STANDBY EQUITY DISTRIBUTION
AGREEMENT
THIS AGREEMENT dated as of the
1st
day of July 2009 (this "Agreement") is made
by and between YA GLOBAL MASTER
SPV LTD., a Cayman Islands exempt limited partnership (the "Investor"), and TOP SHIPS INC., a corporation
organized and existing under the laws of the Marshall Islands (the "Company").
WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Investor, from time to time as provided herein, and
the Investor shall purchase from the Company up to $200,000,000 of the Company's
common stock, par value $0.01 per share (the "Common Stock");
and
WHEREAS, such investments will
be made in reliance upon the exemption from registration contained in Section
4(2) of the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act"), or
upon such other exemption from the registration requirements of the Securities
Act as may be available with respect to any or all of the transactions to be
made hereunder.
NOW, THEREFORE, the parties hereto
agree as follows:
Article
I.
Certain
Definitions
Section
1.01
"Advance" shall mean
the purchase and sale of Shares pursuant to this Agreement.
Section
1.02
"Advance Notice" shall
mean a written notice in the form of Exhibit A attached
hereto to the Investor executed by an officer of the Company and setting forth
the number of Shares that the Company desires to sell to the Investor pursuant
to an Advance.
Section
1.03
"Advance Pricing Date"
shall mean (a) the Trading Day the Investor receives any Advance Notices with
respect to any Advance Notices received by the Investor prior to 9:30 am (New
York City time), and (b) the Trading Day immediately succeeding the Trading Day
the Investor receives an Advance Notice with respect to any Advance Notice
received by the Investor on or after 9:30 am (New York City time); provided,
however, that with respect to any Advance Notice received by the Investor on or
after 9:30 am (New York City time), the Company may request that the Advance
Pricing Date for such Advance Notice be the Trading Day it was received by the
Investor, and the Investor, in its sole discretion, may choose to honor such
request. For the avoidance of doubt, if the Investor chooses not to
honor the Company's request to have the Advance Pricing Date for a particular
Advance Notice received on or after 9:30 am (New York City time) be the Trading
Day received: (i) the Investor shall promptly Notify the Company of its decision
not to honor the Company's request; (ii) the Advance Notice will remain in full
force and effect; (iii) the Advance Pricing Date for such Advance Notice will be
the Trading Day immediately succeeding the Trading Day it was received; and (iv)
the Investor will remain obligated to purchase such number of Shares set forth
in the Advance Notice in accordance with the terms of the
Agreement.
Section
1.04
"Advance Settlement
Date" shall mean the 3rd Trading Day after the relevant Pricing Period,
or such earlier day as may be available for settlement.
Section
1.05
"Articles of
Incorporation" shall have the meaning set forth in Section
4.04.
Section
1.06
"By-laws" shall
have the meaning set forth in Section 4.04.
Section
1.07 "Closing" shall mean
one of the closings of a purchase and sale of Shares pursuant to Section
2.02.
Section
1.08 "Commitment Amount"
shall mean the aggregate amount of up to $200,000,000 of Common Stock which the
Investor has agreed to purchase from the Company pursuant to the terms and
conditions of this Agreement.
Section
1.09 "Commitment Period"
shall mean the period commencing on the Effective Date, and expiring upon the
termination of this Agreement in accordance with Section 10.02.
Section
1.10
"Common Stock"
shall have the meaning set forth in the recitals of this Agreement.
Section
1.11
"Company Periodic Report
Date" shall have the meaning set forth in Section 6.14(a).
Section
1.12
"Condition Satisfaction
Date" shall have the meaning set forth in Article VII.
Section
1.13
"Consolidation Event"
shall have the meaning set forth in Section 6.06.
Section
1.14
"Daily Maximum Advance
Shares" shall mean, for each Advance Pricing Date, the greater of (i) the
number of Shares equal to $1,500,000 divided by the VWAP of the Common Stock on
the Trading Day immediately prior to the Advance Pricing Date or (ii) the number
of shares equal to 20% of the average of the volume traded on each of the 5
Trading Days immediately prior to the Advance Pricing Date.
Section
1.15
"Daily Value Traded"
shall mean, for any Trading Day, the product obtained by multiplying the trading
volume for such day (as reported by Bloomberg L.P.) by the VWAP for such
day.
Section
1.16
"Discount Percentage"
shall initially mean 97.25% and is subject to adjustment in accordance with
Section 2.04 hereof.
Section
1.17 "Effective Date" shall
mean, as applicable, the date of filing a prospectus supplement covering the
resale of the Shares, or the date on which the SEC first declares effective a
Registration Statement registering the resale of the Shares.
Section
1.18
"Environmental Laws"
shall have the meaning set forth in Section 4.09.
Section
1.19 "Exchange Act" shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
Section
1.20
"Inspectors" shall
have the meaning set forth in Section 6.14(b).
Section
1.21 "Market Price" shall
mean the VWAP of the Common Stock on the Advance Pricing Date.
Section
1.22
"Material Adverse
Effect" shall mean any condition, circumstance, or situation that may
result in, or reasonably be expected to result in (i) a material adverse effect
on the legality, validity or enforceability of this Agreement or the
transactions contemplated herein, (ii) a material adverse effect on the results
of operations, assets, business or condition (financial or otherwise) of the
Company, taken as a whole, or (iii) a material adverse effect on the Company's
ability to perform in any material respect on a timely basis its obligations
under this Agreement.
Section
1.23
"Ownership Limitation"
shall have the meaning set forth in Section 2.01(a).
Section
1.24
"Person" shall mean an
individual, a corporation, a partnership, an association, a trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
Section
1.25
"Plan of Distribution"
shall have the meaning set forth in Section 6.01(a).
Section
1.26
"Principal Market"
shall mean the Nasdaq Global Market.
Section
1.27 "Purchase Price" shall
mean the price per share obtained by multiplying the Market Price by the
Discount Percentage.
Section
1.28
"Records" shall have
the meaning set forth in Section 6.14(b).
Section
1.29
"Registrable
Securities" shall mean (i) the Shares and (ii) any securities issued or
issuable with respect to the Shares by way of exchange, stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. As to any
particular Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (a) the Registration Statement has been declared
effective by the SEC and such Registrable Securities have been disposed of
pursuant to the Registration Statement, (b) such Registrable Securities are
eligible to be resold in a ninety-day period without limitation pursuant to Rule
144 under the Securities Act ("Rule 144") (or any similar provision then in
force). For the avoidance of doubt, for so long as the Company is
current in its reporting obligations under the Exchange Act, any requirement
that the Company be current in its reporting obligations under the Exchange Act
will not be deemed a limitation for purposes of clause (b) above.
