6% SERIES F CONVERTIBLE PREFERRED STOCK SUBSCRIPTION AGREEMENT
STOCK SUBSCRIPTION AGREEMENT, dated as of August 13, 1999 (the
"Agreement"), among the entities listed on Schedule A annexed hereto (referred
to as the "Investor" or "Investors"), WARWICK CORPORATION, LTD. (the "Placement
Agent") located at Xxxxxxxxx Xxxxx, Xxxxxxxxx Xxxxxx, X.X. Xxx X. 0000, Xxxxxx,
Bahamas, organized and existing under the laws of the Bahamas, and OBJECTSOFT
CORPORATION (Nasdaq SmallCap Stock Market Symbol "OSFT"), a corporation
organized and existing under the laws of the State of Delaware (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 Investors
and the Investors shall purchase (i) up to $2,100,000 in aggregate value of
Preferred Stock (as defined below), and (ii) Warrants to purchase an aggregate
of up to 210,000 Warrant Shares (as defined below); and
WHEREAS, the Company shall issue to the Placement Agent, in return for
services rendered, the fees as set forth in Section 12.7 below; and
WHEREAS, such investments will be made in reliance upon the provisions
of Section 4(2) ("Section 4(2)") and Regulation D ("Regulation D") of the United
States Securities Act of 1933, as amended, and the 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 investments in Common Stock to be made hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 "Bid Price" shall mean the closing bid price (as reported
by Bloomberg L.P.) of the Common Stock on the Principal Market.
Section 1.2 "Capital Shares" shall mean the Common Stock and any shares
of any other class of common stock whether now or hereafter authorized, having
the right to participate in the distribution of earnings and assets of the
Company.
Section 1.3 "Capital Shares Equivalents" shall mean any securities,
rights, or obligations that are convertible into or exchangeable for, or giving
any right to subscribe for, any Capital Shares of the Company or any warrants,
options or other rights to subscribe for or purchase Capital Shares or any such
convertible or exchangeable securities.
Section 1.4 "Certificate of Designation" shall mean the Company's
Certificate of Designation setting forth all of the rights, privileges and
preferences of the Series F Preferred Stock, as annexed hereto as Exhibit A.
Section 1.5 "Closing" shall mean the closing of the purchase and sale
of the Preferred Stock and Warrants pursuant to Article II herein.
Section 1.6 "Closing Date" shall mean the Subscription Date.
Section 1.7 "Commitment Amount" shall mean up to the $2,100,000 which
the Investors have agreed to provide to the Company in order to purchase the
Preferred Shares and Warrants pursuant to the terms and conditions of this
Agreement.
Section 1.8 "Common Stock" shall mean the Company's common stock, par
value $0.0001 per share.
Section 1.9 "Damages" shall mean any loss, claim, damage, liability,
costs and expenses which shall include, but not be limited to, reasonable
attorney's fees, disbursements, costs and expenses of expert witnesses and
investigation.
Section 1.10 "Effective Date" shall mean the date on which the SEC
first declares effective a Registration Statement(s) registering the resale of
the Underlying Shares and Warrant Shares.
Section 1.11 "Escrow Agent" shall mean the law firm of Xxxxxx Xxxxxx
Flattau & Klimpl, LLP, pursuant to the terms of the Escrow Agreement annexed
hereto as Exhibit C.
Section 1.12 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
Section 1.13 "Legend" shall have the meaning set forth in Section 8.1.
Section 1.14 "Material Adverse Effect" shall mean any effect on the
business, operations, properties, prospects, or financial condition of the
Company that is material and adverse to the Company and its subsidiaries and
affiliates, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise in any material respect interfere with the
ability of the Company to enter into and perform any of its obligations under
this Agreement, the Registration Rights Agreement, the Escrow Agreement, the
Certificate of Designation or the Warrants in any material respect.
Section 1.15 "NASD" shall mean the National Association of Securities
Dealers, Inc.
Section 1.16 "Outstanding" when used with reference to shares of Common
Stock, Preferred Stock or Capital Shares (collectively the "Shares"), shall
mean, at any date as of which the
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number of such Shares is to be determined, all issued and outstanding Shares,
and shall include all such Shares issuable in respect of outstanding scrip or
any certificates representing fractional interests in such Shares; provided,
however, that "Outstanding" shall not mean any such Shares then directly or
indirectly owned or held by or for the account of the Company.
Section 1.17 "Person" shall mean an individual, a corporation, a
partnership, an association, a limited liability company, a trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
Section 1.18 "Preferred Stock" shall mean the Company's Series F
Preferred Stock with the rights, privileges and preferences, as set forth in the
Certificate of Designation attached hereto as Exhibit A.
Section 1.19 "Principal Market" shall mean The Nasdaq National Market,
or The Nasdaq SmallCap Market, whichever is at the time the principal trading
exchange or market for the Common Stock.
Section 1.20 "Purchase Price" shall mean an amount equal to the
"Purchase Price" of each share of Preferred Stock, as set forth in the
Certificate of Designation.
Section 1.21 "Registrable Securities" shall mean the Underlying Shares
and the Warrant Shares (i) in respect of which the Registration Statement
(covering these securities) has not been declared effective by the SEC, (ii)
which have not been sold under circumstances under which all of the applicable
conditions of Rule 144 (or any similar provision then in force) under the
Securities Act ("Rule 144") are met, (iii) which have not been otherwise
transferred to holders who may trade such shares without restriction under the
Securities Act, and (iv) the sales of which, in the opinion of counsel to the
Company, are subject to any time, volume or manner limitations pursuant to Rule
144 (or any similar provision then in effect) under the Securities Act.
Section 1.22 "Registration Rights Agreement" shall mean the agreement
regarding the filing of the Registration Statement for the resale of the
Registrable Securities, entered into between the Company, the Placement Agent,
and the Investors on the Subscription Date annexed hereto as Exhibit B.
