<PAGE> 1
EXHIBIT 2.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT is made as of September 28,
2000, by and among QuadraMed Corporation, a Delaware corporation ("QM"),
QuadraMed Operating Corporation, a Delaware corporation and a wholly owned
subsidiary of QM ("QMOC" and together with QM, the "Seller"), and the investors
whose names and addresses are set forth on Schedule I hereto (the "Purchasers").
The parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF SECURITIES.
(a) Subject to the terms and conditions hereof, on the Closing
Date, as defined herein, the Seller shall sell to the Purchasers, and the
Purchasers shall purchase from the Seller, the securities (the "Securities")
listed on Schedule II hereto of ChartOne, Inc., a Delaware corporation (the
"Company"), for the aggregate cash purchase prices (each a "Purchase Price") set
forth opposite their respective names on Schedule I hereto.
(b) Such sales and purchases shall be effected by the Seller
delivering to the Purchasers duly executed certificates or other instruments
evidencing the Securities to be purchased, in each case with appropriate
instruments of transfer attached (duly endorsed or otherwise in form sufficient
for transfer), against delivery by each of the Purchasers to the Seller of the
Purchase Price. The Purchase Price shall be paid by wire transfer of immediately
available funds to such account or accounts as the Seller shall designate in
writing. The Seller's agreements with each of the Purchasers are separate
agreements, and the sales to each of the Purchasers are separate sales.
(c) The closing of the purchases and sales referred to above
hereto shall take place on the third business day after the satisfaction or
waiver of the conditions set forth in Sections 5 and 6 hereof (the "Closing
Date"), at the offices of Pillsbury Madison & Sutro LLP, 50 Fremont Street, San
Francisco, CA 94105, at 10:00 a.m., San Francisco time, or on such other date,
and at such other place and time as the parties hereto shall mutually agree.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants to the Purchasers that:
(a) The Seller is a corporation, duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(b) The Seller has all requisite power and authority to execute
and deliver this Agreement and that certain Letter Agreement (the "Letter
Agreement"), dated as of the date hereof, the form of which is attached as
Exhibit A hereto, and to perform its obligations hereunder and thereunder. The
Seller has authorized the execution, delivery and performance of
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this Agreement, and each of the transactions contemplated hereby and thereby. No
other action (including shareholder approval) is necessary to authorize such
execution, delivery and performance, and upon such execution and delivery, this
Agreement and the Letter Agreement shall constitute valid and binding
obligations of the Seller, enforceable against the Seller in accordance with
their terms, except to the extent that enforcement hereof and thereof may be
limited by applicable bankruptcy, moratorium, insolvency or other similar laws
affecting creditors' rights generally and general equitable principles.
(c) Except pursuant to the applicable requirements of the HSR
Act, no consent, approval, authorization or order of any court, governmental
agency or body or arbitrator having jurisdiction over the Seller is required for
the execution or delivery by the Seller of this Agreement or the Letter
Agreement, or performance by the Seller of its obligations hereunder or
thereunder, including without limitation the sale of the Securities.
(d) Neither the sale of the Securities nor the performance of the
Seller's obligations hereunder or under the Letter Agreement will violate,
conflict with, result in a breach of, or constitute a default (or an event that,
with the giving of notice or the lapse of time, or both, would constitute a
default) under (i) the certificate of incorporation, bylaws or other
organizational documents of the Seller, (ii) any decree, judgment, order, law,
treaty, rule, regulation or determination of any court, governmental agency or
body or arbitrator having jurisdiction over the Seller or any of its assets or
properties or (iii) the terms of any material agreement to which the Seller is a
party or to which any of the Seller's properties is subject.