Section
1.30
"Registration
Statement" shall mean a registration statement on Form F-1 or Form F-3 or
on such other form promulgated by the SEC for which the Company then qualifies
and which counsel for the Company shall deem appropriate, and which form shall
be available for the registration of the resale by the Investor of the
Registrable Securities under the Securities Act.
Section
1.31
"Registration Period"
shall have the meaning set forth in Section 6.01(b).
Section
1.32
"Registration Statement
Amendment Date" has the meaning set forth in Section
6.14(a).
Section
1.33 "Regulation D" shall
have the meaning set forth in Section 3.05 of this Agreement.
Section
1.34
"SEC" shall
mean the U.S. Securities and Exchange Commission.
Section
1.35
"SEC Documents" shall
have the meaning set forth in Section 4.01.
Section
1.36 "Securities Act" shall
have the meaning set forth in the recitals of this Agreement.
Section
1.37
"Settlement Document"
shall have the meaning set forth in Section 2.02(a).
Section
1.38 "Shares" shall mean
the shares of Common Stock to be issued from time to time hereunder pursuant to
Advances.
Section
1.39 "Trading Day" shall
mean any day during which the Principal Market shall be open for
business.
Section
1.40
"Upward Adjustment"
shall have the meaning set forth in Section 2.04.
Section
1.41 "VWAP" means, for any
Trading Day, the daily dollar volume-weighted average price for such security as
reported by Bloomberg L.P. (based on a regular trading hours of 9:30 a.m. (New
York City time) to 4:00 p.m. (New York City time)).
Article
II.
Advances
Section
2.01 Advances; Mechanics.
On the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein, the Company, at its sole and
exclusive option, may, from time to time, issue and sell to the Investor, and
the Investor shall purchase from the Company, shares of Common Stock on the
following terms:
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(a)
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Advance
Notice. At any time during the Commitment Period, the
Company may require the Investor to purchase Shares by delivering an
Advance Notice to the Investor, containing the number of Shares it desires
to sell, a form of which is attached hereto on Exhibit A. The
Company has the sole right to decide when to deliver Advance Notices and
may deliver multiple Advance Notices on the same day. With respect to each
Advance the Company shall issue and sell to the Investor and the Investor
shall purchase such number of Shares set forth in the Advance Notices at a
price per share equal to the Purchase Price, provided however, (i) the
number of Shares purchased in any particular Pricing Period pursuant to
Advance Notices shall not exceed the Daily Maximum Advance Shares, (ii)
the number of Shares shall not cause the aggregate number of shares of
Common Stock beneficially owned (as calculated pursuant to Section 13(d)
of the Exchange Act) by the Investor and its affiliates to exceed 9.99% of
the then outstanding Common Stock (the "Ownership
Limitation"), (iii) the number of Shares or the aggregate offering
price shall not exceed the aggregate number of shares of Common Stock or
the aggregate offering price, as the case may be, registered and then
available for resale under the Registration Statement, and (iv) no Advance
shall cause the aggregate Market Price of the Shares issued pursuant to
this Agreement to exceed the Commitment
Amount.
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(b)
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Date of Delivery of
Advance Notice. Advance Notices shall be delivered in
accordance with the instructions set forth on the bottom of Exhibit
A. If an Advance Notice is delivered on a day that is not a
Trading Day it will be deemed to be received prior to 9:30 am (New York
City time) on the next Trading Day.
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(c)
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Ownership
Limitation. In connection with each Advance Notice
delivered by the Company, any portion of an Advance that would cause the
Investor to exceed the Ownership Limitation shall automatically be deemed
to be withdrawn by the Company with no further action required by the
Company.
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(d)
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Registration
Limitation. In connection with each Advance Notice, any
portion of an Advance that would cause the aggregate number of Shares or
the aggregate offering price to exceed the aggregate number of Shares or
the aggregate offering price, as the case may be, available for resale
under the Registration Statement, shall automatically be deemed to be
withdrawn by the Company with no further action required by the
Company. At the Company's request from time to time, the
Investor shall report to the Company the total amount of Shares offered
and sold pursuant to this Agreement and the portion of the total
Commitment Amount remaining.
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(e)
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Resale of
Shares. During the Pricing Period, the Investor shall
use its reasonable efforts, to the extent market conditions allow, to
resell the Shares to the
public.
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Section
2.02
Closings. The
closing of each Advance with respect to each Pricing Period shall take place on
each Advance Settlement Date in accordance with the following
procedures:
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(a)
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By
10:30 am on the Trading Day immediately following each Pricing Period, the
Investor shall deliver to the Company a written document (each a "Settlement
Document") setting forth (i) the number of Shares to be purchased
by the Investor pursuant to the Advance (taking into account any
adjustments pursuant to Section 2.01(c) or Section 2.01(d), (ii) the
Market Price for such Advance, (iii) the Purchase Price for such Advance,
and (iv) the amount payable to the Company (which shall equal the number
of Shares to be purchased pursuant to such Advance (as specified in the
relevant Advance Notices and taking into account any adjustments pursuant
to Section 2.01(c) or Section 2.01(d), multiplied by the Purchase
Price). The Settlement Document shall be in the form attached
hereto as Exhibit
B.
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(b)
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On
each Advance Settlement Date the Company will, or will cause its transfer
agent to, electronically transfer the Shares being issued and sold
pursuant to the Advance by crediting the Investor's account or its
designee's account at the Depository Trust Company through its Deposit
Withdrawal Agent Commission System or by such other means of delivery as
may be mutually agreed upon by the parties hereto (which in all cases
shall be registered shares, freely available for resale, in good
deliverable form) against payment of the Purchase Price in same day funds
to an account designated by the Company.
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Section
2.03
Hardship. If
the Company defaults in its obligations to deliver the Shares on the Advance
Settlement Date, the Company agrees that in addition to and in no way
limiting the rights and obligations set forth in Section 5.01 hereto and in
addition to any other remedy to which the Investor is entitled at law or in
equity, including, without limitation, specific performance, it will hold the
Investor harmless against any loss, claim, damage, or expense (including
reasonable legal fees and expenses), as incurred, arising out of or in
connection with such default by the Company and acknowledges that irreparable
damage would occur in the event of any such default. It is
accordingly agreed that Investor shall be entitled to an injunction or
injunctions to prevent such breaches of this Agreement and to specifically
enforce, without the posting of a bond or other security, the terms and
provisions of this Agreement.
Section
2.04
Discount
Percentage. The Discount Percentage shall initially be
97.25%. Thereafter, if at any time or from time to time the sum
obtained by adding the Daily Volume Traded for any consecutive 20 Trading Day
period is equal to or greater than $40,000,000, the Discount Percentage from and
following the first Trading Day following such 20 Trading Day period shall be
adjusted (an "Upward
Adjustment") to 97.75%; provided however, that following an Upward
Adjustment, if the sum obtained by adding the Daily Volume Traded for any
subsequent consecutive 20 Trading Day period is less than $40,000,000, the
Discount Percentage from and following the first Trading Day following such
subsequent consecutive 20 Trading Period shall be adjusted to
97.25%.
