EXHIBIT 10.86
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of April 14,
2000, by and among HomeCom Communications, Inc., a Delaware corporation, with
headquarters located at Fourteen Piedmont Center, Suite 100, 0000 Xxxxxxxx Xxxx,
Xxxxxxx, Xxxxxxx 00000 (the "COMPANY"), and the investor listed on the Schedule
of Buyers (the "SCHEDULE OF BUYERS") attached hereto (individually, a "BUYER" or
collectively "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration pursuant
to Section 4(2) and/or Regulation D ("REGULATION D") at the sole election of
Buyer in the event that a registration statement filed by the Company pursuant
to Section 2(a) of the Registration Rights Agreement (described below) is not
declared effective by the Registration Deadline (as defined therein) as
promulgated by the U.S. Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 ACT");
B. The Company has authorized the following new series of its Preferred
Xxxxx, x.0000 par value per share (the "PREFERRED STOCK"): the Company's Series
E Convertible Preferred Stock (the "SERIES E PREFERRED SHARES"), which shall be
convertible into shares of the Company's Common Stock, $.0001 par value per
share (the "COMMON STOCK") (as converted, the "CONVERSION SHARES"), in
accordance with the terms of the Company's Certificate of Designations,
Preferences, and Rights of the Series E Convertible Preferred Stock,
substantially in the form attached hereto as Exhibit "A" (the "CERTIFICATE OF
DESIGNATIONS");
C. The Buyer wishes to purchase, upon the terms and conditions stated
in this Agreement, an aggregate of 100 shares of Series E Preferred Shares in
the respective amounts set forth opposite each Buyer's name on the Schedule of
Buyers;
D. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit "B" (the "REGISTRATION
RIGHTS AGREEMENT") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws; and
E. As set forth in Section 4(i) hereof, the holders of Series E
Preferred Shares shall receive stock purchase warrants to acquire shares of
Common Stock substantially in the form attached as Exhibit "C (the "WARRANTS")."
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NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1 . PURCHASE AND SALE OF SERIES E PREFERRED STOCK.
a. PURCHASE OF SERIES E PREFERRED STOCK. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6 and
7 below, the Company shall issue and sell to the Buyers and the Buyers
shall purchase from the Company an aggregate of 100 shares of Series E
Preferred Stock, in the respective amounts set forth opposite each
Buyer's name on the Schedule of Buyers (the "CLOSING").
b. CLOSING DATE. The date and time of the Closing (the "CLOSING
DATE") shall be 10:00 a.m. Eastern Standard Time, within five (5)
business days following the date hereof, subject to notification of
satisfaction (or waiver) of the conditions to the Closing set forth in
Sections 6 and 7 below (or such later date as is mutually agreed to by
the Company and the Buyer). The Closing shall occur on the Closing Date
at the offices of Xxxx Xxxx Xxxxx & Xxxxx LLP, 000 Xxxxxxxxx Xxxx
Xxxxxx, Xxxxx 000, 0000 Xxxxxxxxx Xxxx, X.X., Xxxxxxx, Xxxxxxx 00000.
c. FORM OF PAYMENT. On the Closing Date, (i) each Buyer shall
pay the purchase price to the Company for the Series E Preferred Shares
to be issued and sold to such Buyer at the Closing, by wire transfer of
immediately available funds in accordance with the Company's written
wire instructions, and (ii) the Company shall deliver to each Buyer,
certificates representing such Series E Preferred Shares which such
Buyer is then purchasing (as indicated opposite such Buyer's name on
the Schedule of Buyers), duly executed on behalf of the Company and
registered in the name of such Buyer or its designee (the
"CERTIFICATES").
2. BUYER'S REPRESENTATIONS AND WARRANTEES.
Each Buyer represents and warrants with respect to only itself that:
a. INVESTMENT PURPOSE. Such Buyer (i) is acquiring the Series E
Preferred Shares, (ii) upon conversion of the Series E Preferred Shares, will
acquire the Conversion Shares then issuable, (iii) will acquire any Warrants
issuable, and (iv) upon exercise of the Warrants, will acquire the shares of
Common Stock issuable upon exercise thereof (the "WARRANT SHARES") for its own
account for investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 0000 Xxx. The Buyer represents and
warrants that it has no prearranged agreement or other arrangement to sell or
otherwise dispose of, pledge or assign the Series A Preferred Shares, the
Conversion Shares, the Warrants, the Warrant Shares or the Company's Common
Stock.
b. ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D.