Section 1.23 "Registration Statement" shall mean a registration
statement on Form S-3 (if use of such form is then available to the Company
pursuant to the rules of the SEC and, if not, 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 resale of the
Registrable Securities to be registered thereunder in accordance with the
provisions of this Agreement, the Registration Rights Agreement, and the
Warrants and in accordance with the intended method of distribution of such
securities), for the registration of the resale by the Investors and the
Placement Agent of the Registrable Securities under the Securities Act.
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Section 1.24 "Regulation D" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.25 "SEC" shall mean the U.S. Securities and Exchange
Commission.
Section 1.26 "Section 4(2)" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.27 "Securities" shall mean the Preferred Stock, the
Underlying Shares and the Warrant Shares.
Section 1.28 "Securities Act" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.29 "SEC Documents" shall mean the Company's latest Form
10-KSB (and all amendments thereto) as of the time in question, all Forms
10-QSB, all Forms 8-K filed thereafter, and the Proxy Statement for its latest
fiscal year as of the time in question, and all subsequent filings until such
time as the Company no longer has an obligation to maintain the effectiveness of
a Registration Statement as set forth in the Registration Rights Agreement.
Section 1.30 "Subscription Date" shall mean the date on which this
Agreement and all Exhibits and attachments hereto, are executed and delivered by
the parties hereto and all of the conditions relating to the purchase of the
Preferred Stock shall have been fulfilled.
Section 1.31 "Trading Day" shall mean any day during which the New York
Stock Exchange shall be open for business.
Section 1.32 "Underlying Shares" shall mean all shares of Common Stock
or other securities issued or issuable pursuant to conversion of the Preferred
Stock or exercise of the Warrants.
Section 1.33 "Warrants" shall mean the Warrants issued in the form
attached hereto as Exhibit D.
Section 1.34 "Warrant Shares" shall mean all shares of Common Stock or
other securities issued or issuable pursuant to the exercise of the Warrants.
ARTICLE II
PURCHASE AND SALE OF PREFERRED STOCK AND WARRANTS
Section 2.1 Preferred Stock. (a) The Company agrees to sell and the
Investors agree to purchase up to an aggregate principal amount of $2,100,000
principal amount of Series F Preferred Stock as set forth in (b) below. The
number of shares of Common Stock issuable upon conversion
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of the Preferred Stock shall be determined by dividing $2,100,000 by the
conversion formula contained in the Certificate of Designation.
(b) The Investors shall purchase (pro rata) an aggregate
principal amount of $2,100,000 principal amount of Preferred Stock on the
Subscription Date upon the satisfaction of the following conditions:
(i) delivery into escrow by the Company of an
aggregate principal amount of $2,100,000 of original
Preferred Stock, as more fully set forth in the
Escrow Agreement attached hereto as Exhibit C;
(ii) the Investors shall have received an opinion of
counsel of the Company as set forth in this
Agreement;
(iii) the Investors shall have received a copy of the
filed Certificate of Designation and any amendments
thereto;
(iv) the Company shall have obtained all permits and
qualifications required by any state for the offer
and sale of the Preferred Stock, or shall have the
availability of exemptions therefrom. To the
knowledge of the Company, the offer, sale and
issuance of the Preferred Stock shall be legally
permitted by all laws and regulations to which the
Company is subject;
(v) the Company shall have performed, satisfied and
complied in all material respects with all covenants,
agreements and conditions required by this Agreement
and all Exhibits hereto, the Certificate of
Designation, the Escrow Agreement, the Registration
Rights Agreement and the Warrants, to be performed,
satisfied or complied with by the Company at or prior
to the Closing Date;
(vi) 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;
(vii) except as set forth on Schedule B attached
hereto, since the date of filing of the Company's
most recent SEC Document, no event that had or is
reasonably likely to have a Material Adverse Effect
has occurred;
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(viii) the trading of the Common Stock is not
suspended by the SEC or the Principal Market, and the
Common Stock shall have been approved for listing or
quotation on and shall not have been delisted from
the Principal Market. The issuance of the Securities
with respect to the Closing of the Preferred Stock
shall not violate the shareholder approval or other
requirements of the Principal Market or the NASD.
Except as set forth on Schedule B attached hereto,
the Company shall not have been contacted by the NASD
concerning the delisting of the Common Stock on the
Principal Market, and the Company currently meets all
listing requirements during the thirty day period
immediately preceding the Closing Date;
(ix) payment of fees as applicable as set forth in
Section 12.7 herein; and
(x) The representations and warranties of the Company
set forth in this Agreement shall be true and correct
in all material respects (except as to
representations and warranties, or portions thereof,
which by their terms are subject to a materiality or
similar standard, in which case such representations
and warranties shall be true and correct) as of the
date of this Agreement and as of the Subscription
Date as though made on and as of the Subscription
Date (except that representations and warranties that
by their terms speak as of the date of this Agreement
or some other date shall be true and correct only as
of such date) and the Investors shall have received a
certificate, dated the Subscription Date, signed by
an officer on behalf of the Company to such effect.
Section 2.2 Warrants. On the Closing Date, the Company will issue to
the Investors Warrants, exercisable beginning on the Closing Date and
exercisable thereafter any time over the five-year period subsequent to the
Closing Date, to purchase an aggregate of 210,000 Warrant Shares (allocated pro
rata with respect to each Investor) at the Exercise Price (as defined in the
Warrant). The Warrants shall be delivered by the Company to the Escrow Agent,
and delivered to the Investors pursuant to the terms of this Agreement and the
Escrow Agreement. The Warrant Shares shall be registered for resale pursuant to
the Registration Rights Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Investors severally (as to itself) and not jointly
represents and warrants to the Company that:
Section 3.1 Intent. Such Investor is entering into this Agreement for
its own account and has no present arrangement (whether or not legally binding)
at any time to sell the Securities to or through any person or entity; provided,
however, that by making the representations herein, such
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Investor does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with federal and state securities laws applicable to such
disposition.