Article
III.
Representations
and Warranties of Investor
Investor
hereby represents and warrants to, and agrees with, the Company that the
following are true and correct as of the date hereof:
Section
3.01
Organization and
Authorization. The Investor is duly organized and validly
existing and in good standing under the laws of the Cayman Islands and has all
requisite power and authority to perform its obligations under this
Agreement. The decision to invest and the execution and delivery of
this Agreement by such Investor, the performance by such Investor of its
obligations hereunder and the consummation by the Investor of the transactions
contemplated hereby have been duly authorized and requires no other proceedings
or actions on the part of the Investor. The undersigned has the
right, power and authority to execute and deliver this Agreement and all other
instruments on behalf of the Investor. This Agreement has been duly
executed and delivered by the Investor and, assuming the execution and delivery
hereof and acceptance thereof by the Company, will constitute the legal, valid
and binding obligations of the Investor, enforceable against the Investor in
accordance with its terms.
Section
3.02
Evaluation of
Risks. The Investor has such knowledge and experience in
financial, tax and business matters as to be capable of evaluating the merits
and risks of, and bearing the economic risks entailed by, an investment in the
Company and of protecting its interests in connection with this
transaction. It recognizes that its investment in the Company
involves a high degree of risk.
Section
3.03
No Legal Advice From the
Company. The Investor acknowledges that it had the opportunity
to review this Agreement and the transactions contemplated by this Agreement
with its own legal counsel and investment and tax advisors. The
Investor is relying solely on such counsel and advisors and not on any
statements or representations of the Company or any of the Company's
representatives or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.
Section
3.04
Investment Purpose.
The securities are being purchased by the Investor for its own account, and for
investment purposes. The Investor agrees not to assign or in any way
transfer the Investor's rights to the securities or any interest therein and
acknowledges that the Company will not recognize any purported assignment or
transfer except in accordance with applicable federal and state securities
laws. No other person has or will have a direct or indirect
beneficial interest in the securities. The Investor agrees not to
sell, hypothecate or otherwise transfer the Investor's securities unless the
securities are registered under federal and applicable state securities laws or
unless, in the opinion of counsel satisfactory to the Company, an exemption from
registration is available.
Section
3.05 Accredited
Investor. The Investor is an "Accredited Investor"
as that term is defined in Rule 501(a)(3) of Regulation D under the Securities
Act.
Section
3.06
Information. The
Investor and its advisors (and its counsel), if any, have been furnished with
all materials relating to the business, finances and operations of the Company
and information it deemed material to making an informed investment
decision. The Investor and its advisors, if any, have been afforded
the opportunity to ask questions of the Company and its
management. Neither such inquiries nor any other due diligence
investigations conducted by such Investor or its advisors, if any, or its
representatives shall modify, amend or affect the Investor's right to rely on
the Company's representations and warranties contained in this
Agreement. The Investor understands that its investment involves a
high degree of risk. The Investor is in a position vis a vis the
Company, as a result of its economic bargaining power, such that the Investor
has obtained and is able to obtain information from the Company in order to
evaluate the merits and risks of this investment. The Investor has
sought such accounting, legal and tax advice, as it has considered necessary to
make an informed investment decision with respect to this
transaction.
Section
3.07
No General
Solicitation. Neither the Company, nor any of its 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 under
the Securities Act) in connection with the offer or sale of the shares of Common
Stock offered hereby.
Section
3.08
Not an
Affiliate. The Investor is not an officer, director or a
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the Company or any "Affiliate" of the
Company (as that term is defined in Rule 405 of the Securities
Act).
Section
3.09
Short
Position. Neither the Investor nor any affiliate of the
Investor has an open short position in the Common Stock of the
Company.
Section
3.10
Trading
Activities. The Investor agrees that it shall not, and that it
will cause its affiliates not to, (a) engage in any short sales of or hedging
transactions with respect to the Common Stock, or (b) purchase any shares of
Common Stock except for Common Stock purchased in connection with this
Agreement, provided that the Company acknowledges and agrees that upon receipt
of an Advance Notice the Investor has the right to sell the Shares to be
purchased by the Investor pursuant to such Advance Notice prior to taking
possession of such Shares.
Section
3.11
Non-Solicitation. For
a period of two years from the date hereof, without the prior written consent of
the Company, the Investor shall not directly or indirectly solicit for
employment or employ any person who is employed by the Company on the date
hereof. Notwithstanding the foregoing, the Investor shall not be prevented from
hiring any such employee of the Company who contacts the Investor (a) in
response to solicitation directed at the public in general through advertisement
or similar means not targeted specifically at such employee or a general
solicitation from a recruitment firm not targeted specifically at such employee
or the Company or (b) on his or her own initiative and without any direct
or indirect solicitation by the Investor.
Section
3.12
Standstill
Agreement. The Investor agrees that for a period of one year
from the date of this Agreement, it will not, unless (x) specifically consented
to in advance in writing by the Board of Directors of the Company (the "Board") or (y)
required in order to fulfill its obligations to purchase and sell the Shares as
set forth in Article II of this Agreement, directly or indirectly, in any
manner:
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(a)
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make,
or in any way participate in, directly or indirectly, alone or in concert
with others, any "solicitation" of "proxies" to vote (as such terms are
used in the proxy rules promulgated pursuant to Section 14 of the Exchange
Act), whether subject to or exempt from the proxy rules, or seek to advise
or influence in any manner whatsoever any person or entity with respect to
the voting of any equity securities of the
Company;
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(b)
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form,
join or in any way intentionally participate in a "group" within the
meaning of Section 13(d)(3) of the Exchange Act with respect to any voting
equity securities of the Company, other than a group comprised solely of
the Investor and any of its controlling
persons;
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(c)
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acquire,
offer to acquire or agree to acquire, alone or in concert with others, by
purchase, exchange or otherwise, (i) any of the assets, tangible and
intangible, of the Company or any of its subsidiaries or (ii) direct or
indirect rights, warrants or options to acquire any assets of the Company
or any of its subsidiaries, in each case except for such assets as are
then being offered for sale by the Company or any of its subsidiaries or
otherwise are not material to the operations of the Company or any of its
subsidiaries, either individually or in the
aggregate;
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(d)
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otherwise
act, alone or in concert with others, to seek to propose to the Company,
any of its subsidiaries or any of their respective shareholders any
merger, business combination, restructuring, recapitalization or other
transaction involving the Company or any of its subsidiaries or otherwise
seek, alone or in concert with others, to control, change or influence the
management, the Board or the policies of the Company or any of its
subsidiaries or nominate any person as a director who is not nominated by
the then incumbent directors, or propose any matter to be voted upon by
the shareholders of the Company or any of its subsidiaries;
or
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(e)
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publicly
announce an intention to do, or enter into any arrangement or
understanding with others to do, any of the actions restricted or
prohibited under this Section
3.12.