c. RELIANCE ON EXEMPTIONS. Such Buyer understands that the
Series E Preferred Shares, the Conversion Shares, the Warrants, and the
Warrant Shares are being
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offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state
securities laws and that the Company is relying in part upon the
truth and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and
understandings of such Buyer set forth herein in order to determine
the availability of such exemptions and the eligibility of such
Buyer to acquire such securities.
d. INFORMATION. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale
of the Series E Preferred Shares, the Conversion Shares, the Warrants,
and the Warrant Shares, which have been requested by such Buyer. Such
Buyer and its advisors, if any, have been afforded the opportunity to
ask questions of the Company. Neither such inquiries nor any other due
diligence investigations conducted by such Buyer or its advisors, if
any, or its representatives shall modify, amend or affect such Buyer's
right to rely on the Company's representations and warranties contained
in Section 3 below. Such Buyer understands that its investment in the
Series E Preferred Shares, the Conversion Shares, the Warrants, and the
Warrant Shares involves a high degree of risk. Such Buyer has sought
such accounting, legal and tax advice as it has considered necessary to
make an informed investment decision with respect to its acquisition of
the Series E Preferred Shares, the Conversion Shares, the Warrants, and
the Warrant Shares.
e. NO GOVERNMENTAL REVIEW. Such Buyer understands that no United
States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the
Series E Preferred Shares, the Conversion Shares, the Warrants, and the
Warrant Shares or the fairness or suitability of the investment in the
Series E Preferred Shares, the Conversion Shares, the Warrants, or the
Warrant Shares nor have such authorities passed upon or endorsed the
merits of the offering of the Series E Preferred Shares, the Conversion
Shares, the Warrants, or the Warrant Shares.
f. TRANSFER OR RESALE. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Series E
Preferred Shares, the Conversion Shares, the Warrants, and the Warrant
Shares have not been and are not being registered under the 1933 Act or
any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (a) subsequently registered thereunder,
(b) such Buyer shall have delivered to the Company an opinion of
counsel, in a generally acceptable form, to the effect that such
securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (c)
such Buyer provides the Company with reasonable assurance that such
securities can be sold, assigned or transferred pursuant to Rule 144
promulgated under the 1933 Act, (ii) any sale of such securities made
in reliance on Rule 144 (or a successor rule thereto) ("RULE 144") may
be made only in accordance with the terms of Rule 144 and further, if
Rule 144 is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale
is made) may be deemed to be an underwriter (as that term is defined in
the 0000 Xxx) may require compliance with some other exemption under
the
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1933 Act or the rules and regulations of the SEC thereunder; and
(iii) neither the Company nor any other person is under any obligation
to register such securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption
thereunder.
g. LEGENDS. Such Buyer understands that the certificates or
other instruments representing the Series E Preferred Shares, the
Warrants and, until such time as the sale of the Conversion Shares have
been registered under the 1933 Act as contemplated by the Registration
Rights Agreement, the stock certificates representing the Conversion
Shares, and the Warrant Shares shall bear a restrictive legend in
substantially the following form (and a stop transfer order may be
placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR
AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.
The legend set forth above shall be removed and the Company
shall issue a certificate without such legend to the holder of the
Series E Preferred Shares, the Conversion Shares, the Warrants, or the
Warrant Shares upon which it is stamped, if, unless otherwise required
by state securities laws, (i) the sale of the Conversion Shares or the
Warrant Shares is registered under the 1933 Act, (ii) in connection
with a sale transaction, such holder provides the Company with an
opinion of counsel, in a generally acceptable form, to the effect that
a public sale, assignment or transfer of the Series E Preferred Shares,
the Conversion Shares, the Warrants, or the Warrant Shares may be made
without registration under the 1933 Act, or (iii) such holder provides
the Company with reasonable assurances that the Series E Preferred
Shares, the Conversion Shares, the Warrants, or the Warrant Shares can
be sold pursuant to Rule 144 without any restriction as to the number
of securities acquired as of a particular date that can then be
immediately sold.
h. AUTHORIZATION, ENFORCEMENT. This Agreement has been duly and
validly authorized, executed and delivered on behalf of such Buyer and
is a valid and binding agreement of such Buyer enforceable in
accordance with its terms, subject as enforceability to general
principles of equity and to applicable bankruptcy, insolvency,
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reorganization, moratorium, liquidation and other similar laws relating
to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
i. RESIDENCY. Such Buyer is a resident of that country specified
in its address on the Schedule of Buyers.