Section 3.2 Sophisticated Investor. Such Investor is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited
investor (as defined in Rule 501 of Regulation D), and such Investor has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Securities. Such Investor
acknowledges that an investment in the Common Stock is speculative and involves
a high degree of risk. Such Investor has the ability to fund the purchase of the
Preferred Stock and Warrants, hold the Preferred Stock and the Warrants for an
indefinite period of time and is in a financial position to risk loss of its
entire investment contemplated hereby.
Section 3.3 Authority. This Agreement has been duly authorized and
validly executed and delivered by such Investor and is a valid and binding
agreement of such Investor enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
Section 3.4 Not an Affiliate. Such Investor is not an officer, director
or "affiliate" (as that term is defined in Rule 405 of the Securities Act) of
the Company.
Section 3.5 Organization and Standing. Such Investor is duly organized,
validly existing, and in good standing under the laws of the countries and/or
states of their incorporation or organization.
Section 3.6 Absence of Conflicts. The execution and delivery of this
Agreement and any other document or instrument executed in connection herewith,
and the consummation of the transactions contemplated hereby and thereby, and
compliance with the requirements thereof, will not violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on such
Investor, or, to the Investor's knowledge, (a) violate any provision of any
indenture, instrument or agreement to which such Investor is a party or is
subject, or by which such Investor or any of its assets is bound; (b) conflict
with or constitute a material default thereunder; (c) result in the creation or
imposition of any lien pursuant to the terms of any such indenture, instrument
or agreement, or constitute a breach of any fiduciary duty owed by such Investor
to any third party; or (d) require the approval of any third-party (which has
not been obtained) pursuant to any material contract, agreement, instrument,
relationship or legal obligation to which such Investor is subject or to which
any of its assets, operations or management may be subject.
Section 3.7 Disclosure; Access to Information. Such Investor has
received all documents, records, books and other information pertaining to its
investment in the Company that has been requested thereof, including the
opportunity to ask questions of, and receive answers from, the Company. The
Company is subject to the periodic reporting requirements of the Exchange Act,
and
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such Investor has reviewed or received copies of any such reports that have been
requested by it. Such Investor represents that it has reviewed the Company's (i)
Form 10-KSB for the year ended December 31, 1997, (ii) Form 10-KSB for the year
ended December 31, 1998, (iii) Form 10-QSB for the quarter ended March 31, 1999,
(iv) prospectuses dated September 29, 1998, February 24, 1999 and April 30,
1999, (iv) Post-Effective Amendment to a Registration Statement on Form SB-2
dated May 20, 1999 and (v) Current Reports on Forms 8-K filed January 15, 1999
and March 23, 1999.
Section 3.8 Manner of Sale. At no time was such Investor presented with
or solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising in
connection with the offer and sale of the Securities.
Section 3.9 Registration or Exemption Requirements. Such Investor
further acknowledges and understands that the Securities may not be transferred,
resold or otherwise disposed of except in a transaction registered under the
Securities Act and any applicable state securities laws, or unless an exemption
from such registration is available. Such Investor understands that the
certificate(s) evidencing these Securities will be imprinted with a legend that
prohibits the transfer of these Securities unless (i) they are registered or
such registration is not required, and (ii) if the transfer is pursuant to an
exemption from registration other than Rule 144 under the Securities Act and, if
the Company shall so request in writing, an opinion of counsel reasonably
satisfactory to the Company is obtained to the effect that the transaction is so
exempt. Such Investor understands that the Preferred Stock and Warrants are
being offered and sold in reliance on transactional exemptions from the
registration requirements of federal and state securities laws and that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of such Investor set
forth herein in order to determine the applicability of such exemptions and the
suitability of such Investor to acquire the Preferred Stock and Warrants.
Section 3.10 No Legal, Tax or Investment Advice. Such Investor
understands that nothing in this Agreement or any other materials presented to
such Investor in connection with the purchase and sale of the Securities
constitutes legal, tax or investment advice. Such Investor has relied on, and
has consulted with, such legal, tax and investment advisors as such Investor, in
its sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Securities.
Section 3.11 Put/Short Positions. Neither such Investor, nor any
affiliate of such Investor, have any present intention of entering into any put
option, short position or other similar position with respect to the Securities.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors and the Placement
Agent that:
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Section 4.1 Organization of the Company. The Company is a corporation
duly incorporated and existing in good standing under the laws of the State of
Delaware and has all requisite corporate authority to own its properties and to
carry on its business as now being conducted except as described in the SEC
Documents. The Company 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 or property owned by it makes such qualification necessary,
other than those in which the failure so to qualify would not reasonably be
expected to have a Material Adverse Effect.
Section 4.2 Authority. (i) The Company has the requisite corporate
power and authority to enter into and, subject to shareholder approval in
regards to the issuance by the Company of more than 19.99% of the outstanding
shares of Common Stock, perform its obligations under this Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Certificate of
Designation and Underlying Shares, Preferred Stock and the Warrant Shares, (ii)
the execution, issuance and delivery of this Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Certificate of Designation, the Preferred
Stock, and the Warrants by the Company and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action and, other than the approval by the Company's Shareholders in
regards to the issuance by the Company of more than 19.99% of the outstanding
shares of Common Stock at a discount, no further consent or authorization of the
Company or its Board of Directors is required, and (iii) this Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Certificate of
Designation, the Preferred Stock, and the Warrants have been duly executed and
delivered by the Company and constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
Section 4.3 Capitalization. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, par value $0.0001, of which
9,260,639 shares are issued and outstanding, and 5,000,000 shares of Preferred
Stock, par value $0.0001, of which 8,300 are issued and outstanding. Except as
set forth in the SEC Documents or on Schedule 4.3 hereto, there are no
outstanding Capital Shares Equivalents. All of the outstanding shares of Common
Stock of the Company have been duly and validly authorized and issued and are
fully paid and nonassessable.