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Article
IV.
Representations
and Warranties of the Company
Except as
stated below, or in the SEC Documents, the Company hereby represents and
warrants to, the Investor that the following are true and correct as of the date
hereof:
Section
4.01
SEC Documents; Financial
Statements. The Common Stock is registered pursuant to Section
12(b) of the Exchange Act and the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC
under the Exchange Act (all of the foregoing filed within the two years
preceding the date hereof or amended after the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to as the "SEC
Documents"). The Company is current with its filing
obligations under the Exchange Act and all SEC Documents have been filed on a
timely basis or the Company has received a valid extension of such time of
filing and has filed any such SEC Document prior to the expiration of any such
extension. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Exchange 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 as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, 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, to normal year-end audit
adjustments). No other information provided by or on behalf of the
Company to the Investor which is not included in the SEC Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made and not misleading.
Section
4.02
Organization and
Qualification. The Company is duly incorporated and validly
existing and in good standing under the laws of the Republic of the Marshall
Islands and has all requisite corporate power to own its properties and to carry
on its business as now being conducted. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted 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.
Section
4.03
Authorization, Enforcement,
Compliance with Other Instruments. (a) The Company has the
requisite corporate power and authority to enter into and perform this Agreement
and any related agreements, in accordance with the terms hereof and thereof, (b)
the execution and delivery of this Agreement and any related agreements by the
Company and the consummation by it of the transactions contemplated hereby and
thereby, have been duly authorized by the Board and no further consent or
authorization is required by the Company, its Board or its stockholders,
(c) this Agreement and any related agreements have been duly executed and
delivered by the Company, (d) this Agreement and assuming the execution and
delivery thereof and acceptance by the Investor and any related agreements
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their 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 creditors' rights and
remedies.
Section
4.04
Capitalization. The
authorized capital stock of the Company consists of: (i) 100,000,000 shares
of Common Stock, of which 29,537,700 are issued and outstanding, and (ii)
20,000,000 shares of Preferred Stock, $0.01 par value per share ("Preferred Stock"), of
which no shares are issued and outstanding. All of such outstanding
shares have been validly issued and are fully paid and
nonassessable. The Common Stock is currently listed on the Nasdaq
Global Market under the trading symbol "TOPS." Except as disclosed in
the SEC Documents, no shares of Common Stock are subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or permitted by
the Company. Except as disclosed in the SEC Documents, as of the date
hereof, there are no outstanding options, warrants, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of 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 shares of capital stock of the Company or any of its subsidiaries or
options, warrants, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its subsidiaries. There are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by this Agreement or any related agreement or the consummation
of the transactions described herein or therein. The Company has
furnished to the Investor true and correct copies of the Company's Articles of
Incorporation, as amended and as in effect on the date hereof (the "Articles of
Incorporation"), and the Company's By-laws, as in effect on the date
hereof (the "By-laws"), and the
terms of all securities convertible into or exercisable for Common Stock and the
material rights of the holders thereof in respect thereto.
Section
4.05
No
Conflict. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the Articles of
Incorporation, any certificate of designations of any outstanding series of
preferred stock of the Company or By-laws 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
the Company or any of its subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
Principal Market on which the Common Stock is listed) applicable to the Company
or any of its subsidiaries or by which any material property or asset of the
Company or any of its subsidiaries is bound or affected and which would cause a
Material Adverse Effect. Except as disclosed in the SEC Documents,
neither the Company nor its subsidiaries is in violation of any term of or in
default under its Articles of Incorporation or By-laws or their organizational
charter or by-laws, respectively, or any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its subsidiaries. The
business of the Company and its subsidiaries is not being conducted in violation
of any material law, ordinance, regulation of any governmental
entity. Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement in accordance with the terms hereof or thereof,
except as such consent, authorization or order has been obtained prior to the
date hereof.
Section
4.06
No
Default. Except as disclosed in the SEC Documents, the Company
is not in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any material indenture, mortgage,
deed of trust or other material instrument or agreement to which it is a party
or by which it is or its property is bound and neither the execution, nor the
delivery by the Company, nor the performance by the Company of its obligations
under this Agreement or any of the exhibits or attachments hereto will conflict
with or result in the breach or violation of any of the terms or provisions of,
or constitute a default or result in the creation or imposition of any lien or
charge on any assets or properties of the Company under its Articles of
Incorporation, By-Laws, any material indenture, mortgage, deed of trust or other
material agreement applicable to the Company or instrument to which the Company
is a party or by which it is bound, or any statute, or any decree, judgment,
order, rules or regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties, which default, lien or charge
is likely to cause in each case a Material Adverse Effect.
Section
4.07
Intellectual Property
Rights. The Company and its subsidiaries own or possess
adequate rights or licenses to use all material trademarks, trade names, service
marks, service mark registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted. The Company and its subsidiaries do not have any
knowledge of any infringement by the Company or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service mark registrations, trade secret or other
similar rights of others, and, to the knowledge of the Company, there is no
claim, action or proceeding being made or brought against, or to the Company's
knowledge, being threatened against, the Company or its subsidiaries regarding
trademark, trade name, patents, patent rights, invention, copyright, license,
service names, service marks, service mark registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
Section
4.08
Employee
Relations. Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened.
Section
4.09
Environmental
Laws. The Company and its subsidiaries are (i) in compliance
with any and all applicable material foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance or nonreceipt would not,
individually or in the aggregate, in each case have a Material Adverse
Effect.
Section
4.10
Title. Except
as set forth in the SEC Documents, the Company has good and marketable title to
its properties and material assets owned by it, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest other than
such as are not material to the business of the Company. Any real
property and facilities held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
subsidiaries.
Section
4.11
Insurance. The
Company and each of its subsidiaries are insured 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. 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 not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
Section
4.12
Regulatory
Permits. The Company and its subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, 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.
Section
4.13
Internal Accounting
Controls. The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
Section
4.14
No Material Adverse
Breaches, etc. Except as set forth in the SEC Documents,
neither the Company nor any of its subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree, order, rule or
regulation which in the judgment of the Company's officers has or is expected in
the future to have a Material Adverse Effect on the business, properties,
operations, financial condition, results of operations or prospects of the
Company or its subsidiaries. Except as set forth in the SEC
Documents, neither the Company nor any of its subsidiaries is in breach of any
contract or agreement which breach, in the judgment of the Company's officers,
has or is expected to have, individually or in the aggregate, a Material Adverse
Effect on the business, properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiaries, taken as a
whole.