j. NO SCHEME TO EVADE REGISTRATION. Buyer represents and
warrants to the Company that the acquisition of the Series E Preferred
Stock and the Conversion Shares is not a transaction (or any element of
a series of transactions) that is part of a plan or scheme by the Buyer
to evade the registration provisions of the 1933 Act.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
a. ORGANIZATION AND QUALIFICATION. The Company and its
subsidiaries are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power to own their
properties and to carry on their business as now being conducted. Each
of the Company and its subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries taken as a whole.
b. AUTHORIZATION, ENFORCEMENT, COMPLIANCE WITH OTHER
INSTRUMENTS. (i) The Company has the requisite corporate power and
authority to enter into and perform this Agreement, the Registration
Rights Agreement and any related agreements, and to issue the Series E
Preferred Shares, the Conversion Shares, the Warrants, and the Warrant
Shares in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement, the Registration Rights
Agreement and any related agreements by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Series E Preferred
Shares and the Warrants and the reservation for issuance and the
issuance of the Conversion Shares and the Warrant Shares issuable upon
conversion or exercise thereof, have been duly authorized by the
Company's Board of Directors and no further consent or authorization is
required by the Company, its Board of Directors or its stockholders,
(iii) this Agreement and the Registration Rights Agreement and any
related agreements have been duly executed and delivered by the
Company, (iv) this Agreement, the Registration Rights Agreement and any
related agreements constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting
generally, the enforcement of creditors' rights and remedies, and (v)
prior to the Closing Date, the Certificate of Designations has been
filed with the
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Secretary of State of the State of Delaware and will be in full
force and effect, enforceable against the Company in accordance with
its terms.
c. CAPITALIZATION. On March 28, 2000, the authorized capital
stock of the Company consists of 15,000,000 shares of Common Stock, of
which as of the date hereof 8,131,250 shares were issued and
outstanding, and 10,000,000 shares of Preferred Stock of which 50
shares of Series B Convertible Preferred Stock, 126.35 shares of Series
C Convertible Preferred Stock, 18.05 shares of Series D Convertible
Preferred Stock were issued and outstanding. All of such outstanding
shares have been validly issued and are fully paid and nonassessable.
Except as disclosed in Schedule 3(c), no shares of Common Stock or
preferred stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the
Company. Except as disclosed in Schedule 3(c), as of the effective date
of this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or
contracts, commitments, understandings or arrangements by which the
Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its
subsidiaries or options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities
or rights convertible into, any shares of capital stock of the Company
or any of its subsidiaries, (ii) there are no outstanding debt
securities and (iii) there are no agreements or arrangements under
which the Company or any of its subsidiaries is obligated to register
the sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement). There are no securities or instruments
containing anti-dilution or similar provisions that will be triggered
by the issuance of the Series E Preferred Shares, the Conversion
Shares, the Warrants, or the Warrant Shares as described in this
Agreement. The Company has furnished to the Buyer true and correct
copies of the Company's Certificate of Incorporation, as amended and as
in effect on the date hereof (the "CERTIFICATE OF INCORPORATION"), and
the Company's By-laws, as in effect on the date hereof (the "BY-LAWS"),
and the terms of all securities convertible into or exercisable for
Common Stock and the material rights of the holders thereof in respect
thereto.
d. ISSUANCE OF SECURITIES. The Series E Preferred Shares are
duly authorized and, upon issuance in accordance with the terms hereof,
shall be (i) validly issued, fully paid and nonassessable, are free
from all taxes, liens and charges with respect to the issue thereof and
are entitled to the rights and preferences set forth in the Series E
Preferred Shares. The Conversion Shares issuable upon conversion of the
Series E Preferred Shares have been duly authorized and reserved for
issuance. Upon conversion or exercise in accordance with the Series E
Preferred Shares or the Warrants, the Conversion Shares and the Warrant
Shares will be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issue thereof,
with the holders being entitled to all rights accorded to a holder of
Common Stock.
e. NO CONFLICTS. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of this Agreement by the Company
and the consummation by
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the Company of the transactions contemplated hereby will not (i)
result in a material violation of the Certificate of Incorporation,
any Certificate of Designations, Preferences, and Rights of any
outstanding series of preferred stock of the Company or By-laws or
(ii) conflict with or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to
which the Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations
and the rules and regulations of the principal market or exchange on
which the Common Stock is traded or listed) applicable to the
Company or any of its subsidiaries or by which any property or asset
of the Company or any of its subsidiaries is bound or affected.
