower irrevocably waives any benefits it may have under California Civil Code Section 1542 which provides: A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. Borrower represents and warrants that it has not assigned
to any
-2-
|
|
|
Square 1 Bank |
|
Tenth Amendment to Loan Agreement |
other Person any Released Claim, and agrees to indemnify Bank against any and all actions, demands, obligations, causes of action, decrees, awards, claims, liabilities, losses and costs,
including but not limited to reasonable attorneys fees of counsel of Banks choice and costs, which Bank may sustain or incur as a result of a breach or purported breach of the foregoing representation and warranty.
7. No Waiver. Nothing herein constitutes a waiver of any default or Event of Default under the Loan Agreement or any other Loan
Documents, whether or not known to Bank.
8. Governing Law; Jurisdiction; Venue. All of the provisions of Section 11 of the
Loan Agreement shall apply to this Amendment, and the same are incorporated herein by this reference.
9. General Provisions.
Borrower hereby ratifies and confirms the continuing validity, enforceability and effectiveness of the Loan Agreement and all other Loan Documents. This Amendment, the Loan Agreement, any prior written amendments to the Loan Agreement signed by Bank
and Borrower, and the other written documents and agreements between Bank and Borrower set forth in full all of the representations and agreements of the parties with respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect to the subject hereof. Except as herein expressly amended, all of the terms and provisions of the Loan Agreement, and all other documents and agreements between Bank and
Borrower shall continue in full force and effect and the same are hereby ratified and confirmed. This Amendment may be executed in multiple counterparts, by different parties signing separate counterparts, and all of the same taken together shall
constitute one and the same agreement.
10. Mutual Waiver of Jury Trial. BANK AND BORROWER EACH ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL RIGHT, BUT THAT IT MAY BE WAIVED. EACH OF THE PARTIES, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AMENDMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AMENDMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN),
ACTION OR INACTION OF ANY OF THEM. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM. IF FOR ANY REASON THE PROVISIONS OF THIS
SECTION ARE VOID, INVALID OR UNENFORCEABLE, THE SAME SHALL NOT AFFECT ANY OTHER TERM OR PROVISION OF THIS AMENDMENT, AND ALL OTHER TERMS AND PROVISIONS OF THIS AMENDMENT SHALL BE UNAFFECTED BY THE SAME AND CONTINUE IN FULL FORCE AND EFFECT.
[Signatures on Next Page]
-3-
|
|
|
Square 1 Bank |
|
Tenth Amendment to Loan Agreement |
|
|
|
|
|
|
|
|
|
Borrower:
LOCAL CORPORATION |
|
|
|
Bank:
SQUARE 1 BANK |
|
|
|
|
|
By |
|
/s/ Ken Cragun |
|
|
|
By |
|
/s/ Mark Salem |
|
|
|
|
|
|
|
|
|
Title |
|
CFO |
|
|
|
Title |
|
Vice President |
|
|
|
|
|
|
|
|
|
|
|
|
Borrower:
KRILLION, INC. |
|
|
|
Borrower:
SCREAMIN MEDIA GROUP, INC. |
|
|
|
|
|
By |
|
/s/ Ken Cragun |
|
|
|
By |
|
/s/ Ken Cragun |
[Signature PageTenth Amendment to Loan Agreement]
-4-
Exhibit 99.1
Local Corporation Increases Working Capital by Approximately $3.0 Million and Extends Convertible
Debt Maturities
- Enters $10 Million Financing Agreement -
IRVINE, Calif., Mar. 10, 2015 Local Corporation (NASDAQ CM: LOCM), a leading local search and advertising technology company, completed a series of
transactions bringing the aggregate amount of its outstanding Senior Convertible Notes to approximately $9.32 million, raising approximately $3.0 million of new capital and extending the maturities.
Senior Convertible Notes
On March 9, 2015,
the company entered into a Securities Purchase Agreement relating to the sale and issuance of Senior Convertible Notes, comprising $4.57 million aggregate principal amount of new 8% Senior Convertible Notes maturing in April 2018 and initially
convertible at $0.5534 (subject to adjustment), $250,000 of which was invested by certain management and board members, and $4.75 million aggregate principal amount of 10% Partially Liquidating Debentures maturing August 2016, initially convertible
at $0.7090 (subject to adjustment). Both transactions included issuance of five-year warrants with 50% coverage with an exercise price at market. The company will issue the Partially Liquidating Debentures pursuant to its effective shelf
registration statement. The company has agreed to file a registration statement covering the resale of the common stock issuable upon conversion of the 8% Senior Notes and upon issuance of the warrants The company will use a portion of the proceeds
to repay its outstanding 7% Convertible Notes due April 2015 and associated fees.