Section 4.4 Common Stock. The Company has registered its Common Stock
pursuant to Section 12 of the Exchange Act and is in substantial compliance with
all reporting requirements of the Exchange Act, and the Company has maintained
all requirements for the continued listing or quotation of its Common Stock, and
such Common Stock is currently listed or quoted on the Principal Market. As of
the date hereof, the Principal Market is The Nasdaq SmallCap Stock Market.
Section 4.5 SEC Documents. The Company has delivered or made available
to the Investors true and complete copies of the SEC Documents filed by the
Company with the SEC during the twelve months immediately preceding the
Subscription Date (including, without limitation, proxy information and
solicitation materials). The Company has not provided to any of the Investors
any
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information that, according to applicable law, rule or regulation, should have
been disclosed publicly prior to the date hereof by the Company, but which has
not been so disclosed. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and rules and regulations of the SEC
promulgated thereunder and none of the SEC Documents 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 light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and regulations with
respect thereto. Such financial statements have been prepared in accordance with
U.S. generally accepted accounting principles applied on a consistent basis
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 not include 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
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
Section 4.6 Valid Issuances. When issued and payment has been made
therefor, the Preferred Stock, the Underlying Shares and the Warrants will be
duly and validly issued, fully paid, and nonassessable and the holders of the
Underlying Shares shall be entitled to all rights and preferences accorded to a
holder of Common Stock. Neither the issuance of the Preferred Stock and the
Underlying Shares to the Placement Agent, nor the sales of the Preferred Stock,
the Underlying Shares and the Warrants pursuant to, nor the Company's
performance of its obligations under, this Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Certificate of Designation, or the Warrants
will (i) result in the creation or imposition by the Company of any liens,
charges, claims or other encumbrances upon the Securities issued to the
Placement Agent, the Preferred Stock, the Underlying Shares, the Warrant Shares
or any of the assets of the Company, or (ii) entitle the holders of Outstanding
Capital Shares to preemptive or other rights to subscribe to or acquire any
Capital Shares or other securities of the Company.
Section 4.7 No General Solicitation or Advertising in Regard to this
Transaction. Neither the Company nor any of its affiliates nor any distributor
or any person acting on its or their behalf (i) has conducted or will conduct
any general solicitation (as that term is used in Rule 502(c) of Regulation D)
or general advertising in connection with the offer and sale of the Preferred
Stock, the Underlying Shares or the Warrants, or (ii) made any offers or sales
of any security or solicited any offers to buy any security under any
circumstances that would require registration of the Preferred Stock, the
Underlying Shares or the Warrants under the Securities Act.
Section 4.8 Corporate Documents. The Company has furnished or made
available to each of the Investors true and correct copies of the Company's
Certificate of Incorporation, as amended and in effect on the date hereof (the
"Certificate"), and the Company's By-Laws, as amended and in effect on the date
hereof (the "By-Laws").
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Section 4.9 No Conflicts. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby, including without limitation the issuance of
the Preferred Stock, the Warrants and the Underlying Shares, do not and will not
(i) result in a violation of the Company's Certificate of Incorporation or
By-Laws or (ii) conflict with, or constitute a material default (or an event
that 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 material agreement, indenture, patent, patent license, instrument or any
"lock-up" or similar provision of any underwriting or similar agreement to which
the Company is a party, or (iii) result in a violation of any federal, state or
local law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations) applicable to the Company or by which any
property or asset of the Company is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect), nor is the Company otherwise in violation
of, in conflict with or in default under any of the foregoing except as would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. The business of the Company is not being conducted in violation
of any law, ordinance or regulation of any governmental entity, except for
possible violations that either individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect. The Company is not
required under federal, state or local law, rule or regulation 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 this Agreement or issue and sell the Preferred Stock,
or Warrants, and issue the Underlying Shares upon conversion or exercise
thereof, in accordance with the terms hereof (other than any SEC, NASD, Nasdaq
or state securities filings that may be required to be made by the Company
before or subsequent to any Closing, any registration statement that may be
filed pursuant hereto, and any shareholder approval required by the rules
applicable to companies whose common stock trades on The Nasdaq SmallCap Market,
including the Nasdaq SmallCap notification form listing the additional shares of
Common Stock issuable hereunder, which the Company shall file with The Nasdaq
Stock Market promptly after the Closing Date); provided that, for purposes of
the representation made in this sentence, the Company is assuming and relying
upon the accuracy of the relevant representations and agreements of the
Investors herein.
Section 4.10 No Material Adverse Change. Since March 31, 1999, no
Material Adverse Effect has occurred or exists with respect to the Company,
except as disclosed in the SEC Documents.
Section 4.11 No Undisclosed Liabilities. The Company has no liabilities
or obligations which are material, individually or in the aggregate, and are not
disclosed in the SEC Documents or otherwise publicly announced, other than those
set forth in the Company's financial statements or as incurred in the ordinary
course of the Company's businesses since March 31, 1999, and which, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
Section 4.12 No Undisclosed Events or Circumstances. Since March 31,
1999, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties,
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prospects, operations or financial condition, that, under applicable law, rule
or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed
in the SEC Documents.
Section 4.13 No Integrated Offering. To the Company's knowledge,
neither the Company nor any of its affiliates, nor any person acting on its or
their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, other than pursuant to
this Agreement, under circumstances that would require registration of the
Common Stock under the Securities Act, except as set forth in the SEC Documents.
Section 4.14 Litigation and Other Proceedings. Except as may be set
forth in the SEC Documents, there are no lawsuits or proceedings pending or to
the knowledge of the Company threatened, against the Company, nor has the
Company received any written or oral notice of any such action, suit, proceeding
or investigation, which could reasonably be expected to have a Material Adverse
Effect. Except as set forth in the SEC Documents, no judgment, order, writ,
injunction or decree or award has been issued by or, so far as is known by the
Company, requested of any court, arbitrator or governmental agency which would
be reasonably expected to result in a Material Adverse Effect.