(e) The Securities have been duly authorized and validly issued,
and are fully paid and nonassessable. The Seller has good and marketable title
to the Securities. The Securities are owned by the Seller free and clear of any
security interest, lien, claim or other legal or equitable encumbrance or any
restriction on transfer (collectively, "Encumbrances"), other than those imposed
by the Securities Act and that certain Stockholders Agreement (the "Stockholders
Agreement"), dated as of June 7, 2000, by and among the Institutional Investors
listed on Schedule I thereto, the individuals listed on Schedule II thereto,
QMOC and the Company, and will be transferred to the Purchaser free of any
Encumbrances. The Securities represent the entire equity interest of the Seller
in the Company.
(f) The sale of the Securities by the Seller is not part of a
plan or scheme to evade the registration requirements of the Securities Act.
Neither the Seller nor any person acting on behalf of the Seller has offered or
sold any of the Securities by any form of general solicitation or general
advertising.
(g) Other than as specifically set forth in this Agreement, the
Seller makes no representation or warranty. EXCEPT AS SPECIFICALLY SET FORTH IN
THIS AGREEMENT, ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, ARE HEREBY EXPRESSLY DISCLAIMED.
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3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
Each Purchaser severally represents and warrants to the Seller
that:
(a) The Purchaser is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization.
(b) Such Purchaser has all requisite power and authority to
execute and deliver this Agreement and to perform its obligations hereunder. The
Purchaser has authorized the execution, delivery and performance of this
Agreement, and each of the transactions contemplated hereby. No other action is
necessary to authorize such execution, delivery and performance, and upon such
execution and delivery, this Agreement shall constitute a valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms.
(c) No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Purchaser
is required for the execution, delivery or performance by the Purchaser of its
obligations hereunder, including without limitation the purchase of the
Securities.
(d) Neither the acquisition of the Securities nor the performance
of the Purchaser's obligations hereunder will violate, conflict with, result in
a breach of, or constitute a default (or an event that, with the giving of
notice or the lapse of time, or both, would constitute a default) under (i) the
certificate of incorporation, bylaws or other organizational documents of the
Purchaser, (ii) any decree, judgment, order, law, treaty, rule, regulation or
determination of any court, governmental agency or body or arbitrator having
jurisdiction over the Purchaser or any of its assets or properties or (iii) the
terms of any material agreement to which the Purchaser is a party or to which
any of the Purchaser's properties is subject.
(e) The Purchaser understands that the Securities have not been
registered under the Securities Act, nor qualified under any state securities
laws, and that they are being offered and sold pursuant to an exemption from
such registration and qualification based in part upon the representations of
the Purchaser contained herein.
(f) The Purchaser is an "accredited investor" as such term is
defined in Rule 501(a) of the Securities Act and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the investment contemplated by this Agreement; the
Purchaser is able to bear the economic risk of its investment in the Company
(including a complete loss of its investment).
(g) The Purchaser understands that it must bear the economic risk
of this investment indefinitely unless its Securities are registered pursuant to
the Securities Act or an exemption from such registration is available, and
unless the disposition of such securities is
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<PAGE> 4
qualified under applicable state securities laws or an exemption from such
qualification is available. The Purchaser further understands that there is no
assurance that any exemption from the Securities Act will be available, or, if
available, that such exemption will allow the Purchaser to Transfer any or all
of the Securities, in the amounts, or at the time the Purchaser might propose.
(h) Except as set forth on Schedule 3(h) hereto, the Purchaser is
acquiring the Securities solely for its own account for investment and not with
a view toward the resale, Transfer, or distribution thereof, nor with any
present intention of distributing the Securities. No other person has any right
with respect to or interest in the Securities to be purchased by the Purchaser,
nor has the Purchaser agreed to give any person any such interest or right in
the future.
(i) Other than as specifically set forth in this Agreement, the
Purchaser makes no representation or warranty. EXCEPT AS SPECIFICALLY SET FORTH
IN THIS AGREEMENT, ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, ARE HEREBY EXPRESSLY DISCLAIMED.
4. COVENANTS OF THE PARTIES.
(a) Securities Act Restrictions. The Purchasers acknowledge that
the certificates evidencing the Securities will bear a legend reflecting the
restrictions on the transfer of such securities under the Securities Act.