Credit Facility
In connection with execution of the Securities Purchase Agreement, the company entered into a $10 million secured accounts receivable financing agreement with
Fast Pay Partners LLC (FastPay) that matures in April 2016. This agreement is expected to replace the companys senior secured facility with Square 1 Bank.
SEC Filing
The Company has filed in a report on
Form 8-K dated March 10, 2015 with a description of the terms of the transaction and credit facility, including a copy of the Securities Purchase Agreement and exhibits. Management encourages investors to read the filing for a better
understanding of all terms of the transaction. The 8% Senior Convertible Notes, the warrants and the common stock issuable upon conversion of the 8% Senior Note and upon exercise of the warrants have not be registered under the Securities Act of
1933, as amended, and may not be offered or sold in the United States unless registered or pursuant to an available exemption from registration.
This
press release does not and shall not constitute an offer to sell, or the solicitation of an offer to buy, any of the securities, nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration under the securities laws of any state or jurisdiction.
About Local Corporation
Local Corporation (NASDAQ:LOCM) is a leading local search and advertising technology company that aggregates and curates the most relevant and rich
personalized content and presents it to millions of consumers wherever and however they search for information, while providing significant reach and value to the companys advertisers and partners. For more information,
visit: http://www.localcorporation.com or visit the companys flagship site: http://www.local.com.
1
Forward Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Words or expressions such as anticipate, believe, estimate, plans, expect, intend, project,
forecast, potential, feel and similar expressions and phrases are intended to identify such forward-looking statements. Any forward-looking statements are based on the beliefs of our management as well as
assumptions made by and information currently available to our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including, but not limited to, our
advertising partners paying less revenue per click and revenues to us for our search results, our ability to purchase advertising from third parties to drive users to our sites and consumers to the sites of our advertisers, including at a profit,
our ability to retain a monetization partner for the Local.com domain and other web properties under our management that allows us to operate profitably, our ability to develop, market and operate our local-search technologies and our Krillion local
shopping technologies, our ability to maintain and grow the number of Network partner sites and the aggregate levels of user traffic from such Network partner sites while also maintaining the quality level of such traffic, our ability to market the
Local.com domain as a destination for consumers seeking local-search results, our ability to adapt to policy and technological changes promulgated by our advertising partners and traffic acquisition partners, our ability to raise additional capital
to operate our business as needed and on terms that are acceptable to us, if at all,, the possibility that the information and estimates used to predict anticipated revenues and expenses associated with the businesses we acquire are not accurate,
difficulties executing integration strategies or achieving planned synergies, the possibility that integration costs and go-forward costs associated with the businesses we acquire will be higher than anticipated, the possibility of impairment of
assets associated with the businesses we have acquired, our ability to successfully expand our sales channels for new and existing products and services, our ability to increase the number of businesses that purchase our advertising products, our
ability to expand our advertiser and distribution networks, our ability to integrate and effectively utilize our acquisitions technologies, our ability to develop our products and sales, marketing, finance and administrative functions and
successfully integrate our expanded infrastructure, as well as our dependence on major advertisers, our ability to successfully assert our intellectual property rights, competitive factors and pricing pressures, changes in legal and regulatory
requirements, and general economic conditions. Any forward-looking statements reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of
operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this paragraph. Unless otherwise stated, all site
traffic and usage statistics are from third-party service providers engaged by the company.
Our most recent Annual Report on Form 10-K, our Quarterly
Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss the foregoing risks as well as other important risk factors that could contribute to such differences or otherwise affect our
business, results of operations and financial condition. The forward-looking statements in this release speak only as of the date they are made. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.
|
|
|
Investor Relations Contact: |
|
Media Relations Contact: |
|
|
Kirsten Chapman |
|
Cameron Triebwasser |
LHA |
|
Local Corporation |
415-433-3777 local@lhai.com |
|
949-789-5223
ctriebwasser@local.com |
2
(MM) (NASDAQ:LOCM)
Historical Stock Chart
From Apr 2024 to May 2024
(MM) (NASDAQ:LOCM)
Historical Stock Chart
From May 2023 to May 2024