Section 4.15 Restrictions On Future Financings. The Company represents
that, unless it obtains the written approval of all of the Investors (which
approval shall not be unreasonably withheld), the Company will not enter into
any other equity financing agreement, or other financing arrangement, that
would: (a) cause the Common Stock issued in such financing to be salable and
freely tradeable before forty-five days from the Effective Date, or (b) affect
the timeliness of the Registration Statement being declared effective.
Section 4.16 Brokers. Except for the Placement Agent, the Company has
taken no action which would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments by the Company or any Investor
relating to this Agreement or the transactions contemplated hereby.
Section 4.17 Acknowledgment of Dilution. The number of shares of Common
Stock constituting Warrant Shares may increase substantially in certain
circumstances, including the circumstance where the trading price of the Common
Stock declines. The Company acknowledges that its obligation to issue Underlying
Shares upon conversion of shares of Preferred Stock and Warrant Shares upon
exercise of the Warrants is absolute and unconditional, regardless of the
dilution that such issuance may have on other shareholders of the Company.
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ARTICLE V
COVENANTS OF THE INVESTORS
Section 5.1 Compliance with Law. Each of the Investor's trading
activities with respect to shares of Common Stock will be in compliance with all
applicable state and federal securities laws, rules and regulations and rules
and regulations of the Principal Market on which the Common Stock is listed.
Section 5.2 Agreement To Vote. For so long as the Company has not
committed a material breach of this Agreement and the Exhibits annexed hereto,
and this Agreement has not been terminated, the Investors agree to vote all
shares of Common Stock beneficially held by them in favor of all nominees to the
Company's board of directors who are nominated by the then current Board of
Directors of the Company.
Section 5.3 Put/Short Positions. Neither the Investors, nor any
affiliate of the Investors, have any present intention of entering into any put
option, short position or other similar position with respect to the Securities.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 Registration Rights. The Company shall cause the
Registration Rights Agreement to remain in full force and effect so long as any
Registrable Securities remain outstanding and the Company shall comply in all
material respects with the terms thereof.
Section 6.2 Reservation of Common Stock. As of the date hereof, the
Company has reserved and the Company shall continue to reserve and keep
available at all times, free of preemptive rights, shares of Common Stock for
the purpose of enabling the Company to satisfy any obligation to issue the
Underlying Shares; such amount of shares of Common Stock to be reserved shall be
calculated based upon the minimum Purchase Price therefor under the terms of
this Agreement, the Certificate of Designation and the Warrants. The number of
shares so reserved from time to time, as theretofore increased or reduced as
hereinafter provided, may be reduced by the number of shares actually delivered
hereunder and the number of shares so reserved shall be increased or decreased
to reflect potential increases or decreases in the Common Stock that the Company
may thereafter be so obligated to issue by reason of adjustments to the
Preferred Stock and the Warrants.
Section 6.3 Listing of Common Stock. The Company hereby agrees to use
its best efforts to (i) maintain the listing of the Common Stock on a Principal
Market, and (ii) as soon as practicable list the Underlying Shares. The Company
further agrees, if the Company applies to have the Common Stock traded on any
other Principal Market or other exchange or automated interdealer quotation
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system, it will include in such application the Underlying Shares, and will take
such other action as is reasonably necessary or desirable in the opinion of the
Investors to cause the Common Stock to be listed on such other Principal Market
or other exchange or automated interdealer quotation system as promptly as
possible. The Company will use its best efforts to comply with the rules and
regulations governing the listing and trading of its Common Stock on the
Principal Market (including, without limitation, maintaining sufficient net
tangible assets) and will comply in all material respects with the Company's
reporting, filing and other obligations under the Bylaws or rules of the
Principal Market. In the event the Company receives notification from Nasdaq
concerning delisting of the Common Stock on the Principal Market, the Company
will notify each Investor and use its best efforts to comply with all applicable
listing standards of the Principal Market.
Section 6.4 Exchange Act Registration. The Company will cause its
Common Stock to continue to be registered under Section 12 of the Exchange Act,
will comply in all material respects with its reporting and filing obligations
under the Exchange Act, and will not take any action or file any document
(whether or not permitted by the Exchange Act or the rules thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under said Act.
Section 6.5 Legends. The certificates evidencing the Common Stock to be
sold by the Investors pursuant to Article VIII shall be free of legends, except
as set forth in Article VIII.
Section 6.6 Corporate Existence. The Company will take all steps
reasonably necessary to preserve and continue the corporate existence of the
Company.
Section 6.7 Notice of Certain Events Affecting Registration or to have
a Closing For the Preferred Stock. The Company will immediately notify each of
the Investors upon the occurrence of any of the following events in respect of a
registration statement or related prospectus in respect of an offering of
Registrable Securities: (i) receipt of any request for additional information by
the SEC or any other federal or state governmental authority during the period
of effectiveness of the Registration Statement or for amendments or supplements
to the Registration Statement or 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 of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Registrable Securities 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
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circumstances under which they were made, not misleading; and (v) the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate; and the Company will promptly make available to
the Investors any such supplement or amendment to the related prospectus.
Section 6.8 Consolidation; Merger. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity (a "Consolidation Event") unless the resulting successor or
acquiring entity (if not the Company) assumes by written instrument the
obligation to deliver to the Investors such shares of stock and/or securities as
the Investors are entitled to receive pursuant to this Agreement.
Section 6.9 Issuance of the Underlying Shares. The issuance of the
Underlying Shares pursuant to exercise of the Warrants, and the conversion of
the Preferred Stock, shall be made in accordance with the provisions and
requirements of Section 4(2) of Regulation D and any applicable state securities
law.