Section
4.15
Absence of
Litigation. Except as set forth in the SEC Documents, there is
no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
against or affecting the Company, the Common Stock or any of the Company's
subsidiaries, wherein an unfavorable decision, ruling or finding would have a
Material Adverse Effect.
Section
4.16
Subsidiaries. Except
as disclosed in the SEC Documents, the Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
partnership, association or other business entity.
Section
4.17
Tax
Status. Except as disclosed in the SEC Documents, the Company
and each of its subsidiaries has made or filed all federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject and (unless and only to the extent that the Company and each
of its subsidiaries has set aside on its books provisions reasonably adequate
for the payment of all unpaid and unreported taxes) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and 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 know of no basis
for any such claim.
Section
4.18
Certain
Transactions. Except as set forth in the SEC Documents none of
the officers, directors, or employees of the Company is presently a party to any
transaction with the Company which individually or in the aggregate would be
material, (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
Section
4.19
Opinion of
Counsel. Investor shall receive an opinion letter from counsel
to the Company on or before the execution of this Agreement in the form attached
hereto as Exhibit C.
Section
4.20
Acknowledgment Regarding
Investor's Purchase of Shares. The Company acknowledges and agrees that
the Investor is acting solely in the capacity of an arm's length investor with
respect to this Agreement and the transactions contemplated hereunder. The
Company further acknowledges that the Investor is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to
this Agreement and the transactions contemplated hereunder and any advice given
by the Investor or any of its representatives or agents in connection with this
Agreement and the transactions contemplated hereunder is merely incidental to
the Investor's purchase of the Shares hereunder. The Company is aware
and acknowledges that it may not be able to request Advances under this
Agreement if the Registration Statement is not declared effective, ceases to be
effective, or if any issuances of Common Stock pursuant to any Advances would
violate any rules of the Principal Market. The Company further is
aware and acknowledges that the fees paid pursuant to Section 12.03 are not
refundable or returnable under any circumstances.
Article
V.
Indemnification
The
Investor and the Company represent to the other the following with respect to
itself:
Section
5.01
The
Company agrees to indemnify and hold harmless the Investor and the Investor's
affiliates, directors, officers, employees and agents and each person who
controls the Investor within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act (collectively, the "Investor
Indemnitees") against any and all losses, claims, damages, expenses or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages, expenses or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement covering the registration of the
Shares as originally filed or in any amendment thereof, or in any related
prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and agrees to reimburse each such Investor Indemnitee, as
incurred, for any legal or other expenses reasonably incurred by it in
connection with defending or settling any such loss, claim, damage, liability,
expense or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Investor specifically for inclusion
therein.
Section
5.02
The
Investor agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers who signs the Registration Statement, and each
person who controls the Company within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act (collectively, the "Company Indemnitees")
to the same extent as the foregoing indemnity to the Investor, but Section
5.01only with reference to written information relating to such Investor
furnished to the Company by or on behalf of the Investor specifically for
inclusion in the documents referred to in the foregoing
indemnity.
Section
5.03
Promptly
after receipt by any of the Investor Indemnitees or Company Indemnitees (each an
"indemnified party") under this Article V of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be made
against the indemnified party under this Article V, notify the indemnifying
party in writing of the commencement thereof; but the failure to so notify the
indemnifying party (i) will not relieve it from liability under Section
5.01 or Section 5.02 above unless and to the extent the indemnifying party did
not otherwise learn of such action and such failure results in the forfeiture by
the indemnifying party of substantial rights and defenses and (ii) will not, in
any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in Section
5.01 or Section 5.02 above. In the case of parties indemnified
pursuant to Section 5.01 above, counsel of the indemnified parties shall be
selected by the Investor, and, in the case of parties indemnified pursuant to
Section 5.02 above, counsel to the indemnified parities shall be selected by the
Company. An indemnifying party may participate at its own expense in
the defense of any such action; provided, however, that counsel
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought under this Agreement (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless (i) such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit or
proceeding and (ii) such settlement, compromise or consent does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
Section
5.04
In the
event that the indemnity provided in Section 5.01, Section 5.02 or Section
5.03 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and the Investor severally agree to contribute
to the aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or defending
the same) (collectively "Losses") to which the
Company and the Investor may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and by the
Investor on the other from transactions contemplated by this Agreement. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Company and the Investor severally shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and of the Investor on the
other in connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to
be equal to the total proceeds from the sales of Shares hereunder (before
deducting expenses) received by it, and benefits received by the Investor shall
be deemed to be equal to the total discounts received by the
Investor. Relative fault shall be determined by reference to, among
other things, whether any untrue or any alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information provided by the Company on the one hand or the Investor on the
other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Investor agree that it would not be
just and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified party and
referred to above in this Article V shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this
Section 5.04, the Investor shall not be required to contribute any amount in
excess of the amount by which the Purchase Price for Shares actually purchased
pursuant to this agreement exceeds the amount of any damages which the Investor
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Article V, each person who controls the
Investor within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act and each director, officer, employee and agent of the Investor
shall have the same rights to contribution as the Investor, and each person who
controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and each director, officer, employee and
agent of the Company, shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions of this Section
5.04.
Section
5.05
The
remedies provided for in this Article V are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any indemnified
person at law or in equity. The obligations of the parties to
indemnify or make contribution under this Article V shall survive
termination.
Article
VI.
Covenants
of the Company
Section
6.01
Registration
Statement.
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(a)
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Filing of a
Registration Statement. The Company shall prepare and
file with the SEC one or more new Registration Statements covering the
resale by the Investor of the Registrable Securities. The
Company in its sole discretion may choose when to file such Registration
Statements; provided,
however, that the Company shall not have the ability to request any
Advances until the effectiveness of a new Registration
Statement. Each Registration Statement shall contain the "Plan of
Distribution" section in substantially the form attached hereto as
Exhibit
D, or as otherwise agreed to by the parties
hereto.
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(b)
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Maintaining a
Registration Statement. The Company shall use its best
efforts to cause any Registration Statement that has been declared
effective to remain effective at all times until all Registrable
Securities contained in such Registration Statement cease to be
Registrable Securities (the "Registration
Period"). Each Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein)
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 light of the circumstances in which they were made,
not misleading.
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(c)
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Filing
Procedures. Prior to the filing thereof, the Company
shall furnish to the Investor within a reasonable period of time for its
review and comment drafts of the following: (i) any prospectus supplement
covering the resale of the Shares; (ii) any new Registration Statement
covering the resale of the Shares; and (iii) any amendments or supplements
to the applicable Registration Statement, including the prospectus
contained therein.