(b) Further Assurances. From and after the Closing Date, the
Seller shall execute all certificates, instruments, documents or agreements and
shall take any other action which it is reasonably requested to execute or take
to further effectuate the transactions contemplated hereby.
(c) Best Efforts. Each of the parties hereto will use
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or advisable consistent
with applicable law to consummate and make effective in the most expeditious
manner practicable the transactions contemplated hereby, including without
limitation, making all required regulatory filings (including without limitation
filings under the HSR Act) as promptly as practicable after the date hereof.
5. PURCHASERS' CONDITIONS TO CLOSING.
The obligation of the Purchasers to purchase and pay for the
Securities on the Closing Date, as provided in Section 1 hereof, shall be
subject to the satisfaction or waiver (to the extent permitted by law), prior
thereto or concurrently therewith, of the following conditions:
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(a) Representations and Warranties. The representations and
warranties of the Seller contained in this Agreement shall be true and correct
on and as of the Closing Date as though such warranties and representations were
made at and as of such date, except as otherwise affected by the transactions
contemplated hereby.
(b) Compliance with Agreement. The Seller shall have performed
and complied with all agreements, covenants and conditions contained in this
Agreement which are required to be performed or complied with by the Seller
prior to or on the Closing Date.
(c) Injunction. There shall be no effective injunction, writ,
preliminary restraining order or any order of any nature issued by a court of
competent jurisdiction directing that the transactions provided for herein or
any of them not be consummated as herein provided.
(d) Regulatory Approvals and Consents. All applicable waiting
periods (and any extensions thereof) under the HSR Act shall have expired or
otherwise been terminated without objection of any of the relevant federal
authorities, and all governmental consents, permits, authorizations, approvals
and waivers which are required to consummate the transactions contemplated
hereby shall have been obtained.
(e) Seller Board Approval. The Board of Directors of the Seller
shall have approved the transactions contemplated hereby, on the terms and
conditions contemplated hereby, and such approval shall be in full force and
effect.
(f) Letter Agreement. The Seller shall have performed all of the
obligations required under the Letter Agreement to be performed by the Seller as
of the Closing Date, and the Seller shall have executed and delivered the Mutual
Release attached as Exhibit A to the Letter Agreement.
6. SELLER'S CONDITIONS TO CLOSING.
The obligation of the Seller to sell the Securities to the
Purchasers on the Closing Date, as provided in Section 1 hereof, shall be
subject to the satisfaction or waiver (to the extent permitted by law), prior
thereto or concurrently therewith, of the following conditions:
(a) Representations and Warranties. The representations and
warranties of all of the Purchasers contained in this Agreement shall be true
and correct on and as of the Closing Date as though such warranties and
representations were made at and as of such date, except as otherwise affected
by the transactions contemplated hereby.
(b) Compliance. All of the Purchasers shall have performed and
complied with all agreements, covenants and conditions contained in this
Agreement which are required to be performed or complied with by the Purchasers
prior to or on the Closing Date.
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(c) Injunction. There shall be no effective injunction, writ,
preliminary restraining order or any order of any nature issued by a court of
competent jurisdiction directing that the transactions provided for herein or
any of them not be consummated as herein provided.
(d) Letter Agreement. The Company shall have performed all of the
obligations required to be performed by the Company under the Letter Agreement
as of the Closing Date, and the Company shall have executed and delivered the
Mutual Release attached as Exhibit A to the Letter Agreement.
(e) Regulatory Approvals and Consents. All applicable waiting
periods (and any extensions thereof) under the HSR Act shall have expired or
otherwise been terminated without objection of any of the relevant federal
authorities, and all governmental consents, permits, authorizations, approvals
and waivers which are required to consummate the transactions contemplated
hereby shall have been obtained.