Except as disclosed in Schedule 3(e), neither the Company nor its
subsidiaries is in violation of any term of or in default under its
Certificate of Incorporation or Bylaws or their organizational
charter or by-laws, respectively, or any material contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment,
decree or order or any statute, rule or regulation applicable to the
Company or its subsidiaries. The business of the Company and its
subsidiaries is not being conducted, and shall not be conducted in
violation of any law, ordinance, or regulation of any governmental
entity. Except as specifically contemplated by this Agreement and as
required under the 1933 Act and any applicable state securities
laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver
or perform any of its obligations under or contemplated by this
Agreement or the Registration Rights Agreement in accordance with
the terms hereof or thereof except as disclosed in Schedule 3(e).
All consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date
hereof.
f. SEC DOCUMENTS: FINANCIAL STATEMENTS. Since January 1, 1999,
the Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as
amended (the "1934 ACT") (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein,
being hereinafter referred to as the "SEC DOCUMENTS"). The Company has
delivered to the Buyer or its representative true and complete copies
of the SEC Documents. As of their respective dates, the financial
statements of the Company attached as Schedule 3(f) hereto (the
"FINANCIAL STATEMENTS") complied as to form in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash
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flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
g. ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule
3(g), since January 1, 1999, there has been no material adverse change
and no material adverse development in the business, properties,
operations, financial condition, results of operations or prospects of
the Company or its subsidiaries. The Company has not taken any steps,
and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company or its subsidiaries
have any knowledge or reason to believe that its creditors intend to
initiate involuntary bankruptcy proceedings.
h. ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to
the knowledge of the Company or any of its subsidiaries, threatened
against or affecting the Company, the Common Stock or any of the
Company's subsidiaries, wherein an unfavorable decision, ruling or
finding would (i) have a material adverse effect on the transactions
contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of the documents
contemplated herein or (iii), except as expressly set forth in Schedule
3(h), have a material adverse effect on the business, operations,
properties, financial condition or results of operation of the Company
and its subsidiaries taken as a whole.
i. ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF SERIES E
PREFERRED SHARES. The Company acknowledges and agrees that the Buyer is
acting solely in the capacity of an arm's length purchaser with respect
to this Agreement and the transactions contemplated hereby.
j. NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR
CIRCUMSTANCES. No event, liability, development or circumstance has
occurred or exists, or is contemplated to occur, with respect to the
Company or its subsidiaries or their respective business, properties,
prospects, operations or financial condition, which could be material
but which has not been publicly announced or disclosed in writing to
the Buyer.
k. NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the
meaning of Regulation D under the 0000 Xxx) in connection with the
offer or sale of the Series E Preferred Shares, the Conversion Shares,
the Warrants, or the Warrant Shares.
1. NO INTEGRATED OFFERING. 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, under circumstances that would require
registration of the Series E Preferred Shares, the Conversion Shares,
the Warrants, and the Warrant Shares under the 1933 Act or cause this
offering of Series E Preferred Shares, the Conversion Shares, the
Warrants, or the Warrant Shares to be
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integrated with prior offerings by the Company for purposes of the
1933 Act or any applicable stockholder approval provisions.
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m. EMPLOYEE RELATIONS. Neither the Company nor any of its
subsidiaries is involved in any labor dispute nor, to the knowledge of
the Company or any of its subsidiaries, is any such dispute threatened.
None of the Company's or its subsidiaries' employees is a member of a
union and the Company and its subsidiaries believe that their relations
with their employees are good.
n. TITLE. The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company and its subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such
as are described in Schedule 3(p) or such as do not materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries. Any real property and facilities held under lease by the
Company and its subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries.
o. REGULATORY PERMITS. The Company and its subsidiaries possess
all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit.
p. TAX STATUS. Except as set forth on Schedule 3(u), the Company
and each of its subsidiaries has made or filed all federal and state
income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject (unless and only to the extent
that the Company and each of its subsidiaries has set aside on its
books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except
those being contested in good faith and has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.
q. FEES AND RIGHTS OF FIRST REFUSAL. The Company is not
obligated to offer the securities offered hereunder on a right of first
refusal basis or otherwise to any third parties including, but not
limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.
r. SHAREHOLDER APPROVAL The Company covenants to submit to its
shareholders at its next shareholder meeting a proposal for
ratification of the issuance of the Series C Preferred Stock and the
Conversion Shares, if and as required by the rules of the National
Association of Securities Dealers, Inc. (the "NASD") applicable to the
transaction.