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(d)
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Delivery of Final
Documents. The Company shall furnish to the Investor
without charge, (i) at least one copy of such Registration Statement as
declared effective by the SEC and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference, all exhibits; (ii) at the request of the Investor, 10 copies of
the final prospectus included in such Registration Statement and all
amendments and supplements thereto (or such other number of copies as the
Investor may reasonably request) and (iii) such other documents as the
Investor may reasonably request from time to time in order to facilitate
the disposition of the Registrable Securities owned by the
Investor.
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(e)
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Amendments and Other
Filings. The Company shall (i) prepare and file with the
SEC such amendments (including post-effective amendments) and
supplements to the applicable Registration Statement and the prospectus
used in connection with such Registration Statement, which prospectus is
to be filed pursuant to Rule 424 promulgated under the Securities Act, as
may be necessary to keep such Registration Statement effective at all
times during the Registration Period, and prepare and file with the SEC
such additional Registration Statements in order to register for resale
under the Securities Act all of the Registrable Securities; (ii) cause the
related prospectus to be amended or supplemented by any required
prospectus supplement (subject to the terms of this Agreement), and as so
supplemented or amended to be filed pursuant to Rule 424; (iii) provide
the Investor copies of all correspondence from and to the SEC relating to
a Registration Statement (provided that the Company may excise any
information contained therein which would constitute material non-public
information, and (iv) comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities of the
Company covered by such Registration Statement during the Registration
Period.
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(f)
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Blue-Sky. The
Company shall use its best efforts to (i) register and qualify the
Registrable Securities covered by a Registration Statement under such
other securities or "blue sky" laws of such jurisdictions in the United
States as the Investor reasonably requests, (ii) prepare and file in
those jurisdictions, such amendments (including 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, that the Company shall not be required
in connection therewith or as a condition thereto to (w) make any change
to its articles of incorporation or by-laws, (x) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but
for this Section 6.01(a)Section 6.01(f), (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 the Investor 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 threat of any proceeding
for such purpose.
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Section
6.02
Corporate
Existence. The Company will take all steps necessary to
preserve and continue the corporate existence of the Company.
Section
6.03
Notice of Certain Events
Affecting Registration; Suspension of Right to Submit an Advance
Notice. The Company will as promptly as practicable notify the
Investor, and confirm in writing, upon its becoming aware of the occurrence of
any of the following events: (i) receipt of any request for
additional information by the SEC or any other federal or state governmental
authority for amendments or supplements to the Registration Statement, the
related prospectus, or for any additional information; (ii) the issuance by the
SEC or any other federal or state governmental authority of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Common Stock for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose; (iv) the
happening of any event that makes any statement made in the Registration
Statement or related prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in the Registration Statement, related
prospectus, or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related prospectus, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or of the necessity to amend the Registration Statement or
supplement the related prospectus to comply with the Securities Act or any other
law; or (v) the Company's reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate. The
Company shall not deliver to the Investor any Advance Notice during the
continuation of any of the foregoing events and the Investor agrees to not
consummate any transactions related to the Common Stock upon receipt of such
notice, until the Company subsequently notifies the Investor in writing (which
shall be delivered as promptly as practicable) that the events set forth in such
notice no longer apply.
Section
6.04
Notice of SEC
Investigation. The Company will notify the Investor in writing within two
Trading Days of (i) receiving a "Wells" notice, (ii) receiving any indication
that the SEC or its staff intends to investigate the Company or (iii) an
enforcement action related to an SEC investigation being brought against the
Company.
Section
6.05
Listing of
Shares. The Company will use commercially reasonable efforts
to cause the Shares to be listed on the Principal Market and to qualify the
Shares for sale under the securities laws of such jurisdictions as the Investor
designates; provided that the Company shall not be required in connection
therewith to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction.
Section
6.06
Consolidation;
Merger. The Company shall notify the Investor prior to the
Company's effecting any merger or consolidation of the Company with or into, or
a transfer of all or substantially all the assets of the Company to another
entity (a "Consolidation
Event").
Section
6.07
Issuance of the Company's
Common Stock. The sale of the Common Stock hereunder shall be
made in accordance with the provisions and requirements of the Securities Act
and any applicable state securities law, including any exemptions contained
therein.
Section
6.08
Market Activities.
The Company will not, directly or indirectly, take any action designed to cause
or result in, or that constitutes or might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of the Company
under applicable laws and regulations to facilitate the sale or resale of the
Common Stock.
Section
6.09
Opinion of Counsel
Concerning Resales. Provided that the Investor is permitted to
resell the Shares pursuant to an effective Registration Statement or Rule 144,
or otherwise, the Company shall obtain for the Investor, at the Company's
expense, any and all opinions of counsel which may be required by the Company's
transfer agent to effect such resales or the removal of any restrictive legends
on such shares.
Section
6.10
Expenses. The
Company, whether or not the transactions contemplated hereunder are consummated
or this Agreement is terminated, will pay all expenses incident to the
performance of its obligations hereunder, including but not limited to (i) the
preparation, printing and filing of the Registration Statement and each
amendment and supplement thereto, of each related prospectus and of each
amendment and supplement thereto; (ii) the preparation, issuance and delivery of
any Shares issued pursuant to this Agreement, (iii) all fees and disbursements
of the Company's counsel, accountants and other advisors, (iv) the qualification
of the Shares under securities laws in accordance with the provisions of this
Agreement, including filing fees in connection therewith, (v) the printing and
delivery of copies of the prospectus and any amendments or supplements thereto,
(vi) the fees and expenses incurred in connection with the listing or
qualification of the Shares for trading on the Principal Market, or (vii) filing
fees of the SEC and the Financial Industry Regulatory Authority,
Inc.
Section
6.11
Sales. Without
the written consent of the Investor, the Company will not, directly or
indirectly, offer to sell, sell, contract to sell, grant any option to sell or
otherwise dispose of any shares of Common Stock (other than the Shares offered
pursuant to the provisions of this Agreement) or securities convertible into or
exchangeable for Common Stock, warrants or any rights to purchase or acquire,
Common Stock during the period beginning on the 5th Trading Day immediately
prior to the date on which any Advance Notice is delivered by the Company
hereunder and ending on the 5th Trading Day immediately following the Advance
Settlement Date with respect to Shares sold pursuant to such Advance
Notice.
Section
6.12
Current
Report. As promptly as practicable after the execution hereof
(and prior to the Company delivering an Advance Notice to the Investor
hereunder), the Company shall file with the SEC a report on Form 6-K or such
other appropriate form as determined by counsel to the Company, relating to the
transactions contemplated by this Agreement. In each Annual Report on
Form 20-F, report on Form 6-K (containing financial statements) filed by the
Company in respect to any quarter in which Advances were made under this
Agreement, or at any other time as may be required by the Exchange Act and
applicable SEC regulations, the Company shall set forth with regard to such
quarter or other period the number of Shares sold to the Investor under this
Agreement and the Purchase Price paid for such Shares.