7. TERMINATION AND ABANDONMENT.
This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time before the Closing:
(a) by the mutual written consent of the Seller and the
Purchasers;
(b) by the Seller, on the one hand or the Purchasers, on the
other hand, if the other party or parties hereto fail to comply in any material
respect with any of its or their covenants or agreements contained herein, or
breaches its or their representations and warranties in any material way and
such failure or breach, if capable of being cured, is not cured within 30 days
of the receipt of written notice of such failure or breach from the terminating
party;
(c) by the Seller or the Purchasers if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other action (which
order, decree or ruling the parties hereto shall use their best efforts to
lift), which permanently restrains, enjoins or otherwise prohibits the
transactions contemplated by this Agreement; or
(d) by the Seller or the Purchasers at any time after December
31, 2000; provided however, that if the Closing Date has not occurred on or
before December 31, 2000 as a result of a material breach of this Agreement, the
breaching party shall not be entitled to terminate this Agreement pursuant to
this Section 7(d).
In the event of termination and abandonment of this Agreement
pursuant to this Section 7, written notice thereof shall forthwith be given to
the other party or parties and this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned, without further action by
the Seller or the Purchaser; provided, that no party shall be relieved of any
liability it may have to any other party as a result of any breach of its
obligations hereunder.
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8. INDEMNIFICATION.
(a) The Seller agrees to indemnify and hold harmless each of the
Purchasers, each person, if any, who controls each of the Purchasers within the
meaning of Section 15 of the Securities Act and each officer, director, employee
and agent of each of the Purchasers and of any such controlling person against
any and all losses, liabilities, claims, damages or expenses whatsoever, as
incurred, arising out of or resulting from any breach or alleged breach or other
violation or alleged violation of any representation, warranty, covenant or
undertaking by the Seller contained in this Agreement, and the Seller will
reimburse the Purchaser for its reasonable legal and other expenses (including
the cost of any investigation and preparation, and including the reasonable fees
and expenses of counsel) incurred in connection therewith.
(b) The Purchasers agree to severally indemnify and hold harmless
the Seller, each person, if any, who controls the Seller within the meaning of
Section 15 of the Securities Act and each officer, director, employee and agent
of the Seller and of any such controlling person against any and all losses,
liabilities, claims, damages or expenses whatsoever, as incurred, arising out of
or resulting from any breach or alleged breach or other violation or alleged
violation of any representation, warranty, covenant or undertaking by the
Purchasers contained in this Agreement, and the Purchasers will reimburse
(severally, in proportion to their purchases hereunder) the Seller for its
reasonable legal and other expenses (including the cost of any investigation and
preparation, and including the reasonable fees and expenses of counsel) incurred
in connection therewith.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
agreements, representations, warranties, indemnities and other statements made
by or on behalf each party hereto pursuant to this Agreement shall remain in
full force and effect, regardless of any investigation made by or on behalf of
any party, and shall survive delivery of any payment for the Securities.
10. WAIVER OF RIGHT OF FIRST REFUSAL AND TAG-ALONG RIGHTS. In
connection with the sale of the Securities contemplated by this Agreement, each
of the Purchasers hereby irrevocably waives (a) its right of first refusal to
purchase the Securities pursuant to Section 3(b) of the Stockholders Agreement
and (b) its tag-along rights under Section 3(c) of the Stockholders Agreement.
11. INTERPRETATION OF THIS AGREEMENT.
(a) Terms Defined. As used in this Agreement, the following terms
have the respective meaning set forth below:
HSR Act: Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
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person: an individual, partnership, joint-stock company,
corporation, trust or unincorporated organization, and a government or agency or
political subdivision thereof.
Securities Act: the Securities Act of 1933, as amended.
Series A Purchase Agreement: that certain Securities Purchase
Agreement, dated as of June 7, 2000, by and among the Seller and the Purchasers
pursuant to which the Purchasers purchased 2,520,000 shares of Series A
Convertible Preferred Stock, par value $0.01 per share, of the Company.
Transfer: any sale, assignment, pledge, hypothecation, or other
disposition or encumbrance.