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4. COVENANTS.
a. BEST EFFORTS. Each party shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided
in Sections 6 and 7 of this Agreement.
b. FORM D. The Company agrees to file a Form D with respect to
the Series E Preferred Shares and the Conversion Shares as required
under Regulation D and to provide a copy thereof to each Buyer promptly
after such filing. The Company shall, on or before the Closing Date,
take such action as the Company shall reasonably determine is necessary
to qualify the Series E Preferred Shares and the Conversion Shares for,
or obtain exemption for the Series E Preferred Shares and the
Conversion Shares for, sale to the Buyers at the Closing pursuant to
this Agreement under applicable securities or "Blue Sky" laws of the
states of the United States, and shall provide evidence of any such
action so taken to the Buyers on or prior to the Closing Date.
c. REPORTING STATUS. Until the earlier of (i) the date as of
which the Investors (as that term is defined in the Registration Rights
Agreement) may sell all of the Conversion Shares without restriction
pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto), or (ii) the date on which (A) the Investors shall have sold
all the Conversion Shares and (B) none of the Series E Preferred Shares
is outstanding (the "REGISTRATION PERIOD"), the Company shall file all
reports required to be filed with the SEC pursuant to the 1934 Act, and
the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
d. USE OF PROCEEDS. The Company will use the proceeds from the
sale of the Series E Preferred Shares for substantially the same
purposes and in substantially the same amounts as indicated in Schedule
4(d).
e. FINANCIAL INFORMATION. The Company agrees to send the
following to each Buyer during the Registration Period: (i) within five
(5) days after the filing thereof with the SEC, a copy of its Annual
Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current
Reports on Form 8-K and any registration statements or amendments filed
pursuant to the 1933 Act; (ii) within one (1) day after release
thereof, copies of all press releases issued by the Company or any of
its subsidiaries and (ii) copies of the same notices and other
information given to the stockholders of the Company generally,
contemporaneously with the giving thereof to the stockholders.
f. RESERVATION OF SHARES. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose
of issuance, no less than 100% of the number of shares of Common Stock
needed to provide for the issuance of the Conversion Shares and Warrant
Shares; provided that all shares of the Common Stock authorized and not
otherwise reserved for other purposes as of the date hereof shall be
reserved for the purpose of issuance of the Conversion Shares.
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g. LISTINGS. The Company shall promptly secure the listing of
all Registrable Securities (as defined in the Registration Rights
Agreement) upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain, so
long as any other shares of Common Stock shall be so listed, such
listing of all Conversion Shares from time to time issuable under the
terms of this Agreement and the Registration Rights Agreement. The
Company shall maintain the Common Stock's authorization for quotation
in the over-the counter market. The Company shall promptly provide to
each Buyer copies of any notices it receives regarding the continued
eligibility of the Common Stock for trading on the Nasdaq SmallCap
Market(TM).
h. EXPENSES. Each of the Company and the Buyer shall pay all
costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution and delivery of this
Agreement and the Registration Rights Agreement.
i. WARRANT ISSUANCES. At Closing, the Company shall issue to
each Buyer warrants to acquire 33,334 shares of Common Stock for each
one million dollars ($1,000,000) invested in the form as attached as
Exhibit "C" hereto. The Company shall, in addition to the Warrants
otherwise issuable hereunder, issue to each Buyer such Warrants (the
"LOCK-UP WARRANTS") as may be issuable to a Buyer pursuant to Section
2(i) of the Certificate of Designations. Each Warrant issued hereunder
(including pursuant to Section 2(i) of the Certificate of Designations)
shall be immediately exercisable and shall expire (to the extent not
exercised) on the fifth (5th) anniversary of its issuance date.
j. NO SHORT SALES OF THE COMMON STOCK. So long as (i) a Buyer or
any of its affiliates beneficially owns any of Series E Preferred
Shares, (ii) the Company has not issued any publicly traded convertible
securities and (iii) the Issuer is not in material default under the
terms of the Series E Preferred Shares, each Buyer and its affiliates
shall not directly or indirectly engage in any short sales or third
party short sales of the Company's Common Stock or hold a "put
equivalent position" with respect to the Common Stock (as defined in
Rule 16a-1 under the 1934 Act).
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its transfer agent
to issue certificates, registered in the name of the Buyer or its respective
nominee(s), for the Conversion Shares and Warrant Shares in such amounts as
specified from time to time by the Buyer to the Company upon conversion of the
Series E Preferred Shares or exercise of the Warrants (the "IRREVOCABLE TRANSFER
AGENT INSTRUCTIONS"). Prior to registration of the Conversion Shares and Warrant
Shares under the 1933 Act, all such certificates shall bear the restrictive
legend specified in Section 2(g) of this Agreement. The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 5, and stop transfer instructions to give effect to Section 2(g)
hereof (in the case of the Conversion Shares and Warrant Shares, prior to
registration of such shares under the 0000 Xxx) will be given by the
76
Company to its transfer agent and that the Series E Preferred Shares, the
Conversion Shares, the Warrants, and the Warrant Shares shall otherwise be
freely transferable on the books and records of the Company as and to the
extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section 5 shall affect in any way the Buyer's obligations and
agreement to comply with all applicable securities laws upon resale of the
Series E Preferred Shares, the Conversion Shares, the Warrants, and the
Warrant Shares. If the Buyer provides the Company with an opinion of counsel,
satisfactory in form and substance to the Company, that registration of a
resale by the Buyer of any of the Series E Preferred Shares, the Conversion
Shares, the Warrants, or the Warrant Shares is not required under the 1933
Act, the Company shall permit the transfer, and, in the case of the
Conversion Shares or the Warrant Shares, promptly instruct its transfer agent
to issue one or more certificates in such name and in such denominations as
specified by the Buyer.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Series E
Preferred Shares to the Buyer at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:
a. The Buyer shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
b. The Certificate of Designations shall have been filed with
the Secretary of State of the State of Delaware.
c. The Buyer shall have delivered to the Company the Purchase
Price for the Series E Preferred Shares being purchased by the Buyer at
the Closing by wire transfer of immediately available funds pursuant to
the wire instructions provided by the Company.
d. The representations and warranties of the Buyer shall be true
and correct in all material respects as of the date when made and as of
the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
the Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Buyer at
or prior to the Closing Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Series E
Preferred Shares at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Buyer's sole benefit and may be waived by the Buyer at
any time in its sole discretion:
77
a. The Company shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Buyer.
b. The Common Stock shall be authorized for quotation on the
Nasdaq SmallCap Market(TM) and trading in the Common Stock shall not
have been suspended for any reason and all of the Conversion Shares
issuable upon conversion of the Series E Preferred Shares shall be
approved for listing.
c. The representations and warranties of the Company shall be
true and correct in all material respects (except to the extent that
any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case, such representations and
warranties shall be true and correct without further qualification) as
of the date when made and as of the Closing Date as though made at that
time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by the Company at or prior to the Closing Date. The Buyer
shall have received a certificate, executed by the Chief Executive
Officer of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by
the Buyer including, without limitation an update as of the Closing
Date regarding the representation contained in Section 3(c) above.
d. The Buyer shall have received the opinion of the Company's
counsel dated as of the Closing Date, in form, scope and substance
reasonably satisfactory to the Buyer and in substantially the form of
Exhibit "D" attached hereto.
e. The Company shall have executed and delivered to the Buyer
the Certificates (in such denominations as the Buyer shall request) for
the Series E Preferred Shares being purchased by the Buyer at the
Closing.
f. The Board of Directors of the Company shall have adopted the
resolutions in substantially the form of Exhibit "E" attached hereto.
g. As of the Closing Date, the Company shall as of the Closing
Date have reserved out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of the Series E
Preferred Shares, such number of shares of Common Stock equal to or
greater than 100% of the number of shares of Common Stock for which are
issuable upon conversion of all of the Series E Preferred Shares, and
the Warrant Shares could be issued at any time under this Agreement.
h. The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyer, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