Section 6.10. Conversion Limitations. The Company, the Investors and
the Placement Agent agree that, unless and until the approval of the Company's
stockholders or a waiver from The Nasdaq Stock Market is obtained as hereinafter
set forth, the total number of shares of Common Stock issued and issuable upon
the conversion of the Preferred Stock issued on the Closing Date pursuant to the
Certificate of Designation and/or upon exercise of the Warrants shall not exceed
19.99% of the number of shares of Common Stock outstanding as of the Closing
Date. The Company agrees that, upon the written request of Required Cap
Investors (as hereinafter defined), it shall include a resolution for approval
at a special meeting of stockholders for the purpose of approving below market
price issuances of Common Stock to the Investors equal to or in excess of 20% of
the number of shares of Common Stock outstanding as of the Closing Date as
required by Section 4310(c)(25)(H)(i) of The Nasdaq Marketplace Rules, or other
similar requirement. The Company shall, within thirty days after receiving the
aforementioned written request, prepare an appropriate proxy statement for such
special meeting and file it with the SEC and shall, as soon as practicable after
clearance of the proxy statement by the SEC, call the special meeting. In the
event that the aforementioned proposal is not ratified by the stockholders and
the number of shares issued and potentially issuable under the Certificate of
Designation and upon exercise of the Warrants exceeds in the aggregate 19.99% of
the number of shares of Common Stock outstanding as of the Closing Date, the
Company will use its reasonable efforts to obtain a waiver from The Nasdaq Stock
Market (or other applicable market or exchange) to permit such issuances. For
the purpose of this Agreement, the "Required Cap Investors" shall mean one or
more Investors which acquired, in the aggregate, at least 50% of the total
number of shares of Series F Preferred Stock originally purchased by all
Investors hereunder and each of which Investor has received, prior to the
aforementioned written request, on conversion or exercise of the Securities,
shares of Common Stock representing the full allocation of such Investor's
respective Cap Allocation Amount (as defined in the Certificate of Designation).
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Section 6.11 Securities Compliance. The Company shall notify the SEC
and The Nasdaq SmallCap Market, in accordance with their requirements, of the
transactions contemplated by this Agreement, the Preferred Stock, the
Registration Rights Agreement and the Warrants, and shall take all other
necessary action and proceedings as may be required and permitted by applicable
law, rule and regulation, for the legal and valid issuance of the Preferred
Stock hereunder, the Underlying Shares issuable upon conversion thereof, the
Warrants and Warrant Shares issuable upon exercise of the Warrants.
Section 6.12 Notices. The Company agrees to provide all holders of
Preferred Stock and Warrants with copies of all notices and information,
including without limitation, notices and proxy statements in connection with
any meetings, that are provided generally to the holders of shares of Common
Stock, contemporaneously with the delivery of such notices or information to
such Common Stock holders.
ARTICLE VII
DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION
Section 7.1 Due Diligence Review. The Company shall make available for
inspection and review by the Investors, advisors to and representatives of the
Investors (who may or may not be affiliated with the Investors and who are
reasonably acceptable to the Company), and any underwriter participating in any
disposition of the Registrable Securities on behalf of the Investors pursuant to
the Registration Statement, any such registration statement or amendment or
supplement thereto or any blue sky, NASD or other filing, all financial and
other records, all SEC Documents and other filings with the SEC, and all other
corporate documents and properties of the Company as may be reasonably necessary
for the purpose of such review, and cause the Company's officers, directors and
employees to supply all such information reasonably requested by any of the
Investors or any such representative, advisor or underwriter in connection with
such Registration Statement (including, without limitation, in response to all
questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Investors and such
representatives, advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.
Section 7.2 Non-Disclosure of Non-Public Information
(a) The Company shall not disclose non-public information to
the Investors, or advisors to, or representatives of the Investors unless prior
to disclosure of such information the Company identifies such information as
being non-public information and provides each Investor, and its advisors and
representatives with the opportunity to accept or refuse to accept such
non-public information for review. The Company may, as a condition to disclosing
any non-public information hereunder, require each of the Investor's advisors
and representatives to enter into a confidentiality agreement in form reasonably
satisfactory to the Company and the Investors.
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(b) Nothing herein shall require the Company to disclose
non-public information to any of the Investors or their advisors or
representatives, and the Company represents that it does not disseminate
non-public information to any investors who purchase stock in the Company in a
public offering, to money managers or to securities analysts, provided, however,
that notwithstanding anything herein to the contrary, the Company will, as
hereinabove provided, immediately notify the advisors and representatives of the
Investors and, if any, underwriters, 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. Nothing contained
in this Section shall be construed to mean that such persons or entities other
than the Investors (without the written consent of the Investors prior to
disclosure of such information) may not obtain non-public information in the
course of conducting due diligence in accordance with the terms of this
Agreement and nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due diligence by such
persons or entities, that the Registration Statement contains an untrue
statement of a material fact or omits a material fact required to be stated in
the Registration Statement or necessary to make the statements contained
therein, in light of the circumstances in which they were made, not misleading.
ARTICLE VIII
LEGENDS
Section 8.1 Legends. Unless otherwise provided below, each certificate
representing the Securities will bear the following legend (the "Legend"):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE
UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THESE SECURITIES NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED
OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR, IN THE WRITTEN OPINION OF LEGAL COUNSEL REASONABLY
ACCEPTABLE TO THE COMPANY, PURSUANT TO A TRANSACTION THAT IS EXEMPT
FROM, OR NOT SUBJECT TO, SUCH REGISTRATION REQUIREMENTS. THE HOLDER OF
THIS CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS OF THE
COMPANY SET FORTH IN A 6% SERIES F CONVERTIBLE PREFERRED STOCK
SUBSCRIPTION AGREEMENT
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DATED AS OF AUGUST __, 1999. A COPY OF THE PORTION OF THE AFORESAID
AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM THE
COMPANY'S EXECUTIVE OFFICES.