(b) Seller. As used in this Agreement, the term "Seller" shall
mean QM and QMOC collectively, and any liability assumed or obligation
undertaken by Seller hereunder shall be the joint and several liability or
obligation of QM and QMOC.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.
(d) Section Headings. The headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part thereof.
(e) Notices.
(i) All communications under this Agreement shall be in writing
and shall be delivered by hand or facsimile or mailed by overnight
courier or by registered or certified mail, postage prepaid:
(1) if to the Purchasers, to the address or facsimile number
listed below each Purchaser's name on Schedule I hereto, or at such
other address or facsimile number as such Purchaser may have furnished
the Seller in writing, with a copy to Willkie Farr & Gallagher, 787
Seventh Avenue, New York, NY 10019, Attention: Steven J. Gartner, Esq.
(facsimile: (212) 728-8111);
(2) if to the Seller, at 22 Pelican Way, San Rafael, CA 94901,
Attention: Lawrence P. English, (facsimile: (415) 455-1468, or at such
other address or facsimile number as it may have furnished in writing to
Purchaser, with a copy to Pillsbury Madison & Sutro LLP, 50 Fremont
Street, San Francisco, CA 94105, Attention D. Stanley Rowland, Esq.
(facsimile: (415) 983-1200).
(ii) Any notice so addressed shall be deemed to be given: if
delivered by hand or facsimile, on the date of such delivery; if mailed
by courier, on the first business day
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following the date of such mailing; and if mailed by registered or
certified mail, on the third business day after the date of such
mailing.
(f) Expenses and Taxes. Each of the parties shall bear its own
expenses in connection with the transactions contemplated by this Agreement,
including without limitation any tax liability resulting herefrom.
(g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties.
(h) Entire Agreement; Amendment and Waiver. This Agreement
constitutes the entire understanding of the parties hereto with respect to the
matters set forth herein, provided, however, that the parties acknowledge and
agree that each of the Asset Contribution Agreement, dated as of May 3, 2000, by
and between the Seller and the Company, and the Series A Purchase Agreement, and
the agreements entered into in connection with each, shall remain in full force
and effect, except as specifically modified by this Agreement. This Agreement
may be amended, and the observance of any term of this Agreement may be waived,
with (and only with) the written consent of the Seller and the Purchaser.
(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed this Purchase
Agreement as of the date first above written.
SELLER:
QUADRAMED CORPORATION
By: /s/ Lawrence P. English
---------------------------------
Name: Lawrence P. English
Title: Chief Executive Officer
QUADRAMED OPERATING CORPORATION
By: /s/ Lawrence P. English
---------------------------------
Name: Lawrence P. English
Title: Chief Executive Officer
PURCHASERS:
WARBURG, PINCUS EQUITY PARTNERS, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Joel Ackerman
---------------------------------
Name: Joel Ackerman
Title: Managing Director
<PAGE> 11
WARBURG, PINCUS NETHERLANDS EQUITY
PARTNERS I, C.V.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Joel Ackerman
---------------------------------
Name: Joel Ackerman
Title: Managing Director
WARBURG, PINCUS NETHERLANDS EQUITY
PARTNERS II, C.V.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Joel Ackerman
---------------------------------
Name: Joel Ackerman
Title: Managing Director
WARBURG, PINCUS NETHERLANDS EQUITY
PARTNERS III, C.V.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Joel Ackerman
---------------------------------
Name: Joel Ackerman
Title: Managing Director
PRUDENTIAL SECURITIES GROUP, INC.
By: /s/ Vincent T. Pica, II
---------------------------------
Name: Vincent T. Pica, II
Title: Vice President
<PAGE> 12
SCHEDULE I
<TABLE>
<CAPTION>
NAME AND ADDRESS OF INVESTOR NUMBER OF SHARES OF PURCHASE PRICE
---------------------------- ------------------- --------------
SERIES B SERIES C
PREFERRED STOCK PREFERRED STOCK
--------------- ---------------
<S> <C> <C> <C>
Warburg, Pincus Equity Partners, L.P. 1,533,601 864,002 $ 19,180,824
466 Lexington Avenue
New York, NY 10017-3147
Attention: Joel Ackerman
Facsimile: (212) 878-9351
Telephone: (212) 878-9215
Warburg, Pincus Netherlands Equity 48,685 27,428 $ 608,904
Partners I, C.V.
466 Lexington Avenue
New York, NY 10017-3147
Attention: Joel Ackerman
Facsimile: (212) 878-9351
Telephone: (212) 878-9215
Warburg, Pincus Netherlands Equity 32,457 18,285 $ 405,936
Partners II, C.V.
466 Lexington Avenue
New York, NY 10017-3147
Attention: Joel Ackerman
Facsimile: (212) 878-9351
Telephone: (212) 878-9215
Warburg, Pincus Netherlands Equity 8,114 4,571 $ 101,480
Partners III, C.V.
466 Lexington Avenue
New York, NY 10017-3147
Attention: Joel Ackerman
Facsimile: (212) 878-9351
Telephone: (212) 878-9215
Prudential Securities Group, Inc. 507,143 285,714 $ 6,342,856
One Seaport Plaza
199 Water Street
New York, NY 10292
Attention: William J. Horan
Facsimile: (212) 214-7933
Telephone: (212) 214-7310
----------- ----------- ------------------
2,130,000 1,200,000 $26,640,000
</TABLE>
(CONTINUED ON NEXT PAGE)
<PAGE> 13
SCHEDULE I
(CONTINUED)
<TABLE>
<CAPTION>
NAME AND ADDRESS OF INVESTOR NUMBER OF SHARES OF PURCHASE PRICE
---------------------------- ------------------- --------------
COMMON STOCK
------------
<S> <C> <C>
Warburg, Pincus Equity Partners, L.P. 1 $8.00
466 Lexington Avenue
New York, NY 10017-3147
Attention: Joel Ackerman
Facsimile: (212) 878-9351
Telephone: (212) 878-9215
</TABLE>
<PAGE> 14
SCHEDULE II
<TABLE>
<CAPTION>
NAME OF SELLER SECURITIES PURCHASE PRICE
--------------------------------- ------------------------------- -------------------------------
<S> <C> <C>
QuadraMed Corporation and 2,130,000 shares of Series B $8.00 per share
QuadraMed Operating Corporation Convertible Preferred Stock,
par value $0.01 per share, of
ChartOne, Inc.
1,200,000 shares of Series C $8.00 per share
Convertible Preferred Stock,
par value $0.01 per share, of
ChartOne, Inc.
1 share of Common Stock, par $8.00 per share
value $0.001 per share, of
ChartOne, Inc.
--------------------------------- ------------------------------- -------------------------------
</TABLE>
<PAGE> 15
SCHEDULE 3(h)
PURCHASE ENTIRELY FOR OWN ACCOUNT
Prudential Securities Group, Inc. ("PSGI") shall have the right
to transfer and assign all its right, title and interest in, and all of its
obligations under, this Agreement to (i) one or more investment funds organized
by an affiliate of PSGI (any such funds, collectively, the "Fund") and (ii) to
certain individuals affiliated with Bedrock Capital Partners (the "Individual
Transferees"), in each case provided that (1) any such transferee has adequate
financial resources in order to satisfy such obligations which it is so
assigned, (2) any such transferees perform, in the aggregate, all of the
obligations of PSGI under this Agreement and (3) any such transfers shall not
violate the Securities Act of 1933, as amended, or any applicable federal or
state securities or "blue sky" laws or regulations. If the formation of the Fund
occurs after the Closing, PSGI shall have the right to transfer all its right,
title and interest to the Securities purchased by PSGI to the Fund and the
Individual Transferees, subject to the above limitations. From and after any
such transfer, each such transferee shall be deemed an "Purchaser" for all
purposes of this Agreement.