Section
6.13
Compliance With
Laws. The Company will not, directly or indirectly, take any
action designed to cause or result in, or that constitutes or might reasonably
be expected to constitute, the stabilization or manipulation of the price of the
Shares or which caused or resulted in, or which would in the future reasonably
be expected to cause or result in, stabilization or manipulation of the price of
the Shares.
Section
6.14
Comfort Letters; Due
Diligence.
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(a)
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From
time to time at the request of the Investor the Company will cause its
independent accountants to furnish to the Investor, at the Investor's
request, a letter in form and substance reasonably satisfactory to the
Investor, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the financial statements of the Company and the Company shall deliver
additional "comfort letters" promptly after (i) the date the Registration
Statement or any prospectus shall be amended or supplemented (other than
(1) in connection with the filing of a prospectus supplement that contains
solely information relating to the number of shares sold by the Investor
pursuant to the Registration Statement; (2) in connection with the filing
of any report or other document under Section 13, 14 or 15(d) of the
Exchange Act (other than the filing of a Form 6-K which contains financial
statements); or (3) by a prospectus supplement relating to the
offering of other securities (including, without limitation, other shares
of Common Stock)) (each such date, a "Registration Statement
Amendment Date") and (ii) the date of filing or amending each
Annual Report on Form 20-F or report on Form 6-K including quarterly
financial statements for a period in which an Advance was delivered
pursuant to this Agreement and which are incorporated by reference in the
Registration Statement (each such date, a "Company Periodic
Report Date").
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(b)
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From
time to time at the request of the Investor, the Company shall make
available for inspection by (i) the Investor and (ii) one firm of
accountants or other agents retained by the 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
Company's officers, directors and employees to supply all information
which any Inspector may reasonably request; provided, however, that each
Inspector shall agree, and the Investor hereby agrees, to hold in strict
confidence and shall not make any disclosure (except to an Investor) or
use any Record or other information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are so
notified, unless (a) 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 Securities Act, (b) 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 (c) the
information in such Records has been made generally available to the
public other than by disclosure in violation of this or any other
agreement of which the Inspector and the Investor has
knowledge. The 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.
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Article
VII.
Conditions
for Advance and Conditions to Closing
Conditions Precedent to each
Advance. The right of the Company to deliver an Advance Notice
and the obligations of the Investor hereunder with respect to an Advance is
subject to the satisfaction, on each such Pricing Day and Advance Settlement
Date (each a "Condition Satisfaction
Date"), of each of the following conditions:
Section
7.01
Accuracy of the Company's
Representations and Warranties. The representations and
warranties of the Company shall be true and correct in all material
respects.
Section
7.02
Registration of the Common
Stock with the SEC. There shall be an effective Registration
Statement pursuant to which the Investor is permitted to utilize the prospectus
thereunder, including any prospectus supplements, to resell all of the shares of
Common Stock issuable pursuant to such Advance. The Company shall
have filed with the SEC in a timely manner all reports, notices and other
documents required of a "reporting company" under the Exchange Act and
applicable SEC regulations.
Section
7.03
Authority. The
Company shall have obtained all permits and qualifications required by any
applicable state for the offer and sale of the shares of Common Stock, or shall
have the availability of exemptions therefrom. The sale and issuance
of the shares of Common Stock shall be legally permitted by all laws and
regulations to which the Company is subject.
Section
7.04
No Material Notices.
None of the following events shall have occurred and be
continuing: (i) receipt by the Company of any request for additional
information from the SEC or any other federal or state governmental,
administrative or self regulatory authority during the period of effectiveness
of the Registration Statement, the response to which would require any
amendments or supplements to the Registration Statement or the related
prospectus; (ii) the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;
(iii) receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Shares for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose; (iv) the occurrence of any event that makes any statement made in
the Registration Statement or the related prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires the making of any changes in the Registration
Statement, related prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; or (v) the Company's reasonable determination that a
post-effective amendment to the Registration Statement would be
required.
Section
7.05
Performance by the
Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to each Condition Satisfaction Date.
Section
7.06
No
Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits or directly and adversely affects any of the transactions contemplated
by this Agreement, and no proceeding shall have been commenced that may have the
effect of prohibiting or adversely affecting any of the transactions
contemplated by this Agreement.
Section
7.07
No Suspension of Trading in
or Delisting of Common Stock. The Common Stock shall be
trading on the Principal Market and all of the Shares issuable pursuant to an
Advance Notice shall have been approved for listing on the Principal Market and
the Company believes, in good faith, that trading of the Common Stock on a
Principal Market will continue uninterrupted for the foreseeable
future. The issuance of shares of Common Stock with respect to the
applicable Advance Notice will not violate the shareholder approval requirements
of the Principal Market. The Company shall not have received any
notice threatening the continued listing of the Common Stock on the Principal
Market.
Section
7.08
Comfort
Letters. The Company's independent accountants shall have
furnished to the Investor any letters requested pursuant to Section 6.14(a)
addressed to the Investor containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements of the Company.
Section
7.09
Authorized. There
shall be a sufficient number of authorized but unissued and otherwise unreserved
shares of Common Stock for the issuance of all of the shares issuable pursuant
to such Advance Notice.
Section
7.10
Consolidation
Event. The Company shall not have effected any merger or
consolidation with or into, or a transfer of all or substantially all the assets
of the Company to another entity.
Section
7.11
Executed Advance
Notice. The Investor shall have received the Advance Notice in
compliance with the Advance parameters set forth in Section 2.01(a) and Section
2.01(b) executed by an officer of the Company and the representations contained
in such Advance Notice shall be true and correct as of each Condition
Satisfaction Date.
Article
VIII.
Non-Disclosure
of Non-Public Information
Nothing
herein shall require the Company to disclose non-public information to the
Investor or its advisors or representatives, provided, however, that
notwithstanding anything herein to the contrary, the Company will immediately
notify the Investor or its advisors or representatives of any event or the
existence of any circumstance (without any obligation to disclose the specific
event or circumstance) of which it becomes aware, constituting non-public
information (whether or not requested of the Company specifically or generally
during the course of due diligence by such persons or entities), which, if not
disclosed in the prospectus included in the Registration Statement would cause
such prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements, therein, in light
of the circumstances in which they were made, not misleading.
The
Company shall hold in confidence and not make any disclosure of information
concerning the 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, (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. The
Company agrees that it shall, upon learning that disclosure of such information
concerning the Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt written notice to the
Investor and allow the Investor, at the Investor's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
Article
IX.
Choice
of Law/Jurisdiction
This
Agreement shall be governed by and interpreted in accordance with the laws of
the State of New York without regard to the principles of conflict of
laws. The parties agree that any suit, action or proceeding between
them, their respective directors, officers, partners, employees and agents,
arising out of or based upon this Agreement or the transactions contemplated
hereby may be instituted in any court of competent jurisdiction located in the
City, County and State of New York and waives any objection which it may now or
hereafter have to the laying of venue of any such proceeding, and irrevocably
submits to the non-exclusive jurisdiction of such courts in any suit, action or
proceeding.
Article
X.
Assignment;
Termination
Section
10.01
Assignment. Neither
this Agreement nor any rights of the parties hereunder may be assigned to any
other Person.
Section
10.02
Termination.
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(a)
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Unless
earlier terminated as provided hereunder, this Agreement shall terminate
automatically on the earlier of (i) the first day of the month next
following the 36-month anniversary of the Effective Date, or (ii) the date
on which the aggregate Market Price for the Shares issued pursuant to this
Agreement is equal to the Commitment
Amount.
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(b)
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The
Company may terminate this Agreement at any time upon prior written notice
to the Investor; provided that upon such termination (i) there are no
Advances outstanding, and (ii) the Company has paid all amounts owed to
the Investor pursuant to this Agreement through the date of such
termination. This Agreement may be terminated at any time by
the mutual written consent of the parties, effective as of the date of
such mutual written consent unless otherwise provided in such written
consent. In the event of any termination of this Agreement by
the Company hereunder, so long as the Investor owns any shares of Common
Stock issued hereunder, unless all of such shares of Common Stock may be
resold by the Investor without registration and without any time, volume
or manner limitations pursuant to Rule 144, the Company shall not
suspend or withdraw the Registration Statement or otherwise cause the
Registration Statement to become ineffective or voluntarily delist the
Common Stock from the Principal Market without listing the Common Stock on
another trading market.
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(c)
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The
obligation of the Investor to make an Advance to the Company pursuant to
this Agreement shall terminate permanently (including with respect to an
Advance Settlement Date that has not yet occurred) in the event that there
shall occur any stop order or suspension of the effectiveness of the
Registration Statement for an aggregate of 50 Trading Days in any calendar
year, other than due to the acts of the Investor, during the Commitment
Period, provided, however, that
this termination provision shall not apply to any period commencing upon
the filing of a post-effective amendment to such Registration Statement
and ending upon the date on which such post effective amendment is
declared effective by the SEC.
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(d)
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Nothing
in this Section 10.02 shall be deemed to release the Company or the
Investor from any liability for any breach under this Agreement, or to
impair the rights of the Company and the Investor to compel specific
performance by the other party of its obligations under this
Agreement. The indemnification provisions contained in Article
V shall survive termination
hereunder.
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Article
XI.
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 a copy is mailed by U.S. certified
mail, return receipt requested; (iii) 3 days after being sent by U.S. certified
mail, return receipt requested, or (iv) 1 day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for
such communications, except for Advance Notices which shall be delivered in
accordance with Section 2.02Section 2.02 hereof, shall be:
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If
to the Company, to:
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Top
Ships Inc.
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Attn:
Alexandros Tsirikos, CFO
1,
Vassilissis Sofias Str. & Meg.
Alexandrou
Str.
151
24, Maroussi
Athens,
Greece
+
30 210 812 8180
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With
a copy to:
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Seward
& Kissel LLP
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Attention: Gary
J. Wolfe, Esq.
One
Battery Park Plaza
New
York, New York 10004
(212)
574-1200
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If
to the Investor(s):
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YA
Global Master SPV Ltd.
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101
Hudson Street –Suite 3700
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Jersey
City, NJ 07302
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Attention: Mark
Angelo
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Portfolio
Manager
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Telephone: (201)
985-8300
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Facsimile: (201)
985-8266
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With
a Copy to:
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David
Gonzalez, Esq.
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101
Hudson Street – Suite 3700
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Jersey
City, NJ 07302
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Telephone: (201)
985-8300
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Facsimile: (201)
985-8266
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Each
party shall provide 5 days' prior written notice to the other party of any
change in address or facsimile number.
Article
XII.
Miscellaneous
Section
12.01
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 any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause two additional
original executed signature pages to be physically delivered to the other party
within five days of the execution and delivery hereof, though failure to deliver
such copies shall not affect the validity of this Agreement.
Section
12.02
Reporting Entity for the
Common Stock. The reporting entity relied upon for the
determination of the trading price or trading volume of the Common Stock on any
given Trading Day for the purposes of this Agreement shall be Bloomberg, L.P. or
any successor thereto. The written mutual consent of the Investor and
the Company shall be required to employ any other reporting entity.
Section
12.03
Fees and
Expenses. The Company shall pay a structuring fee of $75,000
to Yorkville Advisors, LLC on or before the execution of this
Agreement.
Section
12.04
Brokerage. Each of
the parties hereto represents that it has had no dealings in connection with
this transaction with any finder or broker who will demand payment of any fee or
commission from the other party. The Company on the one hand, and the
Investor, on the other hand, agree to indemnify the other against and hold the
other harmless from any and all liabilities to any person claiming brokerage
commissions or finder's fees on account of services purported to have been
rendered to or on behalf of the indemnifying party in connection with this
Agreement or the transactions contemplated hereby.
Section
12.05
Confidentiality. If
for any reason the transactions contemplated by this Agreement are not
consummated, each of the parties hereto shall keep confidential any information
obtained from any other party (except information publicly available or in such
party's domain prior to the date hereof, and except as required by court order)
and shall promptly return to the other parties all schedules, documents,
instruments, work papers or other written information without retaining copies
thereof, previously furnished by it as a result of this Agreement or in
connection herein.
Section
12.06
Integration.
This Agreement, along with any exhibits or amendments hereto, encompasses the
entire agreement of the parties and supersedes all previous understandings and
agreements between the parties, whether oral or written shall be deemed to
terminate as of the date hereof. No provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the
parties hereto have caused this Standby Equity Purchase Agreement to be executed
by the undersigned, thereunto duly authorized, as of the date first set forth
above.
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COMPANY:
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Top
Ships Inc.
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By: ______________________
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Name:
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Title:
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INVESTOR:
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YA
Global Master SPV Ltd.
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By: Yorkville
Advisors, LLC
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Its: Investment
Manager
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By:
______________________
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Name: Tory
Rillo
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Title: Senior
Managing Director
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YA
Global Investments, L.P. and YA Global Investments II, L.P. hereby in this
Agreement for the purpose of absolutely and unconditionally guaranteeing the
obligations of the Investor hereunder.
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YA
Global Investments, L.P.
By: Yorkville
Advisors, LLC
Its:
Investment Manager
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By:
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Name:
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Tory
Rillo
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Title:
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Senior
Managing Director
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YA
Global Investments II, L.P.
By: Yorkville
Advisors, LLC
Its:
Investment Manager
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By:
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Name:
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Tory
Rillo
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Title: Senior
Managing Director
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