78
8. INDEMNIFICATION.
In consideration of the Buyer's execution and delivery of this
Agreement and acquiring the Series E Preferred Shares, the Conversion Shares,
and the Warrants, and the Warrant Shares hereunder and in addition to all of the
Company's other obligations under this Agreement, the Company shall defend,
protect, indemnify and hold harmless the Buyer and each other holder of the
Series E Preferred Shares, the Conversion Shares, and the Warrants, and the
Warrant Shares and all of their officers, directors, employees and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "INDEMNITEES")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by
the Indemnitees or any of them as a result of, or arising out of, or relating to
(a) any misrepresentation or breach of any representation or warranty made by
the Company in this Agreement, the Series E Preferred Shares, the Warrants, or
the Registration Rights Agreement or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in this Agreement, the
Certificate of Designations, the Warrants, or the Registration Rights Agreement
or any other certificate, instrument or document contemplated hereby or thereby,
or (c) any cause of action, suit or claim brought or made against such
Indemnitee and arising out of or resulting from the execution, delivery,
performance or enforcement of this Agreement or any other instrument, document
or agreement executed pursuant hereto by any of the Indemnities, any transaction
financed or to be financed in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Series E Preferred Shares or the status of the
Buyer or holder of the Series E Preferred Shares, the Warrants, or the
Conversion Shares or the Warrant Shares, as an investor in the Company, except
for any Indemnified Liability which directly or primarily results from the
particular Indemnitee's gross negligence or willful misconduct for which such
holder shall indemnify the Company in the same manner as provided in this
Section 8. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
9. GOVERNING LAW: MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware
without regard to the principles of conflict of laws. Any dispute or
controversy between the parties arising in connection with this
agreement or the subject matter contemplated by this agreement shall be
resolved by arbitration before a three-member panel of the American
Arbitration Association in accordance with the commercial arbitration
rules of said forum and the Federal Arbitration Act, 9 U.S.C. 1 ET
SEQ., with the resulting award being final and conclusive. Said
arbitrators shall be empowered to award all forms of relief and damages
claimed, including, but not limited to, attorney's fees, expenses of
litigation and arbitration, exemplary damages, and prejudgment
interest. Notwithstanding the foregoing, Buyer may at any time and at
its option, whether or not an arbitration action is
79
then pending, initiate a civil action for temporary and permanent
injunctive and other equitable relief against Company. Company
acknowledges that upon any breach of Buyer's conversion rights
hereunder, Buyer's resulting injury may not be adequately
compensated by a remedy at law. Accordingly, upon such breach,
Buyer, at its election and without limitation of its other remedies,
shall be entitled to pursue a claim for specific performance of this
Agreement, and Company hereby waives the right to assert any defense
thereto that Purchaser has an adequate remedy at law. The parties
further agree that any arbitration action between them shall be
heard in Atlanta, Georgia, and expressly consent to the jurisdiction
and venue of the Superior Court of Xxxxxx County, Georgia, and the
United States District Court for the Northern District of Georgia,
Atlanta Division for the adjudication of any civil action asserted
pursuant to this Paragraph.
b. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. In the event any
signature page is delivered by facsimile transmission, the party using
such means of delivery shall cause four (4) additional original
executed signature pages to be physically delivered to the other party
within five (5) days of the execution and delivery hereof
c. HEADINGS. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation
of, this Agreement.
d. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. ENTIRE AGREEMENT, AMENDMENTS. This Agreement supersedes all
other prior oral or written agreements between the Buyer, the Company,
their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any
Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived
or amended other than by an instrument in writing signed by the party
to be charged with enforcement.
f. NOTICES. Any notices, consents, waivers, or other
communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been
delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S.
certified mail, return receipt requested; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv)
one (1) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
80
If to the Company:
FOURTEEN PIEDMONT CENTER, SUITE 100
0000 XXXXXXXX XXXX
Xxxxxxx, Xxxxxxx 00000
Attn: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxx, Esq.
XXXX XXXX XXXXX & XXXXX LLP
000 Xxxxxxxxx Xxxx Xxxxxx, Xxxxx 000
1000 Xxxxxxxxx Road, N.E.
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Transfer Agent:
American Stock Transfer
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to the Buyer's counsel as set forth on the Schedule
of Buyers. Each party shall provide five (5) days' prior written notice
to the other party of any change in address or facsimile number.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors
and assigns. The Company shall not assign this Agreement or any rights
or obligations hereunder without the prior written consent of the
Buyer. The Buyer may assign its rights hereunder without the consent of
the Company, provided, however, that the Company is given written
notice by such holder at the time of such transfer, stating the name
and address of such transferee and any such assignment shall not
release the Buyer from its obligations hereunder unless such
obligations are assumed by such assignee and the Company has consented
to such assignment and assumption.
81
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
i. SURVIVAL. The representations and warranties of the Company
and the Buyer contained in Sections 2 and 3, the agreements and
covenants set forth in Sections 4, 5 and 9, and the indemnification
provisions set forth in Section 8 shall survive for a period of one
year following the Closing. The Buyer shall be responsible only for its
own representations, warranties, agreements and covenants hereunder.
j. PUBLICITY. The Company and the Buyer shall have the right to
approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the
prior approval of the Buyer, to make any press release or other public
disclosure with respect to such transactions as is required by
applicable law and regulations (although the Buyer shall be consulted
by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a
copy thereof).
k. FURTHER ASSURANCES. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.
1. TERMINATION. In the event that the Closing shall not have
occurred with respect to the Buyer on or before five (5) business days
from the date hereof due to the Company's or the Buyer's failure to
satisfy the conditions set forth in Sections 6 and 7 above (and the
nonbreaching party's failure to waive such unsatisfied condition(s)),
the nonbreaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business
on such date without liability of any party to any other party.
m. PLACEMENT AGENT. The Company acknowledges that it has engaged
Greenfield Capital Partners LLC, as a placement agent in connection
with the sale of the Series E Preferred Shares. The Company shall be
responsible for the payment of any finder's fees (which includes cash
and warrants to purchase Common Stock) relating to or arising out of
the transactions contemplated hereby.
n. NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be
applied against any party.
o. INDEPENDENT COUNSEL. The parties to this Agreement
acknowledge that the Company has received independent counsel form the
law firm of Xxxx Xxxx Xxxxx & Xxxxx LLP which is acting as its counsel.
Buyers have been advised by Xxxx Moss Kline
82
& Xxxxx LLP to seek independent advice with respect to the terms and
conditions of this Agreement and any related agreements before
signing them.
10. CONFIDENTIALITY.
(a) As much of the information and other material furnished
under or in connection with this Agreement (whether furnished before,
on or after the date hereof) as constitutes or contains confidential
business, financial or other information of the Company or its
subsidiaries, each Buyer covenants for itself, and, as applicable, for
its directors, officers, affiliates and partners, that it will use due
care to prevent its officers, directors, partners, employees, counsel,
accountants and other representatives from disclosing such information
to persons other than their respective authorized employees, counsel,
accountants, shareholders, partners, limited partners and other
authorized representatives. Notwithstanding the foregoing, if a Buyer
is advised by such counsel that such disclosure or delivery is required
by law, regulation or judicial or administrative order, then they may
disclose or deliver such information or other after giving written
notice to the Company of such requirements.
For purposes of this Section 10(a), "due care" means at least
the same level of care that a Buyer would use to protect the
confidentiality of its own sensitive or proprietary information, and
this obligation shall survive termination of this Agreement.
(b) To the extent that any of the information furnished by the
Company to the Buyers hereof would constitute material, nonpublic
information for purposes of the Exchange Act, Buyers agree not to
engage in any purchase or sale of securities while in possession of
such information and prior to the time that such information is made
generally known to the public and Buyers agree to use due care to
prevent their officers, directors, partners, employees, counsel and
other representatives, who have been given access to such material,
nonpublic information, from engaging in any such purchase or sale
during such period.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
83
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
"COMPANY"
HOMECOM COMMUNICATIONS, INC.
BY:
----------------------------------------
Name: Xxxxx Xx. Xxxxxxxxx
Its: Chief Financial Officer
"BUYER"
-------------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SCHEDULE OF BUYERS
------------------------------------------------------------------------------------------------------------------------
NUMBER OF SERIES E
PREFERRED
BUYER'S NAME ADDRESS/FACSIMILE NUMBER OF BUYER SHARES
---------------------------------------- ------------------------------------------------- -------------------------
---------------------------------------- ------------------------------------------------- -------------------------
---------------------------------------- ------------------------------------------------- -------------------------
---------------------------------------- ------------------------------------------------- -------------------------
84
SCHEDULE 3(c)
CAPITALIZATION
HOMECOM COMMUNICATIONS
Securities outstanding
As of 3/28/2000
APPROX.
CONVERSION COMMON & PREFERRED
EQUITY FACE AMOUNT PRICE EQUIVALENTS SHARES
------ ----------- ---------- ----------- ---------
Common Shares 8,131,250
Series B Preferred 1,000,000 $3.52 284,091 as if converted 50
Series C 2,527,000 $2.91 868,385 as if converted 126.35
Series D 361,000 $2.91 124,055 as if converted 18.05
Total 9,407,781
---------
---------
AVG STRIKE UNDERLYING
PRICE SHARES
---------- ----------
WARRANTS $ 6.32425 1,244,699
--------- ---------
--------- ---------
OPTIONS $4.57 1,069,575
---------- ----------
---------- ----------
85
SCHEDULE 3(e)
CONFLICTS
None.
86
SCHEDULE 3(f)
FINANCIAL STATEMENTS
Reference is made to all public filings made by the Company with the SEC
available at xxxx://xxx.xxx.xxx/.
87
SCHEDULE 3(h)
LITIGATION
None.
88
SCHEDULE 3(n)
INTELLECTUAL PROPERTY
None.
89
SCHEDULE 3(p)
LIENS
None.
90
SCHEDULE 3(u)
TAX STATUS
None.
91
SCHEDULE 3(v)
CERTAIN TRANSACTIONS
None.
92
SCHEDULE 4(d)
USE OF PROCEEDS
Working capital.
93