Upon the execution and delivery hereof, the Company is issuing to the
transfer agent for its Common Stock (and to any substitute or replacement
transfer agent for its Common Stock upon the Company's appointment of any such
substitute or replacement transfer agent) instructions in substantially the form
of Exhibit F hereto. Such instructions shall be irrevocable by the Company from
and after the date hereof or from and after the issuance thereof to any such
substitute or replacement transfer agent, as the case may be, except as
otherwise expressly provided in the Registration Rights Agreement. It is the
intent and purpose of such instructions, as provided therein, to require the
transfer agent for the Common Stock from time to time upon transfer of
Registrable Securities by the Investors to issue certificates evidencing such
Registrable Securities free of the Legend during the following periods and under
the following circumstances and without consultation by the transfer agent with
the Company or its counsel and without the need for any further advice or
instruction or documentation to the transfer agent by or from the Company or its
counsel or the Investors:
(a) at any time after the Effective Date, upon surrender of
one or more certificates evidencing Common Stock that bear the Legend, to the
extent accompanied by a notice requesting the issuance of new certificates free
of the Legend to replace those surrendered; provided that (i) the Registration
Statement shall then be effective; (ii) the Investor(s) confirm to the transfer
agent that it has sold, pledged or otherwise transferred or agreed to sell,
pledge or otherwise transfer such Common Stock in a bona fide transaction to a
third party that is not an affiliate of the Company; and (iii) the Investor(s)
confirm to the transfer agent that the Investor(s) have complied with the
prospectus delivery requirement. The requirement set forth in subsection
8.1(a)(ii) shall only apply in the event the Company registers the Common Stock
pursuant to a Form S-3 registration statement pursuant to the Registration
Rights Agreement. In the event the Company registers the Common Stock by means
of a registration statement other then a Form S-3 registration statement, then
only the conditions in subsection 8.1(a)(i) and 8.1(a)(iii) herein shall apply.
(b) at any time upon any surrender of one or more certificates
evidencing Registrable Securities that bear the Legend, to the extent
accompanied by a notice requesting the issuance of new certificates free of the
Legend to replace those surrendered and containing representations that (i) the
Investor(s) is permitted to dispose of such Registrable Securities without
limitation as to amount or manner of sale pursuant to Rule 144(k) under the
Securities Act or (ii) the Investor(s) has sold, pledged or otherwise
transferred or agreed to sell, pledge or otherwise transfer such Registrable
Securities in a manner other than pursuant to an effective registration
statement, to a transferee who will upon such transfer, in the opinion of
counsel reasonably acceptable to the Company, be entitled to freely tradeable
securities.
Any of the notices referred to above in this Section 8.1 may be sent by
facsimile to the Company's transfer agent.
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Section 8.2 No Other Legend or Stock Transfer Restrictions. No legend
other than the one specified in Section 8.1 has been or shall be placed on the
share certificates representing the Common Stock, and no instructions or "stop
transfer orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article VIII.
Section 8.3 Investor's Compliance. Nothing in this Article shall affect
in any way any of the Investors' obligations under any agreement to comply with
all applicable securities laws upon resale of the Common Stock.
ARTICLE IX
CHOICE OF LAW
Section 9.1 Choice of Law; Venue; Jurisdiction. This Agreement will be
construed and enforced in accordance with and governed by the laws of the State
of New York, except for matters arising under the Securities Act, without
reference to principles of conflicts of law. Each of the parties consents to the
jurisdiction of the U.S. District Court sitting in the Southern District of the
State of New York or the state courts of the State of New York sitting in
Manhattan in connection with any dispute arising under this Agreement and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens, to the bringing of any such proceeding
in such jurisdictions. Each party hereby agrees that if another party to this
Agreement obtains a judgment against it in such a proceeding, the party which
obtained such judgment may enforce same by summary judgment in the courts of any
country having jurisdiction over the party against whom such judgment was
obtained, and each party hereby waives any defenses available to it under local
law and agrees to the enforcement of such a judgment. Each party to this
Agreement irrevocably consents to the service of process in any such proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to such party at its address set forth herein. Nothing herein shall
affect the right of any party to serve process in any other manner permitted by
law. Each party waives its right to a trial by jury.
ARTICLE X
ASSIGNMENT; ENTIRE AGREEMENT, AMENDMENT; TERMINATION
Section 10.1 Assignment. The provisions of this Agreement shall inure
to the benefit of, and be enforceable by, any transferee of any of the Common
Stock and Preferred Stock (except any transferee (i) who was a purchaser on the
open market or pursuant to Rule 144 or (ii) who is an owner of less than ten
(10%) percent of the original number of shares of Common Stock issued hereunder)
purchased or acquired by the Investors hereunder with respect to the Common
Stock and Preferred Stock held by such person, and upon the prior written
consent of the Company, which consent shall not unreasonably be withheld, the
Investor's interest in this Agreement may be assigned
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at any time, in whole or in part, to any affiliate of an Investor who agrees to
make the representations and warranties contained in Article III and who agrees
to be bound by the covenants of Article V.
Section 10.2 Termination. This Agreement shall terminate upon the
earliest of (i) the date that all the Registrable Securities have been sold by
the Investors pursuant to the Registration Statement; (ii) the date the
Investors receive an opinion from counsel to the Company that all of the
Registrable Securities may be sold and all Registered Securities are, in fact,
sold under the provisions of Rule 144 with no limitations; or (iii) five and
one-half years after the Closing Date; provided, however, that the provisions of
Articles III, IV, V, VI (as long as the Securities are beneficially owned by any
of the Investors or the Placement Agent, or their permitted assigns), VII, VIII,
IX, X, and XI, herein, and the registration rights provisions for the
Registrable Securities held by the Investors and the Placement Agent set forth
in this Agreement, and the Registration Rights Agreement, shall survive the
termination of this Agreement.
ARTICLE XI
NOTICES
Section 11.1 Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by reputable courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company: ObjectSoft Corporation
Continental Plaza III
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Mr. David X.X. Xxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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With a copy to: Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Investors: At the addresses set forth on Schedule A
attached hereto.
Any party hereto may from time to time change its address or facsimile
number for notices under this Section 11.1 by giving at least ten days' prior
written notice of such changed address or facsimile number to the other party
hereto.
Section 11.2 Indemnification. The Company agrees to indemnify and hold
harmless each of the Investors and each officer and director of the Investors or
person, if any, who controls the Investor within the meaning of the Securities
Act against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all reasonable attorneys'
fees), to which the Investors may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon the breach by the Company of any
of its obligations, representations and warranties or covenants under this
Agreement.
Each of the Placement Agent and each Investor severally (and not
jointly) agrees that it will indemnify and hold harmless the Company, and each
officer and director of the Company or person, if any, who controls the Company
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities (which shall, for all purposes of this Agreement, include, but not
be limited to, all costs of defense and investigation and all attorneys' fees)
to which the Company or any such officer, director or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon the breach by the Placement Agent or an Investor, as the case may
be, of any of its obligations, representations and warranties or covenants under
this Agreement.
Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such
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indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, unless the indemnifying party shall not pursue the
action to its final conclusion. The indemnified party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the expense
of the indemnifying party if the indemnifying party has assumed the defense of
the action with counsel reasonably satisfactory to the indemnified party;
provided that if the indemnified party is one of the Investors, the fees and
expenses of such counsel shall be at the expense of the indemnifying party if
(i) the employment of such counsel has been specifically authorized in writing
by the indemnifying party, or (ii) the named parties to any such action
(including any impleaded parties) include both the Investor and the indemnifying
party and the Investor shall have been advised by such counsel that there may be
one or more legal defenses available to the indemnifying party different from or
in conflict with any legal defenses which may be available to the Investors (in
which case the indemnifying party shall not have the right to assume the defense
of such action on behalf of the Investors, it being understood, however, that
the indemnifying party shall in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable only for the
reasonable fees and expenses of one separate firm of attorneys for the
Investor(s), which firm shall be designated in writing by the Investor(s)). No
settlement of any action against an indemnified party shall be made without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld.
Section 11.3 Contribution. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) the indemnified
party makes a claim for indemnification pursuant to Section 11.2 hereof but is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 11.2 hereof
provide for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any indemnified party, then the
Company, the Placement Agent and the applicable Investor shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(which shall, for all purposes of this Agreement, include, but not be limited
to, all costs of defense and investigation and all reasonable attorneys' fees),
in either such case (after contribution from others) on the basis of relative
fault as well as any other relevant equitable considerations. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in Section 11.2
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contributions from any person who was not guilty of such fraudulent
representation.
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ARTICLE XII
MISCELLANEOUS
Section 12.1 Counterparts; Facsimile; Amendments. This Agreement may be
executed in multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument which shall
be enforceable against the parties actually executing such counterparts and all
of which together shall constitute one and the same instrument. Except as
otherwise stated herein, in lieu of the original documents, a facsimile
transmission or copy of the original documents shall be as effective and
enforceable as the original. This Agreement may be amended only by a writing
executed by the Company on the one hand, and a majority in interest of the
Investors and the Placement Agent on the other hand, or the Company on the one
hand, and all of the Investors on the other hand.
Section 12.2 Entire Agreement. This Agreement, the Exhibits or
Attachments hereto, which include, but are not limited to the Certificate of
Designation, the Warrants, the Escrow Agreement, and the Registration Rights
Agreement set forth the entire agreement and understanding of the parties
relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, negotiations and understandings between the parties,
both oral and written relating to the subject matter hereof. The terms and
conditions of all Exhibits and Attachments to this Agreement are incorporated
herein by this reference and shall constitute part of this Agreement as is fully
set forth herein.
Section 12.3 Survival; Severability. The representations, warranties,
covenants and agreements of the parties hereto shall survive each Closing
hereunder. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that, such severability shall be ineffective if it
materially changes the economic benefit of this Agreement to any party.
Section 12.4 Title and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 12.5 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
and all Exhibits 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 12.6 Replacement of Certificates. Upon (i) receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of a certificate representing any shares of Common Stock and (ii) in
the case of any such loss, theft or destruction of such certificate, upon
delivery of an indemnity agreement or security reasonably satisfactory in form
and
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amount to the Company or (iii) in the case of any such mutilation, on surrender
and cancellation of such certificate, the Company at its expense will execute
and deliver, in lieu thereof, a new certificate of like tenor.
Section 12.7 Fees and Expenses. Each of the Company and the Investors
agrees to pay its own expenses incident to the performance of its obligations
hereunder, except that the Company shall pay on the Closing Date to the
Placement Agent (a) six percent of the number of shares of Preferred Stock
issued to the Investors on the Closing Date on the same terms as Investors and
(b) the reasonable attorney's fees and expenses actually incurred by the
Placement Agent, in an amount not to exceed $10,000, in connection with the
negotiation, execution and delivery of this Agreement, the Registration Rights
Agreement, the Certificate of Designation, the Escrow Agreement, and other
instruments and agreements entered into pursuant to this Agreement.
Section 12.8 Advice of Counsel. The Placement Agent and each Investor
hereby expressly acknowledge that they have had an opportunity to retain counsel
to represent them in connection with this Agreement and the transactions
contemplated hereby and certain of them have of their own free will foregone the
retaining thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Preferred Stock
Subscription Agreement to be executed by the undersigned, thereunto duly
authorized, as of the date first set forth above.
OBJECTSOFT CORPORATION
By: _______________________________
Name:
Title:
WARWICK CORPORATION, LTD.
By: _______________________________
Name:
Title:
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AMRO INTERNATIONAL, S.A.
By: _______________________________
Name:
Title:
AUSTOST ANSTALT XXXXXX
By: _______________________________
Name:
Title:
BALMORE FUNDS, S.A.
By: _______________________________
Name:
Title:
YEOMAN VENTURES LIMITED
By: _______________________________
Name: Xxxxx Xxxxx
Title: Attorney-in-fact
XXXXXX VENTURE ASSOCIATES LLC
By: _______________________________
Name:
Title:
TALBIYA LTD
By: _______________________________
Name:
Title:
CEDAR TREES INVESTMENTS LTD
By: ________________________________
Name:
Title:
