Exhibit 10.11(a)
STOCK PURCHASE AGREEMENT
This Agreement dated as of December 31, 1999 is entered into by and among
White Pine Software, Inc., a Delaware corporation (the "Company"), and each
entity which executes a counterpart to this Agreement and is listed on Exhibit A
(each referred to herein as a "Purchaser," and collectively referred to herein
as the "Purchasers").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. PURCHASE AND SALE OF SHARES.
1.1 AUTHORIZATION. The Company has duly authorized the sale and issuance,
pursuant to the terms of this Agreement, of an aggregate of 325,521 shares
(the "Shares") of its common stock, $0.01 par value per share ("Common
Stock").
1.2 PURCHASE AND SALE OF SHARES. Subject to the terms and conditions of
this Agreement, each purchaser agrees to purchase and the Company agrees
to sell, that number of Shares indicated opposite the Purchaser's name on
Exhibit A, at a purchase price equal to $15.36 per share (the "Purchase
Price").
1.3 CLOSING. The Closing of the purchase and sale of the Shares
contemplated by this Agreement (the "Closing") shall take place at the
offices of Xxxxx, Xxxx & Xxxxx LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 at 12 noon EST, on December 31, 1999, or at such other
place and time as mutually agreed by the Company and the Purchasers (the
"Closing Date"). At the Closing, the Company shall deliver to each
Purchaser a certificate for the number of Shares for which that Purchaser
has subscribed against payment of the purchase price therefore. Each
Purchaser shall remit the purchase price for the Shares being purchased at
the Closing by wire transfer of same-day funds to an account designated in
writing by the Company.
1.4 USE OF PROCEEDS. The Company will use the proceeds from the sale of
the Shares for working capital and other general corporate purposes.
2. CONDITIONS TO CLOSING.
The obligation of the Purchasers to purchase and pay for the Shares shall
be subject to the accuracy of the representations and warranties made by the
Company herein and to the following conditions (any of which may be waived by a
Purchaser, acting individually, in its sole discretion, as to such Purchaser's
own Shares, but not as to the Shares to be purchased by any other Purchaser):
2.1 DELIVERIES BY THE COMPANY. The Company shall deliver to the Purchaser
or its agent:
(a) a certificate, as of recent date, as to the legal existence and
corporate good standing of the Company issued by the Secretary of State of
the State of Delaware;
(b) a copy of the Certificate of Incorporation of the Company, as
amended and in effect as of the Closing Date, certified by the Secretary
of State of the State of Delaware;
(c) a copy of the resolutions of the Board of Directors of the
Company authorizing and approving this Agreement and the issuance of the
Shares hereby, certified by the Secretary of the Company;
(d) a copy of the By-laws of the Company, certified by the Secretary
of the Company as in effect as of the Closing Date;
(e) an opinion of Xxxxx, Xxxx & Xxxxx LLP, counsel to the Company,
in substantially the form attached hereto as Exhibit B; and
(f) an executed lock-up agreement from each officer and director of
the Company in substantially the form attached hereto as Exhibit C.
3. REPRESENTATIONS OF THE COMPANY. Except as set forth in the applicable section
of the Disclosure Schedule attached hereto, the Company hereby represents and
warrants to each Purchaser as follows as of the date hereof and as of Closing.
3.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. The Company is duly qualified or otherwise authorized
to transact business as a foreign corporation and is in good standing in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on the results of operations, business or financial
condition of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"). Each of the Company's subsidiaries is a
corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation. Each of the
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Company's subsidiaries is duly qualified or otherwise authorized to
transact business as a foreign corporation and is in good standing in each
jurisdiction in which the failure to so qualify would have a Material
Adverse Effect.
3.2 CAPITALIZATION. The Company is authorized to issue (a) 30,000,000
shares of Common Stock, and (b) 5,000,000 shares of Preferred Stock, $0.01
par value per share. As of December 22, 1999, there were issued and
outstanding [10,702,213] shares of Common Stock; no shares of Preferred
Stock had been issued or were outstanding; and options, warrants or rights
to purchase an aggregate of approximately 1,679,016 shares of Common Stock
had been granted by the Company and were outstanding. The Common Stock and
the Preferred Stock of the Company have the voting powers, designations,
preferences, rights and qualifications, and limitations or restrictions
set forth in the Certificate of Incorporation and amendments thereto. All
of the issued and outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws,
were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities, and conform in all
material respects to the description thereof contained in the Company's
Registration Statement on Form 8-A and the Company Reports (as hereinafter
defined). Except as disclosed in the first sentence of this section, the
Company does not have outstanding any options or warrants to purchase, or
any preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any shares of
capital stock of any subsidiary and there is no commitment, plan or
arrangement to issue, any securities or obligations convertible into any
shares of capital stock of the Company or its subsidiaries or any such
options, rights convertible securities or obligations. The description of
the Company's capital stock, stock bonus and other stock plans or
arrangements and the options or other rights granted and exercised
thereunder, contained in the Company's Registration Statement on Form 8-A
and the Company Reports accurately and fairly presents the information
required to be shown with respect to such capital stock, plans,
arrangements, options and rights (except for issuances and exercises of
options in the ordinary course of business).
3.3 AUTHORITY FOR AGREEMENT. The execution, delivery and performance of
this Agreement by the Company has been duly authorized by all necessary
corporate action on the part of the Company, and this Agreement has been
duly executed and delivered by the Company, and this Agreement constitutes
the valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium and similar laws affecting the rights and remedies
of creditors generally and to general principles of equity.
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3.4 ISSUANCE AND SALE OF SHARES. The issuance and sale of the Shares by
the Company has been duly authorized and the Shares have been duly
reserved for issuance by all necessary corporate action on the part of the
Company, and the Shares, when issued and delivered against payment
therefor, will be validly issued, fully paid and nonassessable. Based in
part on the representations made by or on behalf of each Purchaser in
Section 4 of this Agreement, the offer, issuance and sale of the Shares
pursuant to this Agreement are exempt from registration under the
Securities Act. The issued shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and are owned by the Company free and clear
of any perfected security interest, or any other security interests,
liens, encumbrances, equities or claims. No preemptive rights or other
rights to subscribe for or purchase exist with respect to the issuance and
sale of the Shares by the Company pursuant to this Agreement. No
stockholder of the Company has any right to request or require the Company
to register the sale of any shares owned by such stockholder under the
Securities Act of 1933, as amended (the "Securities Act"), in the
Registration Statement (as hereinafter defined). No further approval or
authority of the stockholders or the Board of Directors of the Company
will be required for the issuance and sale of the Shares to be sold by the
Company hereunder.
3.5 NO BREACH. The execution, delivery and performance of this Agreement
by the Company will not (a) conflict with or violate any provision of the
Certificate of Incorporation, as amended, or By-laws of the Company, (b)
require on the part of the Company any filing with, or permit,
authorization, consent or approval of, any governmental entity, (c) result
in breach of, constitute a default under, or require any notice, consent
or waiver under, any contract, agreement or other instrument to which the
Company is a party or by which it is bound (other than any consent or
waiver which has already been obtained) or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company,
excluding from subparagraphs (a)-(d) such matters as would not in the
aggregate have a Material Adverse Effect or a material adverse effect upon
the transactions contemplated hereby. No consent, approval, authorization
or other order of any court, regulatory body, administrative agency or
other governmental body is required for the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, except for compliance with the Blue Sky laws and
federal securities laws applicable to the offering of the Shares.
3.6 SEC REPORTS. The Company has previously furnished to the Purchasers
complete and accurate copies, as amended or supplemented, of its (a)
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998,
as filed with the SEC, (b) all proxy statements relating to the Company's
meetings of stockholders held or currently scheduled since December 31,
1998 and (c) all other publicly available reports filed by the Company
with the SEC under the
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Securities Exchange Act of 1934, as amended (the "Exchange Act"), since
December 31, 1998 and through the date hereof (such reports are
collectively referred to herein as the "Company Reports"). The Company
Reports constitute all of the documents required to be filed by the
Company under Section 13, 14 or 15(d) of the Exchange Act with the SEC
since January 1, 1999. As of their respective dates, the Company Reports
did not, and as of the date hereof do not, contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.7 FINANCIAL STATEMENTS. The audited financial statements and unaudited
interim financial statements of the Company included in the Company
Reports (a) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, (b) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby
(except as may be indicated therein or in the notes thereto), (c) fairly
present the consolidated financial condition, results of operations and
cash flows of the Company as of the respective dates thereof and for the
periods referred to therein and (d) are consistent with the books and
records of the Company.
3.8 OTHER INFORMATION. The Company has provided to and discussed with the
Purchaser such information as the Purchaser has requested regarding the
current operations, financial condition (including the amount of available
cash) and plans of the Company.
3.9 MATERIAL ADVERSE CHANGE. Since December 31, 1998, and except as
disclosed by the Company in the Company Reports or otherwise in writing to
the Purchasers, (i) there has not been any material adverse change in the
operations or financial condition of operations of the Company, except
that the Company continues to incur operating losses, (ii) neither the
Company nor its subsidiaries have incurred any liabilities or obligations,
indirect or contingent, of such a nature that would require inclusion on a
balance sheet under generally accepted accounting principles (nor, to the
Company's knowledge, any other liabilities or obligations) or entered into
any verbal or written agreements or other transactions which are not in
the ordinary course of business or which could reasonably be expected to
result in a Material Adverse Effect; (iii) neither the Company nor its
subsidiaries have sustained any material loss or interference with its
businesses or properties from fire, flood, windstorm, accident or other
calamity not covered by insurance; (iv) neither the Company nor its
subsidiaries have paid or declared any dividends or other distributions
with respect to its capital stock and neither the Company nor its
subsidiaries is in default in the payment of principal or interest on any
outstanding debt obligations; and (v) there has not been any change in the
capital stock of the Company other than the sale of the Shares hereunder
and shares or options issued pursuant to exercise of outstanding
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warrants or employee and director stock option plans approved by the
Company's Board of Directors. There is no fact which the Company has not
disclosed to the Purchasers and their counsel in writing and of which the
Company is aware which has, had or is reasonably likely to have a Material
Adverse Effect.
3.10 ACTIONS AND PROCEEDINGS. There are no actions, suits or claims or
legal or arbitral proceedings or governmental inquiries or investigations,
pending, or, to the Company's knowledge, threatened against the Company,
which question the validity of this Agreement or the right of the Company
to enter into it, or which might result in a Material Adverse Effect.
3.11 PROPERTIES. Each of the Company and its subsidiaries has good and
marketable title to all the properties and assets reflected as owned by
them in the consolidated financial statements included in the Company's
Annual Report on Form 10-KS B for the fiscal year ended December 31, 1998,
subject to no lien, mortgage, pledge, charge or encumbrance of any kind
except (i) those, if any, reflected in such consolidated financial
statements, or (ii) those which are not material in amount and do not
materially and adversely affect the use made and intended to be made of
such property by the Company or its subsidiaries. Each of the Company and
its subsidiaries holds its leased properties under valid and binding
leases, with such exceptions as are not materially significant in relation
to the business of the Company and its subsidiaries, taken as a whole.
Each of the Company and its subsidiaries owns or leases all such
properties as are necessary to its operations as now conducted.
3.12 INTELLECTUAL PROPERTY. The Company and its subsidiaries own or have
obtained valid licenses, options or rights to use for the material
inventions, patent applications, patents, trademarks (both registered and
unregistered), tradenames, copyrights and trade secrets necessary for the
conduct of the Company's and its subsidiaries' respective businesses as
currently conducted and as the Company and its subsidiaries contemplate
conducting in all material respects (collectively, the "Intellectual
Property"). Neither the Company nor any of its subsidiaries has received
notice of any third parties who have any ownership rights to any
Intellectual Property that is owned by, or has been licensed to, the
Company or its subsidiaries that would preclude the Company or its
subsidiaries from conducting their respective businesses as currently
conducted and as the Company and its subsidiaries contemplate conducting
in all material respects. To the Company's knowledge, there are currently
no sales of products that would constitute an infringement by third
parties of any material Intellectual Property owned, licensed or optioned
by the Company or its subsidiaries. There is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by
others challenging the rights of the Company or its subsidiaries in or to
any material Intellectual Property owned, licensed or optioned by the
Company or its subsidiaries. There is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or
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scope of any material Intellectual Property owned, licensed or optioned by
the Company or its subsidiaries. There is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others that the
Company or its subsidiaries infringe or otherwise violate any patent,
trademark, copyright, trade secret or other proprietary right of others as
would reasonably be expected to result in a Material Adverse Effect.
3.13 COMPLIANCE. Neither the Company nor any of its subsidiaries has been
advised, and has no reason to believe, that it is not conducting its
business in compliance with all applicable laws, rules and regulations of
the jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state and federal environmental laws and
regulations, except where failure to be so in compliance would not
individually or in the aggregate have a Material Adverse Effect.
3.14 TAXES. Each of the Company and its subsidiaries has filed or obtained
filing extensions with respect to all federal, state, local and foreign
income and franchise tax returns material to the Company and the
subsidiaries, taken as a whole, and has paid or accrued all taxes shown as
due thereon, and neither the Company nor any of its subsidiaries has
knowledge of a tax deficiency which has been asserted or threatened
against it which would reasonably be expected to have a Material Adverse
Effect.
3.15 TRANSFER TAXES. On the Closing Date, all stock transfers or other
taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares to be sold to the
Purchasers hereunder will be, or will have been, fully paid or provided
for by the Company and all laws imposing such taxes will be or will have
been fully complied with.
3.16 INSURANCE. Each of the Company and its subsidiaries maintains
insurance of the type and in the amount that the Company reasonably
believes is adequate for its business, including, but not limited to,
insurance covering all real and personal property owned or leased by the
Company or its subsidiaries against risks customarily insured against by
similarly situated companies, all of which insurance is in full force and
effect.
3.17 CONTRIBUTIONS. Neither the Company at any time since its
incorporation nor its subsidiaries at any time since they were acquired or
formed by the Company have, directly or indirectly, (i) made any unlawful
contribution to any candidate for public office, failed to disclose fully
where required by law any contribution in violation of law, or (ii) made
any payment to any federal or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other
than payments required or permitted by the laws of the United States or
any jurisdiction thereof and in each case except for instances that would
not have a Material Adverse Effect.
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3.18 YEAR 2000 COMPLIANCE. The Company has reviewed its operations to
evaluate the extent to which the business or operations of the Company and
its subsidiaries will be affected by the Year 2000 Problem (as defined
below). As a result of such review, the Company has no reason to believe,
and does not believe, that the Year 2000 Problem will have a Material
Adverse Effect. The "Year 2000 Problem" as used herein means any
significant risk that the Company's computer hardware or software used in
the receipt, transmission, processing, manipulation, storage, retrieval,
retransmissions or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of
dates or time periods occurring after December 31, 1999, function at least
as effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
3.19 INVESTMENT COMPANY. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of
1940, as amended.
3.20 OFFERING MATERIALS. The Company has not distributed and will not
distribute prior to the Closing Date any offering material in connection
with the offering and sale of the Shares other than the Company Reports.
The Company has not nor will it take any action to sell, offer for sale or
solicit offers to buy any securities of the Company which would reasonably
be expected to cause the offer or sale of the Shares, as contemplated by
this Agreement, to be within the provisions of Section 5 of the Securities
Act.
3.21 RELATED PARTY TRANSACTIONS. No transaction has occurred between or
among the Company and its affiliates, officers or directors or any
affiliate or affiliates of any such officer or director that is required
to be described in the Company's Reports and other filings under the
Securities Exchange Act of 1934 (the "Exchange Act") that is not so
described.
3.22 BOOKS AND RECORDS. The books, records and accounts of the Company
accurately and fairly reflect, in reasonable detail, the transactions in,
and dispositions of, the assets of, and the results of operations of, the
Company, all to the extent required by generally accepted accounting
principles. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
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4. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser, severally and not jointly, represents and warrants to the
Company as follows:
4.1 INVESTMENT. Purchaser (a) is acquiring the Shares solely for its own
account for investment purposes and not with a view to, or for sale in
connection with, any distribution thereof, nor with any present intention
of distributing or selling the same other than pursuant to an effective
registration statement under the Securities Act, (b) has no present or
contemplated agreement, undertaking, arrangement, obligation, indebtedness
or commitment providing for the disposition thereof and (c) is fully aware
that in agreeing to sell the Shares and entering into this Agreement, the
Company is relying upon the truth and accuracy of the representations and
warranties contained herein. Each Purchaser has made its own investment
decision without reliance upon any representation, warranty or covenant
from any other Purchaser.
4.2 AUTHORITY FOR AGREEMENT. Purchaser has full power and authority to
execute, deliver and perform its obligations under this Agreement in
accordance with its terms. Purchaser represents that it has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Company. This Agreement has been duly executed and
delivered by Purchaser and constitutes a valid and binding obligation of
Purchaser, enforceable against such Purchaser in accordance with its
terms.
4.3 INFORMATION. Purchaser or its attorney-in-fact (a) has reviewed the
representations of the Company contained in this Agreement and the Company
Reports and (b) has had the opportunity to make inquiry concerning the
Company and its business and personnel. The officers of the Company have
made available to each such person any and all written information that it
has requested and have answered to each such person's satisfaction all
inquiries made.
4.4 ACCREDITED INVESTOR. Purchaser is an "Accredited Investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act.
Purchaser, either alone or with its purchaser representative or
attorney-in-fact, has sufficient knowledge and experience in investing in
companies similar to the Company so as to be able to evaluate the risks
and merits of its investment in the Company and is able financially to
bear the risks thereof, including a complete loss of its entire
investment.
4.5 TRANSFER OF SHARES. Purchaser will not, directly or indirectly, offer,
sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Shares
except in compliance with the Securities Act, the rules and regulations
promulgated thereunder, and applicable state securities laws.
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4.6 PURCHASER REPRESENTATIVES. In the event that any signatory hereto is
signing as attorney-in-fact for one or more advisory client Purchaser(s),
as indicated by checking the box above the signature for the Purchaser at
the end hereof, the undersigned signatory represents and warrants that the
undersigned has been duly appointed as attorney-in-fact of such
Purchaser(s), that the undersigned has sufficient discretionary authority
to enter into this Agreement on behalf of such Purchaser(s), and that each
of the representations and warranties contained in this Section 4 are true
and correct with respect to each of such Purchaser(s). Except as
specifically disclosed in writing prior to the date hereof to the Company,
the Purchaser is not an affiliate of the Company, a broker-dealer or
affiliated with a broker-dealer.
5. COVENANTS. The Company and the Purchasers agree as follows:
5.1 INFORMATION TO BE FURNISHED. The Company shall deliver to the
Purchaser with reasonable promptness, such material notices, information
and data with respect to the Company as the Company files with the SEC and
delivers to all holders of its Common Stock.
5.2 REGISTRATION OF SHARES. The Company will, at its expense, within 20
business days after the Closing Date file with the SEC a registration
statement on Form S-3, or if Form S-3 is unavailable to the Company, on
Form 5-1, to register, under the Securities Act, the resale of the Shares
by the holders thereof (the "Registration Statement"), and will use its
reasonable best efforts to cause such Registration Statement to become
effective as promptly as possible (including by filing when and as
appropriate amendments and supplements thereto and to the related
prospectus, and by making all required "Blue Sky" filings, if any) and to
remain effective continuously until the earlier of (a) two years from the
Closing Date, (b) such time as all of the Shares held by Purchaser may be
sold pursuant to Rule 144 promulgated under the Securities Act on a single
day without regard to volume limitations or (c) such time as all Shares
have been sold. After the Registration Statement is declared effective
under the Securities Act, the Company will furnish holders of Shares (and
to each underwriter, if any, of the Shares) with such number of copies of
the prospectus included in the Registration Statement as the holders may
reasonably request to facilitate the resale of the Shares. Each Purchaser
will cooperate in promptly providing all information or certificates
required from it in order to be included as a selling stockholder on such
Registration Statement. In the event that the Company shall fail to cause
the Registration Statement to be declared effective within 90 days after
the Closing Date, the Company shall pay to each holder of Shares, as
compensation therefor, a cash payment equal to 1% of the product obtained
by multiplying the Purchase Price and the number of Shares held by such
holder. In addition, if the Registration Statement is not declared
effective within 180 days after the Closing Date, the Company shall pay to
each holder of Shares
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an additional cash payment equal to 2% of the product obtained by
multiplying the Purchase Price and the number of Shares held by such
holder for each 30 day-period or part thereof that effectiveness of the
Registration Statement is delayed beyond 180 days after the Closing Date.
After the Closing Date, the Company shall not file or maintain any
registration statement with the Securities and Exchange Commission under
the Securities Act prior to the time it files the Registration Statement.
The Company, upon reasonable request of a Purchaser, will meet with such
Purchaser or a representative thereof at the Company's headquarters to
discuss information relevant for disclosure in the Registration Statement
covering the Shares, subject to appropriate confidentiality limitations as
the Company may require.
5.3 PURCHASER SALES PROCEDURES.
(a) Each Purchaser agrees that such Purchaser will not effect any
disposition of the Shares that would constitute a sale within the meaning
of the Securities Act, except as contemplated in the Registration
Statement, and that the Purchaser will promptly notify the Company of any
changes in the information set forth in the Registration Statement
regarding the Purchaser or such Purchaser's plan of distribution set forth
in such Registration Statement.
(b) For so long as the prospectus delivery requirement under the
Securities Act is in effect, the Purchaser shall not make any sale of the
Shares without complying with such requirement.
(c) Notwithstanding the provisions of Section 5.2, each Purchaser
acknowledges that there may occasionally be times when the Company must
suspend the use of the prospectus forming a part of the Registration
Statement if there then exists material, non-public information regarding
the Company, of such a nature that the public disclosure of which would
not, in the reasonable opinion of the Company, be appropriate at that
time; provided, however, that the Company shall not suspend the use of the
prospectus for a period or periods that, in the aggregate, exceed 90 days
in any twelve-month period. The Purchaser hereby covenants that, prior to
selling any Shares pursuant to the Registration Statement, the Purchaser
shall notify the Company in writing of its intent to sell Shares. The
Company shall have the two business days immediately following the date of
delivery of such notice during which to notify the Purchaser of a
suspension of the prospectus forming a part of the Registration Statement.
During this two-day period, the Purchaser will not sell any Shares. If the
Company notifies the Purchaser that use of the prospectus has been
suspended, the Purchaser will not sell any Shares pursuant to said
prospectus until such time that the Company gives the Purchaser notice
(all such notices shall be given by the Company as promptly as practicable
following the suspension notice) that the Purchaser may thereafter effect
sales pursuant to said prospectus, from which time the Purchaser may sell
shares for a period of ten business days without complying
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with the pre-sale notification requirements set forth above. The Purchaser
further covenants to promptly notify the Company following the sale of all
of the Purchaser's Shares.
5.4 LISTING OF SHARES. The Company will, within twenty business days after
the Closing Date, file with The Nasdaq Stock Market, Inc. a Notification
of Listing of Additional Shares (together with the required listing fee),
thereby listing the Shares on the NASDAQ National Market.
5.5 MARKET STAND-OFF. If requested by the managing underwriters in an
underwritten offering composed primarily of newly issued shares of Common
Stock, the Purchasers, or any assignees thereof, will not sell any of the
Shares for up to 90 days (as requested by such underwriters) following
such public.
6. INDEMNIFICATION AND CONTRIBUTION.
6.1 INDEMNIFICATION BY THE COMPANY. The Company will indemnify and hold
harmless each Purchaser, and each other person, if any, who controls or is
an affiliate of such Purchaser within the meaning of the Securities Act or
the Exchange Act, against any losses, claims, damages or liabilities,
joint or several, to which such Purchaser, controlling person or affiliate
may become subject under the Securities Act, the Exchange Act, state
securities or Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement under which the
Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or
any amendment or supplement to such Registration Statement, or arise out
of or are based upon the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse such Purchaser and
each such controlling person and affiliate for any legal or any other
expenses reasonably incurred by such Purchaser, controlling person or
affiliate in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue
statement or omission made in such Registration Statement, preliminary
prospectus or final prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company,
in writing, by or on behalf of such Purchaser, controlling person or
affiliate specifically for use in the preparation thereof.
6.2 INDEMNIFICATION BY THE PURCHASERS. Each Purchaser, severally and not
jointly, will indemnify and hold harmless the Company, each of its
directors and officers and each person, if any, who controls the Company
12
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages or liabilities, joint or several, to which the
Company, such directors and officers or controlling person may become
subject under the Securities Act, Exchange Act, state securities or Blue
Sky laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement under which the Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based
upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, but only to the extent the statement or omission was made in
reliance upon and in conformity with information relating to such
Purchaser furnished in writing to the Company by or on behalf of such
Purchaser specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement; provided,
however, that the obligations of each Purchaser hereunder shall be limited
to an amount equal to the net proceeds to such Purchaser of Shares sold in
connection with such registration.
6.3 INDEMNIFICATION PROCEDURES. Each party entitled to indemnification
under this Section 6 (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any claim as
to which indemnity may be sought, and shall permit the Indemnifying Party
to assume the defense of any such claim or any litigation resulting
therefrom; provided, that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably withheld);
and, provided further, that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 6, unless and except to the extent that the
Indemnifying Party is prejudiced by the failure of the Indemnified Party
to provide timely notice. The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying
Party shall pay such expense if representation of such Indemnified Party
by the counsel retained by the Indemnifying Party would be inappropriate
in the judgment of the Indemnified Party due to actual or potential
differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect of such claim or litigation, and no
Indemnified Party shall consent to entry of any judgment or
13
settle such claim or litigation without the prior written consent of the
Indemnifying Party.
6.4 CONTRIBUTION. In order to provide for just and equitable contribution
to joint liability under the Securities Act in any case in which either
(a) any Purchaser, or any controlling person of any such Purchaser, makes
a claim for indemnification pursuant to this Section 6 but it 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 this Section 6
provides for indemnification in such case, or (b) contribution under the
Securities Act may be required on the part of any such Purchaser or any
such controlling person in circumstances for which indemnification is
provided under this Section 6; then, in each such case, the Company and
such Purchaser will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others)
in such proportions so that such Purchaser is responsible for the portion
represented by the percentage that the public offering price of its Shares
offered by the Registration Statement bears to the public offering price
of all securities offered by such Registration Statement, and the Company
is responsible for the remaining portion; provided, however, that, in any
such case, (x) no such Purchaser will be required to contribute any amount
in excess of the net proceeds to it of all Shares sold by it pursuant to
such Registration Statement and (y) no person or entity guilty of
fraudulent misrepresentation, within the meaning of Section 11(f) of the
Securities Act, shall be entitled to contribution from any person or
entity who is not guilty of such fraudulent misrepresentation.
7. RIGHT OF FIRST REFUSAL.
7.1 LIMITATION ON FUTURE ISSUANCES. For a period of one year from the date
hereof, the Company shall not issue, sell or exchange, or agree to issue,
sell or exchange (a) any shares of its Common Stock or (b) any option,
warrant or other right that is exercisable for, or convertible into,
shares of its Common Stock (collectively, "Offered Securities"), unless in
each such case the Company shall have first complied with this Section 7.
7.2 PROCEDURE.
(a) The Company shall deliver to each Purchaser a written notice of
any proposed or intended issuance, sale or exchange of Offered Securities
(the "Offer"), which Offer shall (i) identify and describe the Offered
Securities, (ii) describe the price and other terms upon which they are to
be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged and (iii) offer to issue and
sell to or exchange with such Purchaser that number of the Offered
Securities which represents the same percentage of the
14
total Offered Securities as the number of Shares held by such Purchaser
represents of the total number of shares of Common Stock outstanding (the
"Basic Amount"). Each Purchaser shall have the right, for a period of 10
business days following delivery of the Offer, to accept the Offer in the
manner set forth below. The Offer by its term shall remain open and
irrevocable for such 10-business day period. To accept an Offer, in whole
or in part, a Purchaser must deliver a written notice to the Company prior
to the end of the 10-business day period of the Offer, setting forth the
portion of such Purchaser's Basic Amount that such Purchaser elects to
purchase (the "Notice of Acceptance").
(b) The Company shall have 60 days from the expiration of the
10-business day period set forth above to issue, sell or exchange all or
any part of such Offered Securities as to which a Notice of Acceptance has
not been given by the Investors, but only upon terms and conditions which
are not more favorable, in the aggregate, to the acquiring person or
persons or less favorable to the Company than those set forth in the
Offer.
(c) Any Offered Securities not acquired by the Purchasers or other
persons in accordance with Section 7.2 may not be issued, sold or
exchanged until they are again offered to the Purchasers under the
procedures specified in this Section 7.
7.3 EXCLUDED ISSUANCES. The rights of the Purchasers under this Section 7
shall not apply to:
(a) Common Stock issued as a stock dividend to holders of Common
Stock or upon any subdivision or combination of shares of Common Stock;
(b) the issuance of shares of Common Stock, or options exercisable
therefor, to employees, consultants, directors, equipment lessors or banks
(in commercial bank financing arrangements) or similar institutional
credit financing sources;
(c) securities issued solely in consideration for the acquisition
(whether by merger or otherwise) by the Company or any of its subsidiaries
of stock or assets of any other entity, or in connection with a licensing
or strategic partnering transaction approved by the Board of Directors of
the Company (and the stockholders, if required under applicable law or
regulation); or
(d) shares of Common Stock sold by the Company in an underwritten
public offering pursuant to an effective registration statement under the
Securities Act.
15
8. MISCELLANEOUS.
8.1 ASSIGNABILITY. This Agreement, and the rights and obligations of the
Purchaser hereunder, may not be assigned in whole or in part by Purchaser
to any person or entity other than to an affiliate of such Purchaser or
its ultimate parent entity.
8.2 CONFIDENTIALITY. Purchaser agrees that it will keep confidential and
will not disclose or divulge any confidential, proprietary or secret
information which Purchaser may obtain from the Company pursuant to this
Agreement, unless such information is known, or until such information
becomes known, to the public; provided, however, that Purchaser may
disclose such information (a) to its attorneys, accountants, consultants
and other professionals to the extent necessary to obtain their services
in connection with its investment in the Company, (b) to any prospective
purchaser of any Shares from a Purchaser as long as such prospective
purchaser agrees in writing to be bound by the provisions of this Section
or (c) to any affiliate of a Purchaser; subject, in each case, to the
agreement of such party to keep such information confidential as set forth
herein.
8.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements,
representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the closing of the
transactions contemplated hereby.
8.4 NOTICES. All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be delivered by hand,
sent via a reputable nationwide overnight courier service, transmitted via
facsimile with hard copy via U.S. mail, or mailed by first class certified
or registered mail, return receipt requested, postage prepaid:
If to the Company, at White Pine Software, Inc., 000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxx Xxxxxxxxx 00000, Attention: Chief Executive Officer, or
at such other address as may have been furnished in writing by the
Company to the Purchaser, with a copy to: Xxxx X. Xxxxxxx, Esq.,
Xxxxx, Xxxx & Xxxxx LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000; or
If to any Purchaser, at its address as indicated on Exhibit A below,
or at such other address or addresses as may have been furnished in
writing by the Purchaser to the Company.
16
Notices provided in accordance with this Section 8.4 shall be deemed
delivered upon personal delivery, one business day after being sent via a
reputable nationwide overnight courier service for next business day
delivery, or two business days after deposit in the mail and on the next
business day following transmittal via facsimile.
8.5 EXPENSES. The Company and each Purchaser each agree to indemnify and
save the other harmless from and against any and all claims, liabilities
or obligations with respect to brokerage or finders' fees or commissions
in connection with the transactions contemplated by this Agreement
asserted by any person on the basis of any agreement, statement or
representation alleged to have been made by such indemnifying party. The
Company shall pay its own expenses including attorneys' fees.
8.6 ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
8.7 AMENDMENT AND WAIVER. Except as otherwise expressly set forth in this
Agreement, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), with the
written consent of the Company and of Purchasers holding in the aggregate
not less than two-thirds (67%) of all the Shares then outstanding and held
by the Purchasers. Any amendment or waiver effected in accordance with
this Section 6.7 shall be binding upon each holder of any Shares. No
waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition
or provision.
8.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which shall be one and the same document.
8.9 SEPARATE AGREEMENT WITH EACH PURCHASER. While this Agreement is being
executed in multiple counterparts with multiple Purchasers, the
transaction with each Purchaser shall be considered a separate transaction
and none of the rights or obligations of any Purchaser shall be the in any
way affected by actions of any other Purchasers except to the extent that
Purchasers are required by the terms hereof to act as a group.
8.10 HEADINGS. The section headings are for the convenience of the parties
and in no way alter, modify, amend, limit or restrict the contractual
obligations of the parties.
17
8.11 ENFORCEABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
8.12 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
the choice of law provisions thereof.
* * *
18
Executed as of the date first written above.
WHITE PINE SOFTWARE, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
PURCHASER:
Shares Purchased Dollars Invested
---------------- ----------------
325,521 $5,000,002.56
/s/ Xxxxx Xxxxxxx
---------------------------
(Purchaser's name here)
Altamira Management Ltd. as Agent for the Accounts listed in Exhibit A
Xxxxx Xxxxxxx, Supervisor Compliance
/ / Check this box to the undersigned is acting as attorney-in-fact for certain
advisory client Purchasers with respect to which it has discretionary authority.
By:________________________________
Name:______________________________
Title:_____________________________
Date:______________________________
Address for delivery of shares:
___________________________________
___________________________________
Contact Information
Xxxxx Xxxxxxx
ph (000) 000-0000 fx (000) 000-0000
e-mail: xxxxxxxx@xxxxxxxx.xxx
19
EXHIBIT A
ALTAMIRA MANAGEMENT LTD. SHARE
------------------------ -----
ACCOUNT# QUANTITY NET AMOUNT REGISTRATION INSTRUCTION DELIVERY INSTRUCTIONS
-------- -------- ---------- ------------------------ ---------------------
31 162,760 $2,499,993.60 JAYVEE & CO A/C YARF 1209002 CIBC MELLON GLOBAL SECURITIES
CIBC MELLON GLOBAL SECURITES COMMERCE COURT WEST,
000 XXX XXXXXX, X0 XXX 0 SECURITIES LEVEL
TORONTO ONT. M5H 4A6 XXXXXXX, XXX X0X 0X0
ATTN: XXXXXXX XXXXXXXX
360 99,886 $1,534,248.96 JAYVEE & CO A/C YARF 1203002 CIBC MELLON GLOBAL SECURITIES
CIBC MELLON GLOBAL SECURITES COMMERCE COURT WEST,
000 XXX XXXXXX, X0 XXX 0 SECURITIES LEVEL
TORONTO ONT. M5H 4A6 XXXXXXX, XXX X0X 0X0
ATTN: XXXXXXX XXXXXXXX
408 62,875 $965,760.00 ROYAL TRUST CORP. OF CANADA IN ROYAL TRUST CORP OF CANADA
TRUST FOR ACCOUNT 00000000 XXXXX XXXX XXXXX, 000 XXX XX.
ROYAL BANK PLAZA 000 XXXXX XXXXX, XXX XXXXX
XXX XXXXXX XXXXXXX TORONTO, ONT. M5J 2J5
XXX X0X 0X0 ATTN: XXXXXX
XXXXXXX
TOTALS 325,521 $5,000,002.56
Exhibit 10.11(b)
STOCK PURCHASE AGREEMENT
This Agreement dated as of December 31, 1999 is entered into by and among
White Pine Software, Inc., a Delaware corporation (the "Company"), and each
entity which executes a counterpart to this Agreement and is listed on Exhibit A
(each referred to herein as a "Purchaser," and collectively referred to herein
as the "Purchasers").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. PURCHASE AND SALE OF SHARES.
1.1 AUTHORIZATION. The Company has duly authorized the sale and issuance,
pursuant to the terms of this Agreement, of an aggregate of 325,521 shares
(the "Shares") of its common stock, $0.01 par value per share ("Common
Stock").
1.2 PURCHASE AND SALE OF SHARES. Subject to the terms and conditions of
this Agreement, each Purchaser agrees to purchase and the Company agrees
to sell, that number of Shares indicated opposite the Purchaser's name on
Exhibit A, at a purchase price equal to $15.36 per share (the "Purchase
Price").
1.3 CLOSING. The Closing of the purchase and sale of the Shares
contemplated by this Agreement (the "Closing") shall take place at the
offices of Xxxxx, Xxxx & Xxxxx LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 at 12 noon EST, on December 31, 1999, or at such other
place and time as mutually agreed by the Company and the Purchasers (the
"Closing Date"). At the Closing, the Company shall deliver to each
Purchaser a certificate for the number of Shares for which that Purchaser
has subscribed against payment of the purchase price therefore. Each
Purchaser shall remit the purchase price for the Shares being purchased at
the Closing by wire transfer of same-day funds to an account designated in
writing by the Company.
1.4 USE OF PROCEEDS. The Company will use the proceeds from the sale of
the Shares for working capital and other general corporate purposes.
2. CONDITIONS TO CLOSING.
The obligation of the Purchasers to purchase and pay for the Shares shall
be subject to the accuracy of the representations and warranties made by the
Company herein and to the following conditions (any of which may be waived by a
Purchaser, acting individually, in its sole discretion, as to such Purchaser's
own Shares, but not as to the Shares to be purchased by any other Purchaser):
2.1 DELIVERIES BY THE COMPANY. The Company shall deliver to the Purchaser
or its agent:
(a) a certificate, as of recent date, as to the legal existence and
corporate good standing of the Company issued by the Secretary of State of
the State of Delaware;
(b) a copy of the Certificate of Incorporation of the Company, as
amended and in effect as of the Closing Date, certified by the Secretary
of State of the State of Delaware;
(c) a copy of the resolutions of the Board of Directors of the
Company authorizing and approving this Agreement and the issuance of the
Shares hereby, certified by the Secretary of the Company;
(d) a copy of the By-laws of the Company, certified by the Secretary
of the Company as in effect as of the Closing Date;
(e) an opinion of Xxxxx, Xxxx & Xxxxx LLP, counsel to the Company,
in substantially the form attached hereto as Exhibit B; and
(f) an executed lock-up agreement from each officer and director of
the Company in substantially the form attached hereto as Exhibit C.
3. REPRESENTATIONS OF THE COMPANY. Except as set forth in the applicable section
of the Disclosure Schedule attached hereto, the Company hereby represents and
warrants to each Purchaser as follows as of the date hereof and as of Closing.
3.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. The Company is duly qualified or otherwise authorized
to transact business as a foreign corporation and is in good standing in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on the results of operations, business or financial
condition of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"). Each of the Company's subsidiaries is a
corporation duly organized, validly existing an din good standing under
the laws of its jurisdiction of incorporation. Each of the
2
Company's subsidiaries is duly qualified or otherwise authorized to
transact business as a foreign corporation and is in good standing in each
jurisdiction in which the failure to so qualify would have a Material
Adverse Effect.
3.2 CAPITALIZATION. The Company is authorized to issue (a) 30,000,000
shares of Common Stock, and (b) 5,000,000 shares of Preferred Stock, $0.01
par value per share. As of December 22, 1999, there were issued and
outstanding [10,702,213] shares of Common Stock; no shares of Preferred
Stock had been issued or were outstanding; and options, warrants or rights
to purchase an aggregate of approximately 1,679,016 shares of Common Stock
had been granted by the Company and were outstanding. The Common Stock and
the Preferred Stock of the Company have the voting powers, designations,
preferences, rights and qualifications, and limitations or restrictions
set forth in the Certificate of Incorporation and amendments thereto. All
of the issued and outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws,
were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities, and conform in all
material respects to the description thereof contained in the Company's
Registration Statement on Form 8-A and the Company Reports (as hereinafter
defined). Except as disclosed in the first sentence of this section, the
Company does not have outstanding any options or warrants to purchase, or
any preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any shares of
capital stock of any subsidiary and there is no commitment, plan or
arrangement to issue, any securities or obligations convertible into any
shares of capital stock of the Company or its subsidiaries or any such
options, rights convertible securities or obligations. The description of
the Company's capital stock, stock bonus and other stock plans or
arrangements and the options or other rights granted and exercised
thereunder, contained in the Company's Registration Statement on Form 8-A
and the Company Reports accurately and fairly presents the information
required to be shown with respect to such capital stock, plans,
arrangements, options and rights (except for issuances and exercises of
options in the ordinary course of business).
3.3 AUTHORITY FOR AGREEMENT. The execution, delivery and performance of
this Agreement by the Company has been duly authorized by all necessary
corporate action on the part of the Company, and this Agreement has been
duly executed and delivered by the Company, and this Agreement constitutes
the valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium and similar laws affecting the rights and remedies
of creditors generally and to general principles of equity.
3
3.4 ISSUANCE AND SALE OF SHARES. The issuance and sale of the Shares by
the Company has been duly authorized and the Shares have been duly
reserved for issuance by all necessary corporate action on the part of the
Company, and the Shares, when issued and delivered against payment
therefor, will be validly issued, fully paid and nonassessable. Based in
part on the representations made by or on behalf of each Purchaser in
Section 4 of this Agreement, the offer, issuance and sale of the Shares
pursuant to this Agreement are exempt from registration under the
Securities Act. The issued shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and are owned by the Company free and clear
of any perfected security interest, or any other security interests,
liens, encumbrances, equities or claims. No preemptive rights or other
rights to subscribe for or purchase exist with respect to the issuance and
sale of the Shares by the Company pursuant to this Agreement. No
stockholder of the Company has any right to request or require the Company
to register the sale of any shares owned by such stockholder under the
Securities Act of 1933, as amended (the "Securities Act"), in the
Registration Statement (as hereinafter defined). No further approval or
authority of the stockholders or the Board of Directors of the Company
will be required for the issuance and sale of the Shares to be sold by the
Company hereunder.
3.5 NO BREACH. The execution, delivery and performance of this Agreement
by the Company will not (a) conflict with or violate any provision of the
Certificate of Incorporation, as amended, or By-laws of the Company, (b)
require on the part of the Company any filing with, or permit,
authorization, consent or approval of, any governmental entity, (c) result
in breach of, constitute a default under, or require any notice, consent
or waiver under, any contract, agreement or other instrument to which the
Company is a party or by which it is bound (other than any consent or
waiver which has already been obtained) or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company,
excluding from subparagraphs (a)-(d) such matters as would not in the
aggregate have a Material Adverse Effect or a material adverse effect upon
the transactions contemplated hereby. No consent, approval, authorization
or other order of any court, regulatory body, administrative agency or
other governmental body is required for the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, except for compliance with the Blue Sky laws and
federal securities laws applicable to the offering of the Shares.
3.6 SEC REPORTS. The Company has previously furnished to the Purchasers
complete and accurate copies, as amended or supplemented, of its (a)
Annual Report on Form 10-KSB for the fiscal year ended December 31,1998,
as filed with the SEC, (b) all proxy statements relating to the Company's
meetings of stockholders held or currently scheduled since December 31,
1998 and (c) all other publicly available reports filed by the Company
with the SEC under the
4
Securities Exchange Act of 1934, as amended (the "Exchange Act"), since
December 31, 1998 and through the date hereof (such reports are
collectively referred to herein as the "Company Reports"). The Company
Reports constitute all of the documents required to be filed by the
Company under Section 13, 14 or 15(d) of the Exchange Act with the SEC
since January 1, 1999. As of their respective dates, the Company Reports
did not, and as of the date hereof do not, contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.7 FINANCIAL STATEMENTS. The audited financial statements and unaudited
interim financial statements of the Company included in the Company
Reports (a) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, (b) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby
(except as may be indicated therein or in the notes thereto), (c) fairly
present the consolidated financial condition, results of operations and
cash flows of the Company as of the respective dates thereof and for the
periods referred to therein and (d) are consistent with the books and
records of the Company.
3.8 OTHER INFORMATION. The Company has provided to and discussed with the
Purchaser such information as the Purchaser has requested regarding the
current operations, financial condition (including the amount of available
cash) and plans of the Company.
3.9 MATERIAL ADVERSE CHANGE. Since December 31, 1998, and except as
disclosed by the Company in the Company Reports or otherwise in writing to
the Purchasers, (i) there has not been any material adverse change in the
operations or financial condition of operations of the Company, except
that the Company continues to incur operating losses, (ii) neither the
Company nor its subsidiaries have incurred any liabilities or obligations,
indirect or contingent, of such a nature that would require inclusion on a
balance sheet under generally accepted accounting principles (nor, to the
Company's knowledge, any other liabilities or obligations) or entered into
any verbal or written agreements or other transactions which are not in
the ordinary course of business or which could reasonably be expected to
result in a Material Adverse Effect; (iii) neither the Company nor its
subsidiaries have sustained any material loss or interference with its
businesses or properties from fire, flood, windstorm, accident or other
calamity not covered by insurance; (iv) neither the Company nor its
subsidiaries have paid or declared any dividends or other distributions
with respect to its capital stock and neither the Company nor its
subsidiaries is in default in the payment of principal or interest on any
outstanding debt obligations; and (v) there has not been any change in the
capital stock of the Company other than the sale of the Shares hereunder
and shares or options issued pursuant to exercise of outstanding
5
warrants or employee and director stock option plans approved by the
Company's Board of Directors. There is no fact which the Company has not
disclosed to the Purchasers and their counsel in writing and of which the
Company is aware which has, had or is reasonably likely to have a Material
Adverse Effect.
3.10 ACTIONS AND PROCEEDINGS. There are no actions, suits or claims or
legal or arbitral proceedings or governmental inquiries or investigations,
pending, or, to the Company's knowledge, threatened against the Company,
which question the validity of this Agreement or the right of the Company
to enter into it, or which might result in a Material Adverse Effect.
3.11 PROPERTIES. Each of the Company and its subsidiaries has good and
marketable title to all the properties and assets reflected as owned by
them in the consolidated financial statements included in the Company's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998,
subject to no lien, mortgage, pledge, charge or encumbrance of any kind
except (i) those, if any, reflected in such consolidated financial
statements, or (ii) those which are not material in amount and do not
materially and adversely affect the use made and intended to be made of
such property by the Company or its subsidiaries. Each of the Company and
its subsidiaries holds its leased properties under valid and binding
leases, with such exceptions as are not materially significant in relation
to the business of the Company and its subsidiaries, taken as a whole.
Each of the Company and its subsidiaries owns or leases all such
properties as are necessary to its operations as now conducted.
3.12 INTELLECTUAL PROPERTY. The Company and its subsidiaries own or have
obtained valid licenses, options or rights to use for the material
inventions, patent applications, patents, trademarks (both registered and
unregistered), tradenames, copyrights and trade secrets necessary for the
conduct of the Company's and its subsidiaries' respective businesses as
currently conducted and as the Company and its subsidiaries contemplate
conducting in all material respects (collectively, the "Intellectual
Property"). Neither the Company nor any of its subsidiaries has received
notice of any third parties who have any ownership rights to any
Intellectual Property that is owned by, or has been licensed to, the
Company or its subsidiaries that would preclude the Company or its
subsidiaries from conducting their respective businesses as currently
conducted and as the Company and its subsidiaries contemplate conducting
in all material respects. To the Company's knowledge, there are currently
no sales of products that would constitute an infringement by third
parties of any material Intellectual Property owned, licensed or optioned
by the Company or its subsidiaries. There is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by
others challenging the rights of the Company or its subsidiaries in or to
any material Intellectual Property owned, licensed or optioned by the
Company or its subsidiaries. There is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or
6
scope of any material Intellectual Property owned, licensed or optioned by
the Company or its subsidiaries. There is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others that the
Company or its subsidiaries infringe or otherwise violate any patent,
trademark, copyright, trade secret or other proprietary right of others as
would reasonably be expected to result in a Material Adverse Effect.
3.13 COMPLIANCE. Neither the Company nor any of its subsidiaries has been
advised, and has no reason to believe, that it is not conducting its
business in compliance with all applicable laws, rules and regulations of
the jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state and federal environmental laws and
regulations, except where failure to be so in compliance would not
individually or in the aggregate have a Material Adverse Effect.
3.14 TAXES. Each of the Company and its subsidiaries has filed or obtained
filing extensions with respect to all federal, state, local and foreign
income and franchise tax returns material to the Company and the
subsidiaries, taken as a whole, and has paid or accrued all taxes shown as
due thereon, and neither the Company nor any of its subsidiaries has
knowledge of a tax deficiency which has been asserted or threatened
against it which would reasonably be expected to have a Material Adverse
Effect.
3.15 TRANSFER TAXES. On the Closing Date, all stock transfers or other
taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares to be sold to the
Purchasers hereunder will be, or will have been, fully paid or provided
for by the Company and all laws imposing such taxes will be or will have
been fully complied with.
3.16 INSURANCE. Each of the Company and its subsidiaries maintains
insurance of the type and in the amount that the Company reasonably
believes is adequate for its business, including, but not limited to,
insurance covering all real and personal property owned or leased by the
Company or its subsidiaries against risks customarily insured against by
similarly situated companies, all of which insurance is in full force and
effect.
3.17 CONTRIBUTIONS. Neither the Company at any time since its
incorporation nor its subsidiaries at any time since they were acquired or
formed by the Company have, directly or indirectly, (i) made any unlawful
contribution to any candidate for public office, failed to disclose fully
where required by law any contribution in violation of law, or (ii) made
any payment to any federal or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other
than payments required or permitted by the laws of the United States or
any jurisdiction thereof and in each case except for instances that would
not have a Material Adverse Effect.
7
3.18 YEAR 2000 COMPLIANCE. The Company has reviewed its operations to
evaluate the extent to which the business or operations of the Company and
its subsidiaries will be affected by the Year 2000 Problem (as defined
below). As a result of such review, the Company has no reason to believe,
and does not believe, that the Year 2000 Problem will have a Material
Adverse Effect. The "Year 2000 Problem" as used herein means any
significant risk that the Company's computer hardware or software used in
the receipt, transmission, processing, manipulation, storage, retrieval,
retransmissions or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of
dates or time periods occurring after December 31, 1999, function at least
as effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
3.19 INVESTMENT COMPANY. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of
1940, as amended.
3.20 OFFERING MATERIALS. The Company has not distributed and will not
distribute prior to the Closing Date any offering material in connection
with the offering and sale of the Shares other than the Company Reports.
The Company has not nor will it take any action to sell, offer for sale or
solicit offers to buy any securities of the Company which would reasonably
be expected to cause the offer or sale of the Shares, as contemplated by
this Agreement, to be within the provisions of Section 5 of the Securities
Act.
3.21 RELATED PARTY TRANSACTIONS. No transaction has occurred between or
among the Company and its affiliates, officers or directors or any
affiliate or affiliates of any such officer or director that is required
to be described in the Company's Reports and other filings under the
Securities Exchange Act of 1934 (the "Exchange Act") that is not so
described.
3.22 BOOKS AND RECORDS. The books, records and accounts of the Company
accurately and fairly reflect, in reasonable detail, the transactions in,
and dispositions of, the assets of, and the results of operations of, the
Company, all to the extent required by generally accepted accounting
principles. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
8
4. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser, severally and not jointly, represents and warrants to the
Company as follows:
4.1 INVESTMENT. Purchaser (a) is acquiring the Shares solely for its own
account for investment purposes and not with a view to, or for sale in
connection with, any distribution thereof, nor with any present intention
of distributing or selling the same other than pursuant to an effective
registration statement under the Securities Act, (b) has no present or
contemplated agreement, undertaking, arrangement, obligation, indebtedness
or commitment providing for the disposition thereof and (c) is fully aware
that in agreeing to sell the Shares and entering into this Agreement, the
Company is relying upon the truth and accuracy of the representations and
warranties contained herein. Each Purchaser has made its own investment
decision without reliance upon any representation, warranty or covenant
from any other Purchaser.
4.2 AUTHORITY FOR AGREEMENT. Purchaser has full power and authority to
execute, deliver and perform its obligations under this Agreement in
accordance with its terms. Purchaser represents that it has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Company. This Agreement has been duly executed and
delivered by Purchaser and constitutes a valid and binding obligation of
Purchaser, enforceable against such Purchaser in accordance with its
terms.
4.3 INFORMATION. Purchaser or its attorney-in-fact (a) has reviewed the
representations of the Company contained in this Agreement and the Company
Reports and (b) has had the opportunity to make inquiry concerning the
Company and its business and personnel. The officers of the Company have
made available to each such person any and all written information that it
has requested and have answered to each such person's satisfaction all
inquiries made.
4.4 ACCREDITED INVESTOR. Purchaser is an "Accredited Investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act.
Purchaser, either alone or with its purchaser representative or
attorney-in-fact, has sufficient knowledge and experience in investing in
companies similar to the Company so as to be able to evaluate the risks
and merits of its investment in the Company and is able financially to
bear the risks thereof, including a complete loss of its entire
investment.
4.5 TRANSFER OF SHARES. Purchaser will not, directly or indirectly, offer,
sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Shares
except in compliance with the Securities Act, the rules and regulations
promulgated thereunder, and applicable state securities laws.
9
4.6 PURCHASER REPRESENTATIVES. In the event that any signatory hereto is
signing as attorney-in-fact for one or more advisory client Purchaser(s),
as indicated by checking the box above the signature for the Purchaser at
the end hereof, the undersigned signatory represents and warrants that the
undersigned has been duly appointed as attorney-in-fact of such
Purchaser(s), that the undersigned has sufficient discretionary authority
to enter into this Agreement on behalf of such Purchaser(s), and that each
of the representations and warranties contained in this Section 4 are true
and correct with respect to each of such Purchaser(s). Except as
specifically disclosed in writing prior to the date hereof to the Company,
the Purchaser is not an affiliate of the Company, a broker-dealer or
affiliated with a broker-dealer.
5. COVENANTS. The Company and the Purchasers agree as follows:
5.1 INFORMATION TO BE FURNISHED. The Company shall deliver to the
Purchaser with reasonable promptness, such material notices, information
and data with respect to the Company as the Company files with the SEC and
delivers to all holders of its Common Stock.
5.2 REGISTRATION OF SHARES. The Company will, at its expense, within 20
business days after the Closing Date file with the SEC a registration
statement on Form S-3, or if Form S-3 is unavailable to the Company, on
Form S-l, to register, under the Securities Act, the resale of the Shares
by the holders thereof (the "Registration Statement"), and will use its
reasonable best efforts to cause such Registration Statement to become
effective as promptly as possible (including by filing when and as
appropriate amendments and supplements thereto and to the related
prospectus, and by making all required "Blue Sky" filings, if any) and to
remain effective continuously until the earlier of (a) two years from the
Closing Date, (b) such time as all of the Shares held by Purchaser may be
sold pursuant to Rule 144 promulgated under the Securities Act on a single
day without regard to volume limitations or (c) such time as all Shares
have been sold. After the Registration Statement is declared effective
under the Securities Act, the Company will furnish holders of Shares (and
to each underwriter, if any, of the Shares) with such number of copies of
the prospectus included in the Registration Statement as the holders may
reasonably request to facilitate the resale of the Shares. Each Purchaser
will cooperate in promptly providing all information or certificates
required from it in order to be included as a selling stockholder on such
Registration Statement. In the event that the Company shall fail to cause
the Registration Statement to be declared effective within 90 days after
the Closing Date, the Company shall pay to each holder of Shares, as
compensation therefor, a cash payment equal to 1% of the product obtained
by multiplying the Purchase Price and the number of Shares held by such
holder. In addition, if the Registration Statement is not declared
effective within 180 days after the Closing Date, the Company shall pay to
each holder of Shares
10
an additional cash payment equal to 2% of the product obtained by
multiplying the Purchase Price and the number of Shares held by such
holder for each 30 day-period or part thereof that effectiveness of the
Registration Statement is delayed beyond 180 days after the Closing Date.
After the Closing Date, the Company shall not file or maintain any
registration statement with the Securities and Exchange Commission under
the Securities Act prior to the time it files the Registration Statement.
The Company, upon reasonable request of a Purchaser, will meet with such
Purchaser or a representative thereof at the Company's headquarters to
discuss information relevant for disclosure in the Registration Statement
covering the Shares, subject to appropriate confidentiality limitations as
the Company may require.
5.3 PURCHASER SALES PROCEDURES.
(a) Each Purchaser agrees that such Purchaser will not effect any
disposition of the Shares that would constitute a sale within the meaning
of the Securities Act, except as contemplated in the Registration
Statement, and that the Purchaser will promptly notify the Company of any
changes in the information set forth in the Registration Statement
regarding the Purchaser or such Purchaser's plan of distribution set forth
in such Registration Statement.
(b) For so long as the prospectus delivery requirement under the
Securities Act is in effect, the Purchaser shall not make any sale of the
Shares without complying with such requirement.
(c) Notwithstanding the provisions of Section 5.2, each Purchaser
acknowledges that there may occasionally be times when the Company must
suspend the use of the prospectus forming a part of the Registration
Statement if there then exists material, non-public information regarding
the Company, of such a nature that the public disclosure of which would
not, in the reasonable opinion of the Company, be appropriate at that
time; provided, however, that the Company shall not suspend the use of the
prospectus for a period or periods that, in the aggregate, exceed 90 days
in any twelve-month period. The Purchaser hereby covenants that, prior to
selling any Shares pursuant to the Registration Statement, the Purchaser
shall notify the Company in writing of its intent to sell Shares. The
Company shall have the two business days immediately following the date of
delivery of such notice during which to notify the Purchaser of a
suspension of the prospectus forming a part of the Registration Statement.
During this two-day period, the Purchaser will not sell any Shares. If the
Company notifies the Purchaser that use of the prospectus has been
suspended, the Purchaser will not sell any Shares pursuant to said
prospectus until such time that the Company gives the Purchaser notice
(all such notices shall be given by the Company as promptly as practicable
following the suspension notice) that the Purchaser may thereafter effect
sales pursuant to said prospectus, from which time the Purchaser may sell
shares for a period often business days without complying
11
with the pre-sale notification requirements set forth above. The Purchaser
further covenants to promptly notify the Company following the sale of all
of the Purchaser's Shares.
5.4 LISTING OF SHARES. The Company will, within twenty business days after
the Closing Date, file with The Nasdaq Stock Market, Inc. a Notification
of Listing of Additional Shares (together with the required listing fee),
thereby listing the Shares on the NASDAQ National Market.
5.5 MARKET STAND-OFF. If requested by the managing underwriters in an
underwritten offering composed primarily of newly issued shares of Common
Stock, the Purchasers, or any assignees thereof, will not sell any of the
Shares for up to 90 days (as requested by such underwriters) following
such public.
6. INDEMNIFICATION AND CONTRIBUTION.
6.1 INDEMNIFICATION BY THE COMPANY. The Company will indemnify and hold
harmless each Purchaser, and each other person, if any, who controls or is
an affiliate of such Purchaser within the meaning of the Securities Act or
the Exchange Act, against any losses, claims, damages or liabilities,
joint or several, to which such Purchaser, controlling person or affiliate
may become subject under the Securities Act, the Exchange Act, state
securities or Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement under which the
Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or
any amendment or supplement to such Registration Statement, or arise out
of or are based upon the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse such Purchaser and
each such controlling person and affiliate for any legal or any other
expenses reasonably incurred by such Purchaser, controlling person or
affiliate in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue
statement or omission made in such Registration Statement, preliminary
prospectus or final prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company,
in writing, by or on behalf of such Purchaser, controlling person or
affiliate specifically for use in the preparation thereof.
6.2 INDEMNIFICATION BY THE PURCHASERS. Each Purchaser, severally and not
jointly, will indemnify and hold harmless the Company, each of its
directors and officers and each person, if any, who controls the Company
12
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages or liabilities, joint or several, to which the
Company, such directors and officers or controlling person may become
subject under the Securities Act, Exchange Act, state securities or Blue
Sky laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement under which the Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based
upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, but only to the extent the statement or omission was made in
reliance upon and in conformity with information relating to such
Purchaser furnished in writing to the Company by or on behalf of such
Purchaser specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement; provided,
however, that the obligations of each Purchaser hereunder shall be limited
to an amount equal to the net proceeds to such Purchaser of Shares sold in
connection with such registration.
6.3 INDEMNIFICATION PROCEDURES. Each party entitled to indemnification
under this Section 6 (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any claim as
to which indemnity may be sought, and shall permit the Indemnifying Party
to assume the defense of any such claim or any litigation resulting
therefrom; provided, that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably withheld);
and, provided further, that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 6, unless and except to the extent that the
Indemnifying Party is prejudiced by the failure of the Indemnified Party
to provide timely notice. The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying
Party shall pay such expense if representation of such Indemnified Party
by the counsel retained by the Indemnifying Party would be inappropriate
in the judgment of the Indemnified Party due to actual or potential
differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect of such claim or litigation, and no
Indemnified Party shall consent to entry of any judgment or
13
settle such claim or litigation without the prior written consent of the
Indemnifying Party.
6.4 CONTRIBUTION. In order to provide for just and equitable contribution
to joint liability under the Securities Act in any case in which either
(a) any Purchaser, or any controlling person of any such Purchaser, makes
a claim for indemnification pursuant to this Section 6 but it 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 this Section 6
provides for indemnification in such case, or (b) contribution under the
Securities Act may be required on the part of any such Purchaser or any
such controlling person in circumstances for which indemnification is
provided under this Section 6; then, in each such case, the Company and
such Purchaser will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others)
in such proportions so that such Purchaser is responsible for the portion
represented by the percentage that the public offering price of its Shares
offered by the Registration Statement bears to the public offering price
of all securities offered by such Registration Statement, and the Company
is responsible for the remaining portion; provided, however, that, in any
such case, (x) no such Purchaser will be required to contribute any amount
in excess of the net proceeds to it of all Shares sold by it pursuant to
such Registration Statement and (y) no person or entity guilty of
fraudulent misrepresentation, within the meaning of Section 11(f) of the
Securities Act, shall be entitled to contribution from any person or
entity who is not guilty of such fraudulent misrepresentation.
7. RIGHT OF FIRST REFUSAL.
7.1 LIMITATION ON FUTURE ISSUANCES. For a period of one year from the date
hereof, the Company shall not issue, sell or exchange, or agree to issue,
sell or exchange (a) any shares of its Common Stock or (b) any option,
warrant or other right that is exercisable for, or convertible into,
shares of its Common Stock (collectively, "Offered Securities"), unless in
each such case the Company shall have first complied with this Section 7.
7.2 PROCEDURE.
(a) The Company shall deliver to each Purchaser a written notice of
any proposed or intended issuance, sale or exchange of Offered Securities
(the "Offer"), which Offer shall (i) identify and describe the Offered
Securities, (ii) describe the price and other terms upon which they are to
be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged and (iii) offer to issue and
sell to or exchange with such Purchaser that number of the Offered
Securities which represents the same percentage of the
14
total Offered Securities as the number of Shares held by such Purchaser
represents of the total number of shares of Common Stock outstanding (the
"Basic Amount"). Each Purchaser shall have the right, for a period of 10
business days following delivery of the Offer, to accept the Offer in the
manner set forth below. The Offer by its term shall remain open and
irrevocable for such 10-business day period. To accept an Offer, in whole
or in part, a Purchaser must deliver a written notice to the Company prior
to the end of the 10-business day period of the Offer, setting forth the
portion of such Purchaser's Basic Amount that such Purchaser elects to
purchase (the "Notice of Acceptance").
(b) The Company shall have 60 days from the expiration of the
10-business day period set forth above to issue, sell or exchange all or
any part of such Offered Securities as to which a Notice of Acceptance has
not been given by the Investors, but only upon terms and conditions which
are not more favorable, in the aggregate, to the acquiring person or
persons or less favorable to the Company than those set forth in the
Offer.
(c) Any Offered Securities not acquired by the Purchasers or other
persons in accordance with Section 7.2 may not be issued, sold or
exchanged until they are again offered to the Purchasers under the
procedures specified in this Section 7.
7.3 EXCLUDED ISSUANCES. The rights of the Purchasers under this Section 7
shall not apply to:
(a) Common Stock issued as a stock dividend to holders of Common
Stock or upon any subdivision or combination of shares of Common Stock;
(b) the issuance of shares of Common Stock, or options exercisable
therefor, to employees, consultants, directors, equipment lessors or banks
(in commercial bank financing arrangements) or similar institutional
credit financing sources;
(c) securities issued solely in consideration for the acquisition
(whether by merger or otherwise) by the Company or any of its subsidiaries
of stock or assets of any other entity, or in connection with a licensing
or strategic partnering transaction approved by the Board of Directors of
the Company (and the stockholders, if required under applicable law or
regulation); or
(d) shares of Common Stock sold by the Company in an underwritten
public offering pursuant to an effective registration statement under the
Securities Act.
15
8. MISCELLANEOUS.
8.1 ASSIGNABILITY. This Agreement, and the rights and obligations of the
Purchaser hereunder, may not be assigned in whole or in part by Purchaser
to any person or entity other than to an affiliate of such Purchaser or
its ultimate parent entity.
8.2 CONFIDENTIALITY. Purchaser agrees that it will keep confidential and
will not disclose or divulge any confidential, proprietary or secret
information which Purchaser may obtain from the Company pursuant to this
Agreement, unless such information is known, or until such information
becomes known, to the public; provided, however, that Purchaser may
disclose such information (a) to its attorneys, accountants, consultants
and other professionals to the extent necessary to obtain their services
in connection with its investment in the Company, (b) to any prospective
purchaser of any Shares from a Purchaser as long as such prospective
purchaser agrees in writing to be bound by the provisions of this Section
or (c) to any affiliate of a Purchaser; subject, in each case, to the
agreement of such party to keep such information confidential as set forth
herein.
8.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements,
representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the closing of the
transactions contemplated hereby.
8.4 NOTICES. All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be delivered by hand,
sent via a reputable nationwide overnight courier service, transmitted via
facsimile with hard copy via U.S. mail, or mailed by first class certified
or registered mail, return receipt requested, postage prepaid:
If to the Company, at White Pine Software, Inc., 000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxx Xxxxxxxxx 00000, Attention: Chief Executive Officer, or
at such other address as may have been furnished in writing by the
Company to the Purchaser, with a copy to: Xxxx X. Xxxxxxx, Esq.,
Xxxxx, Xxxx & Xxxxx LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000; or
If to any Purchaser, at its address as indicated on Exhibit A below,
or at such other address or addresses as may have been furnished in
writing by the Purchaser to the Company.
16
Notices provided in accordance with this Section 8.4 shall be deemed
delivered upon personal delivery, one business day after being sent via a
reputable nationwide overnight courier service for next business day
delivery, or two business days after deposit in the mail and on the next
business day following transmittal via facsimile.
8.5 EXPENSES. The Company and each Purchaser each agree to indemnify and
save the other harmless from and against any and all claims, liabilities
or obligations with respect to brokerage or finders' fees or commissions
in connection with the transactions contemplated by this Agreement
asserted by any person on the basis of any agreement, statement or
representation alleged to have been made by such indemnifying party. The
Company shall pay its own expenses including attorneys' fees.
8.6 ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
8.7 AMENDMENT AND WAIVER. Except as otherwise expressly set forth in this
Agreement, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), with the
written consent of the Company and of Purchasers holding in the aggregate
not less than two-thirds (67%) of all the Shares then outstanding and held
by the Purchasers. Any amendment or waiver effected in accordance with
this Section 6.7 shall be binding upon each holder of any Shares. No
waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition
or provision.
8.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which shall be one and the same document.
8.9 SEPARATE AGREEMENT WITH EACH PURCHASER. While this Agreement is being
executed in multiple counterparts with multiple Purchasers, the
transaction with each Purchaser shall be considered a separate transaction
and none of the rights or obligations of any Purchaser shall be the in any
way affected by actions of any other Purchasers except to the extent that
Purchasers are required by the terms hereof to act as a group.
8.10 HEADINGS. The section headings are for the convenience of the parties
and in no way alter, modify, amend, limit or restrict the contractual
obligations of the parties.
17
8.11 ENFORCEABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
8.12 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
the choice of law provisions thereof.
* * *
18
Executed as of the date first written above.
WHITE PINE SOFTWARE, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
PURCHASER:
Shares Purchased Dollars Invested
---------------- ----------------
325,521 $5,000,003
Private Equity Holding (Cayman) Ltd.
/ / Check this box to indicate that the undersigned is acting as
attorney-in-fact for certain advisory client Purchasers with respect to
which it has discretionary authority.
By: VBTC Management Ltd.
Its: Sole Director
/s/ Xxxx Xxxxxx
By: Xxxx Xxxxxx
Its: Chairman & Managing Director
Date: December 24, 1999
Address for delivery of shares:
(Please use international courier service)
Private Equity Holding (Cayman) Ltd.
X.X. Xxx 00000 SMB
Grand Pavilion Commercial Centre
West Bay Road
Grand Cayman. Cayman Islands
British West Indies
19
Exhibit A
LIST OF PURCHASERS
Purchaser Dollars
Name and Address Shares Purchased Invested
---------------- ---------------- --------
Private Equity Holding (Cayman) Ltd. 325,521 $5,000,003
20
Executed as of the date first written above.
WHITE PINE SOFTWARE, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
PURCHASER:
Shares Purchased Dollars Invested
---------------- ----------------
325,521 $5,000,003
Private Equity Holding (Cayman) Ltd.
/ / Check this box to indicate that the undersigned is acting as
attorney-in-fact for certain advisory client Purchasers with respect to
which it has discretionary authority.
By: VBTC Management Ltd.
Its: Sole Director
/s/ Xxxx Xxxxxx
By: Xxxx Xxxxxx
Its: Chairman & Managing Director
Date: December 24, 1999
Address for delivery of shares:
(Please use international courier service)
Private Equity Holding (Cayman) Ltd.
X.X. Xxx 00000 SMB
Grand Pavilion Commercial Centre
West Bay Road
Grand Cayman. Cayman Islands
British West Indies
19
Exhibit 10.11(c)
STOCK PURCHASE AGREEMENT
This Agreement dated as of December 31, 1999 is entered into by and among
White Pine Software, Inc., a Delaware corporation (the "Company"), and each
entity which executes a counterpart to this Agreement and is listed on Exhibit A
(each referred to herein as a "Purchaser," and collectively referred to herein
as the "Purchasers").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. PURCHASE AND SALE OF SHARES.
1.1 AUTHORIZATION. The Company has duly authorized the sale and issuance,
pursuant to the terms of this Agreement, of an aggregate of 325,521 shares
(the "Shares") of its common stock, $0.01 par value per share ("Common
Stock").
1.2 PURCHASE AND SALE OF SHARES. Subject to the terms and conditions of
this Agreement, each Purchaser agrees to purchase and the Company agrees
to sell, that number of Shares indicated opposite the Purchaser's name on
Exhibit A, at a purchase price equal to $15.36 per share (the "Purchase
Price").
1.3 CLOSING. The Closing of the purchase and sale of the Shares
contemplated by this Agreement (the "Closing") shall take place at the
offices of Xxxxx, Xxxx & Xxxxx LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 at 12 noon EST, on December 31, 1999, or at such other
place and time as mutually agreed by the Company and the Purchasers (the
"Closing Date"). At the Closing, the Company shall deliver to each
Purchaser a certificate for the number of Shares for which that Purchaser
has subscribed against payment of the purchase price therefore. Each
Purchaser shall remit the purchase price for the Shares being purchased at
the Closing by wire transfer of same-day funds to an account designated in
writing by the Company.
1.4 USE OF PROCEEDS. The Company will use the proceeds from the sale of
the Shares for working capital and other general corporate purposes.
2. CONDITIONS TO CLOSING.
The obligation of the Purchasers to purchase and pay for the Shares shall
be subject to the accuracy of the representations and warranties made by the
Company herein and to the following conditions (any of which may be waived by a
Purchaser, acting individually, in its sole discretion, as to such Purchaser's
own Shares, but not as to the Shares to be purchased by any other Purchaser):
2.1 DELIVERIES BY THE COMPANY. The Company shall deliver to the Purchaser
or its agent:
(a) a certificate, as of recent date, as to the legal existence and
corporate good standing of the Company issued by the Secretary of State of
the State of Delaware;
(b) a copy of the Certificate of Incorporation of the Company, as
amended and in effect as of the Closing Date, certified by the Secretary
of State of the State of Delaware;
(c) a copy of the resolutions of the Board of Directors of the
Company authorizing and approving this Agreement and the issuance of the
Shares hereby, certified by the Secretary of the Company;
(d) a copy of the By-laws of the Company, certified by the Secretary
of the Company as in effect as of the Closing Date;
(e) an opinion of Xxxxx, Xxxx & Xxxxx LLP, counsel to the Company,
in substantially the form attached hereto as Exhibit B and
(f) an executed lock-up agreement from each officer and director of
the Company in substantially the form attached hereto as Exhibit C.
3. REPRESENTATIONS OF THE COMPANY. Except as set forth in the applicable section
of the Disclosure Schedule attached hereto, the Company hereby represents and
warrants to each Purchaser as follows as of the date hereof and as of Closing.
3.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. The Company is duly qualified or otherwise authorized
to transact business as a foreign corporation and is in good standing in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on the results of operations, business or financial
condition of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"). Each of the Company's subsidiaries is a
corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation. Each of the
2
Company's subsidiaries is duly qualified or otherwise authorized to
transact business as a foreign corporation and is in good standing in each
jurisdiction in which the failure to so qualify would have a Material
Adverse Effect.
3.2 CAPITALIZATION. The Company is authorized to issue (a) 30,000,000
shares of Common Stock, and (b) 5,000,000 shares of Preferred Stock, $0.01
par value per share. As of December 22, 1999, there were issued and
outstanding [10,702,213] shares of Common Stock; no shares of Preferred
Stock had been issued or were outstanding; and options, warrants or rights
to purchase an aggregate of approximately 1,679,016 shares of Common Stock
had been granted by the Company and were outstanding. The Common Stock and
the Preferred Stock of the Company have the voting powers, designations,
preferences, rights and qualifications, and limitations or restrictions
set forth in the Certificate of Incorporation and amendments thereto. All
of the issued and outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws,
were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities, and conform in all
material respects to the description thereof contained in the Company's
Registration Statement on Form 8-A and the Company Reports (as hereinafter
defined). Except as disclosed in the first sentence of this section, the
Company does not have outstanding any options or warrants to purchase, or
any preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any shares of
capital stock of any subsidiary and there is no commitment, plan or
arrangement to issue, any securities or obligations convertible into any
shares of capital stock of the Company or its subsidiaries or any such
options, rights convertible securities or obligations. The description of
the Company's capital stock, stock bonus and other stock plans or
arrangements and the options or other rights granted and exercised
thereunder, contained in the Company's Registration Statement on Form 8-A
and the Company Reports accurately and fairly presents the information
required to be shown with respect to such capital stock, plans,
arrangements, options and rights (except for issuances and exercises of
options in the ordinary course of business).
3.3 AUTHORITY FOR AGREEMENT. The execution, delivery and performance of
this Agreement by the Company has been duly authorized by all necessary
corporate action on the part of the Company, and this Agreement has been
duly executed and delivered by the Company, and this Agreement constitutes
the valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium and similar laws affecting the rights and remedies
of creditors generally and to general principles of equity.
3
3.4 ISSUANCE AND SALE OF SHARES. The issuance and sale of the Shares by
the Company has been duly authorized and the Shares have been duly
reserved for issuance by all necessary corporate action on the part of the
Company, and the Shares, when issued and delivered against payment
therefor, will be validly issued, fully paid and nonassessable. Based in
part on the representations made by or on behalf of each Purchaser in
Section 4 of this Agreement, the offer, issuance and sale of the Shares
pursuant to this Agreement are exempt from registration under the
Securities Act. The issued shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and are owned by the Company free and clear
of any perfected security interest, or any other security interests,
liens, encumbrances, equities or claims. No preemptive rights or other
rights to subscribe for or purchase exist with respect to the issuance and
sale of the Shares by the Company pursuant to this Agreement. No
stockholder of the Company has any right to request or require the Company
to register the sale of any shares owned by such stockholder under the
Securities Act of 1933, as amended (the "Securities Act"), in the
Registration Statement (as hereinafter defined). No further approval or
authority of the stockholders or the Board of Directors of the Company
will be required for the issuance and sale of the Shares to be sold by the
Company hereunder.
3.5 NO BREACH. The execution, delivery and performance of this Agreement
by the Company will not (a) conflict with or violate any provision of the
Certificate of Incorporation, as amended, or By-laws of the Company, (b)
require on the part of the Company any filing with, or permit,
authorization, consent or approval of, any governmental entity, (c) result
in breach of, constitute a default under, or require any notice, consent
or waiver under, any contract, agreement or other instrument to which the
Company is a party or by which it is bound (other than any consent or
waiver which has already been obtained) or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company,
excluding from subparagraphs (a)-(d) such matters as would not in the
aggregate have a Material Adverse Effect or a material adverse effect upon
the transactions contemplated hereby. No consent, approval, authorization
or other order of any court, regulatory body, administrative agency or
other governmental body is required for the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, except for compliance with the Blue Sky laws and
federal securities laws applicable to the offering of the Shares.
3.6 SEC REPORTS. The Company has previously furnished to the Purchasers
complete and accurate copies, as amended or supplemented, of its (a)
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998,
as filed with the SEC, (b) all proxy statements relating to the Company's
meetings of stockholders held or currently scheduled since December 31,
1998 and (c) all other publicly available reports filed by the Company
with the SEC under the
4
Securities Exchange Act of 1934, as amended (the "Exchange Act"), since
December 31, 1998 and through the date hereof (such reports are
collectively referred to herein as the "Company Reports"). The Company
Reports constitute all of the documents required to be filed by the
Company under Section 13, 14 or 15(d) of the Exchange Act with the SEC
since January 1, 1999. As of their respective dates, the Company Reports
did not, and as of the date hereof do not, contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.7 FINANCIAL STATEMENTS. The audited financial statements and unaudited
interim financial statements of the Company included in the Company
Reports (a) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, (b) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby
(except as may be indicated therein or in the notes thereto), (c) fairly
present the consolidated financial condition, results of operations and
cash flows of the Company as of the respective dates thereof and for the
periods referred to therein and (d) are consistent with the books and
records of the Company.
3.8 OTHER INFORMATION. The Company has provided to and discussed with the
Purchaser such information as the Purchaser has requested regarding the
current operations, financial condition (including the amount of available
cash) and plans of the Company.
3.9 MATERIAL ADVERSE CHANGE. Since December 31, 1998, and except as
disclosed by the Company in the Company Reports or otherwise in writing to
the Purchasers, (i) there has not been any material adverse change in the
operations or financial condition of operations of the Company, except
that the Company continues to incur operating losses, (ii) neither the
Company nor its subsidiaries have incurred any liabilities or obligations,
indirect or contingent, of such a nature that would require inclusion on a
balance sheet under generally accepted accounting principles (nor, to the
Company's knowledge, any other liabilities or obligations) or entered into
any verbal or written agreements or other transactions which are not in
the ordinary course of business or which could reasonably be expected to
result in a Material Adverse Effect; (iii) neither the Company nor its
subsidiaries have sustained any material loss or interference with its
businesses or properties from fire, flood, windstorm, accident or other
calamity not covered by insurance; (iv) neither the Company nor its
subsidiaries have paid or declared any dividends or other distributions
with respect to its capital stock and neither the Company nor its
subsidiaries is in default in the payment of principal or interest on any
outstanding debt obligations; and (v) there has not been any change in the
capital stock of the Company other than the sale of the Shares hereunder
and shares or options issued pursuant to exercise of outstanding
5
warrants or employee and director stock option plans approved by the
Company's Board of Directors. There is no fact which the Company has not
disclosed to the Purchasers and their counsel in writing and of which the
Company is aware which has, had or is reasonably likely to have a Material
Adverse Effect.
3.10 ACTIONS AND PROCEEDINGS. There are no actions, suits or claims or
legal or arbitral proceedings or governmental inquiries or investigations,
pending, or, to the Company's knowledge, threatened against the Company,
which question the validity of this Agreement or the right of the Company
to enter into it, or which might result in a Material Adverse Effect.
3.11 PROPERTIES. Each of the Company and its subsidiaries has good and
marketable title to all the properties and assets reflected as owned by
them in the consolidated financial statements included in the Company's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998,
subject to no lien, mortgage, pledge, charge or encumbrance of any kind
except (i) those, if any, reflected in such consolidated financial
statements, or (ii) those which are not material in amount and do not
materially and adversely affect the use made and intended to be made of
such property by the Company or its subsidiaries. Each of the Company and
its subsidiaries holds its leased properties under valid and binding
leases, with such exceptions as are not materially significant in relation
to the business of the Company and its subsidiaries, taken as a whole.
Each of the Company and its subsidiaries owns or leases all such
properties as are necessary to its operations as now conducted.
3.12 INTELLECTUAL PROPERTY. The Company and its subsidiaries own or have
obtained valid licenses, options or rights to use for the material
inventions, patent applications, patents, trademarks (both registered and
unregistered), tradenames, copyrights and trade secrets necessary for the
conduct of the Company's and its subsidiaries' respective businesses as
currently conducted and as the Company and its subsidiaries contemplate
conducting in all material respects (collectively, the "Intellectual
Property"). Neither the Company nor any of its subsidiaries has received
notice of any third parties who have any ownership rights to any
Intellectual Property that is owned by, or has been licensed to, the
Company or its subsidiaries that would preclude the Company or its
subsidiaries from conducting their respective businesses as currently
conducted and as the Company and its subsidiaries contemplate conducting
in all material respects. To the Company's knowledge, there are currently
no sales of products that would constitute an infringement by third
parties of any material Intellectual Property owned, licensed or optioned
by the Company or its subsidiaries. There is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by
others challenging the rights of the Company or its subsidiaries in or to
any material Intellectual Property owned, licensed or optioned by the
Company or its subsidiaries. There is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or
6
scope of any material Intellectual Property owned, licensed or optioned by
the Company or its subsidiaries. There is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others that the
Company or its subsidiaries infringe or otherwise violate any patent,
trademark, copyright, trade secret or other proprietary right of others as
would reasonably be expected to result in a Material Adverse Effect.
3.13 COMPLIANCE. Neither the Company nor any of its subsidiaries has been
advised, and has no reason to believe, that it is not conducting its
business in compliance with all applicable laws, rules and regulations of
the jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state and federal environmental laws and
regulations, except where failure to be so in compliance would not
individually or in the aggregate have a Material Adverse Effect.
3.14 TAXES. Each of the Company and its subsidiaries has filed or obtained
filing extensions with respect to all federal, state, local and foreign
income and franchise tax returns material to the Company and the
subsidiaries, taken as a whole, and has paid or accrued all taxes shown as
due thereon, and neither the Company nor any of its subsidiaries has
knowledge of a tax deficiency which has been asserted or threatened
against it which would reasonably be expected to have a Material Adverse
Effect.
3.15 TRANSFER TAXES. On the Closing Date, all stock transfers or other
taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares to be sold to the
Purchasers hereunder will be, or will have been, fully paid or provided
for by the Company and all laws imposing such taxes will be or will have
been fully complied with.
3.16 INSURANCE. Each of the Company and its subsidiaries maintains
insurance of the type and in the amount that the Company reasonably
believes is adequate for its business, including, but not limited to,
insurance covering all real and personal property owned or leased by the
Company or its subsidiaries against risks customarily insured against by
similarly situated companies, all of which insurance is in full force and
effect.
3.17 CONTRIBUTIONS. Neither the Company at any time since its
incorporation nor its subsidiaries at any time since they were acquired or
formed by the Company have, directly or indirectly, (i) made any unlawful
contribution to any candidate for public office, failed to disclose fully
where required by law any contribution in violation of law, or (ii) made
any payment to any federal or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other
than payments required or permitted by the laws of the United States or
any jurisdiction thereof and in each case except for instances that would
not have a Material Adverse Effect.
7
3.18 YEAR 2000 COMPLIANCE. The Company has reviewed its operations to
evaluate the extent to which the business or operations of the Company and
its subsidiaries will be affected by the Year 2000 Problem (as defined
below). As a result of such review, the Company has no reason to believe,
and does not believe, that the Year 2000 Problem will have a Material
Adverse Effect. The "Year 2000 Problem" as used herein means any
significant risk that the Company's computer hardware or software used in
the receipt, transmission, processing, manipulation, storage, retrieval,
retransmissions or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of
dates or time periods occurring after December 31, 1999, function at least
as effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
3.19 INVESTMENT COMPANY. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of
1940, as amended.
3.20 OFFERING MATERIALS. The Company has not distributed and will not
distribute prior to the Closing Date any offering material in connection
with the offering and sale of the Shares other than the Company Reports.
The Company has not nor will it take any action to sell, offer for sale or
solicit offers to buy any securities of the Company which would reasonably
be expected to cause the offer or sale of the Shares, as contemplated by
this Agreement, to be within the provisions of Section 5 of the Securities
Act.
3.21 RELATED PARTY TRANSACTIONS. No transaction has occurred between or
among the Company and its affiliates, officers or directors or any
affiliate or affiliates of any such officer or director that is required
to be described in the Company's Reports and other filings under the
Securities Exchange Act of 1934 (the "Exchange Act") that is not so
described.
3.22 BOOKS AND RECORDS. The books, records and accounts of the Company
accurately and fairly reflect, in reasonable detail, the transactions in,
and dispositions of, the assets of, and the results of operations of, the
Company, all to the extent required by generally accepted accounting
principles. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
8
4. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser, severally and not jointly, represents and warrants to the
Company as follows:
4.1 INVESTMENT. Purchaser (a) is acquiring the Shares solely for its own
account for investment purposes and not with a view to, or for sale in
connection with, any distribution thereof, nor with any present intention
of distributing or selling the same other than pursuant to an effective
registration statement under the Securities Act, (b) has no present or
contemplated agreement, undertaking, arrangement, obligation, indebtedness
or commitment providing for the disposition thereof and (c) is fully aware
that in agreeing to sell the Shares and entering into this Agreement, the
Company is relying upon the truth and accuracy of the representations and
warranties contained herein. Each Purchaser has made its own investment
decision without reliance upon any representation, warranty or covenant
from any other Purchaser.
4.2 AUTHORITY FOR AGREEMENT. Purchaser has full power and authority to
execute, deliver and perform its obligations under this Agreement in
accordance with its terms. Purchaser represents that it has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Company. This Agreement has been duly executed and
delivered by Purchaser and constitutes a valid and binding obligation of
Purchaser, enforceable against such Purchaser in accordance with its
terms.
4.3 INFORMATION. Purchaser or its attorney-in-fact (a) has reviewed the
representations of the Company contained in this Agreement and the Company
Reports and (b) has had the opportunity to make inquiry concerning the
Company and its business and personnel. The officers of the Company have
made available to each such person any and all written information that it
has requested and have answered to each such person's satisfaction all
inquiries made.
4.4 ACCREDITED INVESTOR. Purchaser is an "Accredited Investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act.
Purchaser, either alone or with its purchaser representative or
attorney-in-fact, has sufficient knowledge and experience in investing in
companies similar to the Company so as to be able to evaluate the risks
and merits of its investment in the Company and is able financially to
bear the risks thereof, including a complete loss of its entire
investment.
4.5 TRANSFER OF SHARES. Purchaser will not, directly or indirectly, offer,
sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Shares
except in compliance with the Securities Act, the rules and regulations
promulgated thereunder, and applicable state securities laws.
9
4.6 PURCHASER REPRESENTATIVES. In the event that any signatory hereto is
signing as attorney-in-fact for one or more advisory client Purchaser(s),
as indicated by checking the box above the signature for the Purchaser at
the end hereof, the undersigned signatory represents and warrants that the
undersigned has been duly appointed as attorney-in-fact of such
Purchaser(s), that the undersigned has sufficient discretionary authority
to enter into this Agreement on behalf of such Purchaser(s), and that each
of the representations and warranties contained in this Section 4 are true
and correct with respect to each of such Purchaser(s). Except as
specifically disclosed in writing prior to the date hereof to the Company,
the Purchaser is not an affiliate of the Company, a broker-dealer or
affiliated with a broker-dealer.
5. COVENANTS. The Company and the Purchasers agree as follows:
5.1 INFORMATION TO BE FURNISHED. The Company shall deliver to the
Purchaser with reasonable promptness, such material notices, information
and data with respect to the Company as the Company files with the SEC and
delivers to all holders of its Common Stock.
5.2 REGISTRATION OF SHARES. The Company will, at its expense, within 20
business days after the Closing Date file with the SEC a registration
statement on Form S-3, or if Form S-3 is unavailable to the Company, on
Form S-l, to register, under the Securities Act, the resale of the Shares
by the holders thereof (the "Registration Statement"), and will use its
reasonable best efforts to cause such Registration Statement to become
effective as promptly as possible (including by filing when and as
appropriate amendments and supplements thereto and to the related
prospectus, and by making all required "Blue Sky" filings, if any) and to
remain effective continuously until the earlier of (a) two years from the
Closing Date, (b) such time as all of the Shares held by Purchaser may be
sold pursuant to Rule 144 promulgated under the Securities Act on a single
day without regard to volume limitations or (c) such time as all Shares
have been sold. After the Registration Statement is declared effective
under the Securities Act, the Company will furnish holders of Shares (and
to each underwriter, if any, of the Shares) with such number of copies of
the prospectus included in the Registration Statement as the holders may
reasonably request to facilitate the resale of the Shares. Each Purchaser
will cooperate in promptly providing all information or certificates
required from it in order to be included as a selling stockholder on such
Registration Statement. In the event that the Company shall fail to cause
the Registration Statement to be declared effective within 90 days after
the Closing Date, the Company shall pay to each holder of Shares, as
compensation therefor, a cash payment equal to 1% of the product obtained
by multiplying the Purchase Price and the number of Shares held by such
holder. In addition, if the Registration Statement is not declared
effective within 180 days after the Closing Date, the Company shall pay to
each holder of Shares
10
an additional cash payment equal to 2% of the product obtained by
multiplying the Purchase Price and the number of Shares held by such
holder for each 30 day-period or part thereof that effectiveness of the
Registration Statement is delayed beyond 180 days after the Closing Date.
After the Closing Date, the Company shall not file or maintain any
registration statement with the Securities and Exchange Commission under
the Securities Act prior to the time it files the Registration Statement.
The Company, upon reasonable request of a Purchaser, will meet with such
Purchaser or a representative thereof at the Company's headquarters to
discuss information relevant for disclosure in the Registration Statement
covering the Shares, subject to appropriate confidentiality limitations as
the Company may require.
5.3 PURCHASER SALES PROCEDURES.
(a) Each Purchaser agrees that such Purchaser will not effect any
disposition of the Shares that would constitute a sale within the meaning
of the Securities Act, except as contemplated in the Registration
Statement, and that the Purchaser will promptly notify the Company of any
changes in the information set forth in the Registration Statement
regarding the Purchaser or such Purchaser's plan of distribution set forth
in such Registration Statement.
(b) For so long as the prospectus delivery requirement under the
Securities Act is in effect, the Purchaser shall not make any sale of the
Shares without complying with such requirement.
(c) Notwithstanding the provisions of Section 5.2, each Purchaser
acknowledges that there may occasionally be times when the Company must
suspend the use of the prospectus forming a part of the Registration
Statement if there then exists material, non-public information regarding
the Company, of such a nature that the public disclosure of which would
not, in the reasonable opinion of the Company, be appropriate at that
time; provided, however, that the Company shall not suspend the use of the
prospectus for a period or periods that, in the aggregate, exceed 90 days
in any twelve-month period. The Purchaser hereby covenants that, prior to
selling any Shares pursuant to the Registration Statement, the Purchaser
shall notify the Company in writing of its intent to sell Shares. The
Company shall have the two business days immediately following the date of
delivery of such notice during which to notify the Purchaser of a
suspension of the prospectus forming a part of the Registration Statement.
During this two-day period, the Purchaser will not sell any Shares. If the
Company notifies the Purchaser that use of the prospectus has been
suspended, the Purchaser will not sell any Shares pursuant to said
prospectus until such time that the Company gives the Purchaser notice
(all such notices shall be given by the Company as promptly as practicable
following the suspension notice) that the Purchaser may thereafter effect
sales pursuant to said prospectus, from which time the Purchaser may sell
shares for a period often business days without complying
11
with the pre-sale notification requirements set forth above. The Purchaser
further covenants to promptly notify the Company following the sale of all
of the Purchaser's Shares.
5.4 LISTING OF SHARES. The Company will, within twenty business days after
the Closing Date, file with The Nasdaq Stock Market, Inc. a Notification
of Listing of Additional Shares (together with the required listing fee),
thereby listing the Shares on the NASDAQ National Market.
5.5 MARKET STAND-OFF. If requested by the managing underwriters in an
underwritten offering composed primarily of newly issued shares of Common
Stock, the Purchasers, or any assignees thereof, will not sell any of the
Shares for up to 90 days (as requested by such underwriters) following
such public.
6. INDEMNIFICATION AND CONTRIBUTION.
6.1 INDEMNIFICATION BY THE COMPANY. The Company will indemnify and hold
harmless each Purchaser, and each other person, if any, who controls or is
an affiliate of such Purchaser within the meaning of the Securities Act or
the Exchange Act, against any losses, claims, damages or liabilities,
joint or several, to which such Purchaser, controlling person or affiliate
may become subject under the Securities Act, the Exchange Act, state
securities or Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement under which the
Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or
any amendment or supplement to such Registration Statement, or arise out
of or are based upon the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse such Purchaser and
each such controlling person and affiliate for any legal or any other
expenses reasonably incurred by such Purchaser, controlling person or
affiliate in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue
statement or omission made in such Registration Statement, preliminary
prospectus or final prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company,
in writing, by or on behalf of such Purchaser, controlling person or
affiliate specifically for use in the preparation thereof.
6.2 INDEMNIFICATION BY THE PURCHASERS. Each Purchaser, severally and not
jointly, will indemnify and hold harmless the Company, each of its
directors and officers and each person, if any, who controls the Company
12
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages or liabilities, joint or several, to which the
Company, such directors and officers or controlling person may become
subject under the Securities Act, Exchange Act, state securities or Blue
Sky laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement under which the Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based
upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, but only to the extent the statement or omission was made in
reliance upon and in conformity with information relating to such
Purchaser furnished in writing to the Company by or on behalf of such
Purchaser specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement; provided,
however, that the obligations of each Purchaser hereunder shall be limited
to an amount equal to the net proceeds to such Purchaser of Shares sold in
connection with such registration.
6.3 INDEMNIFICATION PROCEDURES. Each party entitled to indemnification
under this Section 6 (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any claim as
to which indemnity may be sought, and shall permit the Indemnifying Party
to assume the defense of any such claim or any litigation resulting
therefrom; provided, that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably withheld);
and, provided further, that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 6, unless and except to the extent that the
Indemnifying Party is prejudiced by the failure of the Indemnified Party
to provide timely notice. The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying
Party shall pay such expense if representation of such Indemnified Party
by the counsel retained by the Indemnifying Party would be inappropriate
in the judgment of the Indemnified Party due to actual or potential
differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect of such claim or litigation, and no
Indemnified Party shall consent to entry of any judgment or
13
settle such claim or litigation without the prior written consent of the
Indemnifying Party.
6.4 CONTRIBUTION. In order to provide for just and equitable contribution
to joint liability under the Securities Act in any case in which either
(a) any Purchaser, or any controlling person of any such Purchaser, makes
a claim for indemnification pursuant to this Section 6 but it 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 this Section 6
provides for indemnification in such case, or (b) contribution under the
Securities Act may be required on the part of any such Purchaser or any
such controlling person in circumstances for which indemnification is
provided under this Section 6; then, in each such case, the Company and
such Purchaser will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others)
in such proportions so that such Purchaser is responsible for the portion
represented by the percentage that the public offering price of its Shares
offered by the Registration Statement bears to the public offering price
of all securities offered by such Registration Statement, and the Company
is responsible for the remaining portion; provided, however, that, in any
such case, (x) no such Purchaser will be required to contribute any amount
in excess of the net proceeds to it of all Shares sold by it pursuant to
such Registration Statement and (y) no person or entity guilty of
fraudulent misrepresentation, within the meaning of Section 11(f) of the
Securities Act, shall be entitled to contribution from any person or
entity who is not guilty of such fraudulent misrepresentation.
7. RIGHT OF FIRST REFUSAL.
7.1 LIMITATION ON FUTURE ISSUANCES. For a period of one year from the date
hereof, the Company shall not issue, sell or exchange, or agree to issue,
sell or exchange (a) any shares of its Common Stock or (b) any option,
warrant or other right that is exercisable for, or convertible into,
shares of its Common Stock (collectively, "Offered Securities"), unless in
each such case the Company shall have first complied with this Section 7.
7.2 PROCEDURE.
(a) The Company shall deliver to each Purchaser a written notice of
any proposed or intended issuance, sale or exchange of Offered Securities
(the "Offer"), which Offer shall (i) identify and describe the Offered
Securities, (ii) describe the price and other terms upon which they are to
be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged and (iii) offer to issue and
sell to or exchange with such Purchaser that number of the Offered
Securities which represents the same percentage of the
14
total Offered Securities as the number of Shares held by such Purchaser
represents of the total number of shares of Common Stock outstanding (the
"Basic Amount"). Each Purchaser shall have the right, for a period of 10
business days following delivery of the Offer, to accept the Offer in the
manner set forth below. The Offer by its term shall remain open and
irrevocable for such 10-business day period. To accept an Offer, in whole
or in part, a Purchaser must deliver a written notice to the Company prior
to the end of the 10-business day period of the Offer, setting forth the
portion of such Purchaser's Basic Amount that such Purchaser elects to
purchase (the "Notice of Acceptance").
(b) The Company shall have 60 days from the expiration of the
10-business day period set forth above to issue, sell or exchange all or
any part of such Offered Securities as to which a Notice of Acceptance has
not been given by the Investors, but only upon terms and conditions which
are not more favorable, in the aggregate, to the acquiring person or
persons or less favorable to the Company than those set forth in the
Offer.
(c) Any Offered Securities not acquired by the Purchasers or other
persons in accordance with Section 7.2 may not be issued, sold or
exchanged until they are again offered to the Purchasers under the
procedures specified in this Section 7.
7.3 EXCLUDED ISSUANCES. The rights of the Purchasers under this Section 7
shall not apply to:
(a) Common Stock issued as a stock dividend to holders of Common
Stock or upon any subdivision or combination of shares of Common Stock;
(b) the issuance of shares of Common Stock, or options exercisable
therefor, to employees, consultants, directors, equipment lessors or banks
(in commercial bank financing arrangements) or similar institutional
credit financing sources;
(c) securities issued solely in consideration for the acquisition
(whether by merger or otherwise) by the Company or any of its subsidiaries
of stock or assets of any other entity, or in connection with a licensing
or strategic partnering transaction approved by the Board of Directors of
the Company (and the stockholders, if required under applicable law or
regulation); or
(d) shares of Common Stock sold by the Company in an underwritten
public offering pursuant to an effective registration statement under the
Securities Act.
15
8. MISCELLANEOUS.
8.1 ASSIGNABILITY. This Agreement, and the rights and obligations of the
Purchaser hereunder, may not be assigned in whole or in part by Purchaser
to any person or entity other than to an affiliate of such Purchaser or
its ultimate parent entity.
8.2 CONFIDENTIALITY. Purchaser agrees that it will keep confidential and
will not disclose or divulge any confidential, proprietary or secret
information which Purchaser may obtain from the Company pursuant to this
Agreement, unless such information is known, or until such information
becomes known, to the public; provided, however, that Purchaser may
disclose such information (a) to its attorneys, accountants, consultants
and other professionals to the extent necessary to obtain their services
in connection with its investment in the Company, (b) to any prospective
purchaser of any Shares from a Purchaser as long as such prospective
purchaser agrees in writing to be bound by the provisions of this Section
or (c) to any affiliate of a Purchaser; subject, in each case, to the
agreement of such party to keep such information confidential as set forth
herein.
8.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements,
representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the closing of the
transactions contemplated hereby.
8.4 NOTICES. All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be delivered by hand,
sent via a reputable nationwide overnight courier service, transmitted via
facsimile with hard copy via U.S. mail, or mailed by first class certified
or registered mail, return receipt requested, postage prepaid:
If to the Company, at White Pine Software, Inc., 000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxx Xxxxxxxxx 00000, Attention: Chief Executive Officer, or
at such other address as may have been furnished in writing by the
Company to the Purchaser, with a copy to: Xxxx X. Xxxxxxx, Esq.,
Xxxxx, Xxxx & Xxxxx LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000; or
If to any Purchaser, at its address as indicated on Exhibit A below,
or at such other address or addresses as may have been furnished in
writing by the Purchaser to the Company.
16
Notices provided in accordance with this Section 8.4 shall be deemed
delivered upon personal delivery, one business day after being sent via a
reputable nationwide overnight courier service for next business day
delivery, or two business days after deposit in the mail and on the next
business day following transmittal via facsimile.
8.5 EXPENSES. The Company and each Purchaser each agree to indemnify and
save the other harmless from and against any and all claims, liabilities
or obligations with respect to brokerage or finders' fees or commissions
in connection with the transactions contemplated by this Agreement
asserted by any person on the basis of any agreement, statement or
representation alleged to have been made by such indemnifying party. The
Company shall pay its own expenses including attorneys' fees.
8.6 ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
8.7 AMENDMENT AND WAIVER. Except as otherwise expressly set forth in this
Agreement, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), with the
written consent of the Company and of Purchasers holding in the aggregate
not less than two-thirds (67%) of all the Shares then outstanding and held
by the Purchasers. Any amendment or waiver effected in accordance with
this Section 6.7 shall be binding upon each holder of any Shares. No
waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition
or provision.
8.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which shall be one and the same document.
8.9 SEPARATE AGREEMENT WITH EACH PURCHASER. While this Agreement is being
executed in multiple counterparts with multiple Purchasers, the
transaction with each Purchaser shall be considered a separate transaction
and none of the rights or obligations of any Purchaser shall be the in any
way affected by actions of any other Purchasers except to the extent that
Purchasers are required by the terms hereof to act as a group.
8.10 HEADINGS. The section headings are for the convenience of the parties
and in no way alter, modify, amend, limit or restrict the contractual
obligations of the parties.
17
8.11 ENFORCEABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
8.12 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
the choice of law provisions thereof.
* * *
18
Executed as of the date first written above.
WHITE PINE SOFTWARE, INC.
By:_____________________________
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
PURCHASER:
Shares Purchased Dollars Invested
---------------- ----------------
325,521 $5,000,003
SPECIAL SITUATIONS
PRIVATE EQUITY FUND, L.P.
SPECIAL SITUATIONS
CAYMAN FUND, L.P.
SPECIAL SITUATIONS
FUND III, L.P.
(Purchaser's name here)
/ / Check this box to indicate that the undersigned is acting as
attorney-in-fact for certain advisory client Purchasers with respect to
which it has discretionary authority.
By:_______________________________
Name:_____________________________
Title:____________________________
Date:_____________________________
Address for delivery of shares:
__________________________________
__________________________________
19
Exhibit A
LIST OF PURCHASERS
Purchaser Dollars
Name and Address Shares Purchased Invested
---------------- ---------------- --------
SPECIAL SITUATIONS
PRIVATE EQUITY FUND, L.P. 78,125 $1,200,000.00
SPECIAL SITUATIONS
CAYMAN FUND, L.P. 65,104 999,997.44
SPECIAL SITUATIONS
FUND III, L.P. 182,292 2,800,005.12
21
Executed as of the date first written above.
WHITE PINE SOFTWARE, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
PURCHASER:
Shares Purchased Dollars Invested
---------------- ----------------
325,521 $5,000,003
SPECIAL SITUATIONS
PRIVATE EQUITY FUND, L.P.
SPECIAL SITUATIONS
CAYMAN FUND, L.P.
SPECIAL SITUATIONS
FUND III, L.P.
(Purchaser's name here)
/ / Check this box to indicate that the undersigned is acting as
attorney-in-fact for certain advisory client Purchasers with respect to
which it has discretionary authority.
By: /s/ Xxxxx Greenhouse
-------------------------------
Name: Xxxxx Greenhouse
----------------------------
Title: MD
---------------------------
Date: 12/31/99
----------------------------
Address for delivery of shares:
----------------------------------
----------------------------------
18
Exhibit 10.11(d)
STOCK PURCHASE AGREEMENT
This Agreement dated as of December 29, 1999 is entered into by and among
White Pine Software, Inc., a Delaware corporation (the "Company"), and each
entity which executes a counterpart to this Agreement and is listed on Exhibit A
(each referred to herein as a "Purchaser," and collectively referred to herein
as the "Purchasers").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. PURCHASE AND SALE OF SHARES.
1.1 AUTHORIZATION. The Company has duly authorized the sale and issuance,
pursuant to the terms of this Agreement, of an aggregate of 325,521 shares
(the "Shares") of its common stock, $0.01 par value per share ("Common
Stock").
1.2 PURCHASE AND SALE OF SHARES. Subject to the terms and conditions of
this Agreement, each Purchaser agrees to purchase and the Company agrees
to sell, that number of Shares indicated opposite the Purchaser's name on
Exhibit A, at a purchase price equal to $15.36 per share (the "Purchase
Price").
1.3 CLOSING. The Closing of the purchase and sale of the Shares
contemplated by this Agreement (the "Closing") shall take place at the
offices of Xxxxx, Xxxx & Xxxxx LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 at 12 noon EST, on December 29, 1999, or at such other
place and time as mutually agreed by the Company and the Purchasers (the
"Closing Date"). At the Closing, the Company shall deliver to each
Purchaser a certificate for the number of Shares for which that Purchaser
has subscribed against payment of the purchase price therefore. Each
Purchaser shall remit the purchase price for the Shares being purchased at
the Closing by wire transfer of same-day funds to an account designated in
writing by the Company.
1.4 USE OF PROCEEDS. The Company will use the proceeds from the sale of
the Shares for working capital and other general corporate purposes.
2. CONDITIONS TO CLOSING.
The obligation of the Purchasers to purchase and pay for the Shares shall
be subject to the accuracy of the representations and warranties made by the
Company herein and to the following conditions (any of which may be waived by a
Purchaser, acting individually, in its sole discretion, as to such Purchaser's
own Shares, but not as to the Shares to be purchased by any other Purchaser):
2.1 DELIVERIES BY THE COMPANY. The Company shall deliver to the Purchaser
or its agent:
(a) a certificate, as of recent date, as to the legal existence and
corporate good standing of the Company issued by the Secretary of State of
the State of Delaware;
(b) a copy of the Certificate of Incorporation of the Company, as
amended and in effect as of the Closing Date, certified by the Secretary
of State of the State of Delaware;
(c) a copy of the resolutions of the Board of Directors of the
Company authorizing and approving this Agreement and the issuance of the
Shares hereby, certified by the Secretary of the Company;
(d) a copy of the By-laws of the Company, certified by the Secretary
of the Company as in effect as of the Closing Date;
(e) an opinion of Xxxxx, Xxxx & Xxxxx LLP, counsel to the Company,
in substantially the form attached hereto as Exhibit B; and
(f) an executed lock-up agreement from each officer and director of
the Company in substantially the form attached hereto as Exhibit C.
3. REPRESENTATIONS OF THE COMPANY. Except as set forth in the applicable section
of the Disclosure Schedule attached hereto, the Company hereby represents and
warrants to each Purchaser as follows as of the date hereof and as of Closing.
3.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. The Company is duly qualified or otherwise authorized
to transact business as a foreign corporation and is in good standing in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on the results of operations, business or financial
condition of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"). Each of the Company's subsidiaries is a
corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation. Each of the
2
Company's subsidiaries is duly qualified or otherwise authorized to
transact business as a foreign corporation and is in good standing in each
jurisdiction in which the failure to so qualify would have a Material
Adverse Effect.
3.2 CAPITALIZATION. The Company is authorized to issue (a) 30,000,000
shares of Common Stock, and (b) 5,000,000 shares of Preferred Stock, $0.01
par value per share. As of December 28, 1999, there were issued and
outstanding 11,027,734 shares of Common Stock; no shares of Preferred
Stock had been issued or were outstanding; and options, warrants or rights
to purchase an aggregate of approximately 1,679,016 shares of Common Stock
had been granted by the Company and were outstanding. The Common Stock and
the Preferred Stock of the Company have the voting powers, designations,
preferences, rights and qualifications, and limitations or restrictions
set forth in the Certificate of Incorporation and amendments thereto. All
of the issued and outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws,
were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities, and conform in all
material respects to the description thereof contained in the Company's
Registration Statement on Form 8-A and the Company Reports (as hereinafter
defined). Except as disclosed in the first sentence of this section, the
Company does not have outstanding any options or warrants to purchase, or
any preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any shares of
capital stock of any subsidiary and there is no commitment, plan or
arrangement to issue, any securities or obligations convertible into any
shares of capital stock of the Company or its subsidiaries or any such
options, rights convertible securities or obligations. The description of
the Company's capital stock, stock bonus and other stock plans or
arrangements and the options or other rights granted and exercised
thereunder, contained in the Company's Registration Statement on Form 8-A
and the Company Reports accurately and fairly presents the information
required to be shown with respect to such capital stock, plans,
arrangements, options and rights (except for issuances and exercises of
options in the ordinary course of business).
3.3 AUTHORITY FOR AGREEMENT. The execution, delivery and performance of
this Agreement by the Company has been duly authorized by all necessary
corporate action on the part of the Company, and this Agreement has been
duly executed and delivered by the Company, and this Agreement constitutes
the valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium and similar laws affecting the rights and remedies
of creditors generally and to general principles of equity.
3
3.4 ISSUANCE AND SALE OF SHARES. The issuance and sale of the Shares by
the Company has been duly authorized and the Shares have been duly
reserved for issuance by all necessary corporate action on the part of the
Company, and the Shares, when issued and delivered against payment
therefor, will be validly issued, fully paid and nonassessable. Based in
part on the representations made by or on behalf of each Purchaser in
Section 4 of this Agreement, the offer, issuance and sale of the Shares
pursuant to this Agreement, together with the Private Placement, are
exempt from registration under the Securities Act. The issued shares of
capital stock of each of the Company's subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and are
owned by the Company free and clear of any perfected security interest, or
any other security interests, liens, encumbrances, equities or claims. No
preemptive rights or other rights to subscribe for or purchase exist with
respect to the issuance and sale of the Shares by the Company pursuant to
this Agreement. Except for the registration rights granted in connection
with the Private Placement (as defined in Section 3.8), no stockholder of
the Company has any right to request or require the Company to register
the sale of any shares owned by such stockholder under the Securities Act
of 1933, as amended (the "Securities Act"), in the Registration Statement
(as hereinafter defined). No further approval or authority of the
stockholders or the Board of Directors of the Company will be required for
the issuance and sale of the Shares to be sold by the Company hereunder.
3.5 NO BREACH. The execution, delivery and performance of this Agreement
by the Company will not (a) conflict with or violate any provision of the
Certificate of Incorporation, as amended, or By-laws of the Company, (b)
require on the part of the Company any filing with, or permit,
authorization, consent or approval of, any governmental entity, (c) result
in breach of, constitute a default under, or require any notice, consent
or waiver under, any contract, agreement or other instrument to which the
Company is a party or by which it is bound (other than any consent or
waiver which has already been obtained) or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company,
excluding from subparagraphs (a)-(d) such matters as would not in the
aggregate have a Material Adverse Effect or a material adverse effect upon
the transactions contemplated hereby. No consent, approval, authorization
or other order of any court, regulatory body, administrative agency or
other governmental body is required for the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, except for compliance with the Blue Sky laws and
federal securities laws applicable to the offering of the Shares.
3.6 SEC REPORTS. The Company has previously furnished to the Purchasers
complete and accurate copies, as amended or supplemented, of its (a)
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998,
as filed with the SEC, (b) all proxy statements relating to the Company's
meetings of
4
stockholders held or currently scheduled since December 31, 1998 and (c)
all other publicly available reports filed by the Company with the SEC
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since December 31, 1998 and through the date hereof (such reports
are collectively referred to herein as the "Company Reports"). The Company
Reports constitute all of the documents required to be filed by the
Company under Section 13, 14 or 15(d) of the Exchange Act with the SEC
since January 1, 1999. As of their respective dates, the Company Reports
did not, and as of the date hereof do not, contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.7 FINANCIAL STATEMENTS. The audited financial statements and unaudited
interim financial statements of the Company included in the Company
Reports (a) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, (b) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby
(except as may be indicated therein or in the notes thereto), (c) fairly
present the consolidated financial condition, results of operations and
cash flows of the Company as of the respective dates thereof and for the
periods referred to therein and (d) are consistent with the books and
records of the Company.
3.8 OTHER INFORMATION. The Company has provided to and discussed with the
Purchaser such information as the Purchaser has requested regarding the
current operations, financial condition (including the amount of available
cash) and plans of the Company. The Company has provided the Purchaser
with true and correct copies of the transaction documents relating to the
sale of 325,521 shares of Common Stock by the Company in a private
offering on December 24, 1999 (the "Private Placement").
3.9 MATERIAL ADVERSE CHANGE. Since December 31, 1998, and except as
disclosed by the Company in the Company Reports or otherwise in writing to
the Purchasers, (i) there has not been any material adverse change in the
operations or financial condition of operations of the Company, except
that the Company continues to incur operating losses, (ii) neither the
Company nor its subsidiaries have incurred any liabilities or obligations,
indirect or contingent, of such a nature that would require inclusion on a
balance sheet under generally accepted accounting principles (nor, to the
Company's knowledge, any other liabilities or obligations) or entered into
any verbal or written agreements or other transactions which are not in
the ordinary course of business or which could reasonably be expected to
result in a Material Adverse Effect; (iii) neither the Company nor its
subsidiaries have sustained any material loss or interference with its
businesses or properties from fire, flood, windstorm, accident or other
calamity not covered by insurance; (iv) neither the Company nor its
subsidiaries have paid
5
or declared any dividends or other distributions with respect to its
capital stock and neither the Company nor its subsidiaries is in default
in the payment of principal or interest on any outstanding debt
obligations; and (v) there has not been any change in the capital stock of
the Company other than the sale of the Shares hereunder, shares or options
issued pursuant to exercise of outstanding warrants or employee and
director stock option plans approved by the Company's Board of Directors
and shares issued in connection with the Private Placement. There is no
fact which the Company has not disclosed to the Purchasers and their
counsel in writing and of which the Company is aware which has, had or is
reasonably likely to have a Material Adverse Effect.
3.10 ACTIONS AND PROCEEDINGS. There are no actions, suits or claims or
legal or arbitral proceedings or governmental inquiries or investigations,
pending, or, to the Company's knowledge, threatened against the Company,
which question the validity of this Agreement or the right of the Company
to enter into it, or which might result in a Material Adverse Effect.
3.11 PROPERTIES. Each of the Company and its subsidiaries has good and
marketable title to all the properties and assets reflected as owned by
them in the consolidated financial statements included in the Company's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998,
subject to no lien, mortgage, pledge, charge or encumbrance of any kind
except (i) those, if any, reflected in such consolidated financial
statements, or (ii) those which are not material in amount and do not
materially and adversely affect the use made and intended to be made of
such property by the Company or its subsidiaries. Each of the Company and
its subsidiaries holds its leased properties under valid and binding
leases, with such exceptions as are not materially significant in relation
to the business of the Company and its subsidiaries, taken as a whole.
Each of the Company and its subsidiaries owns or leases all such
properties as are necessary to its operations as now conducted.
3.12 INTELLECTUAL PROPERTY. The Company and its subsidiaries own or have
obtained valid licenses, options or rights to use for the material
inventions, patent applications, patents, trademarks (both registered and
unregistered), tradenames, copyrights and trade secrets necessary for the
conduct of the Company's and its subsidiaries' respective businesses as
currently conducted and as the Company and its subsidiaries contemplate
conducting in all material respects (collectively, the "Intellectual
Property"). Neither the Company nor any of its subsidiaries has received
notice of any third parties who have any ownership rights to any
Intellectual Property that is owned by, or has been licensed to, the
Company or its subsidiaries that would preclude the Company or its
subsidiaries from conducting their respective businesses as currently
conducted and as the Company and its subsidiaries contemplate conducting
in all material respects. To the Company's knowledge, there are currently
no sales of products that would constitute an infringement by third
parties of any material Intellectual
6
Property owned, licensed or optioned by the Company or its subsidiaries.
There is no pending or, to the Company's knowledge, threatened action,
suit, proceeding or claim by others challenging the rights of the Company
or its subsidiaries in or to any material Intellectual Property owned,
licensed or optioned by the Company or its subsidiaries. There is no
pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any
material Intellectual Property owned, licensed or optioned by the Company
or its subsidiaries. There is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others that the Company or
its subsidiaries infringe or otherwise violate any patent, trademark,
copyright, trade secret or other proprietary right of others as would
reasonably be expected to result in a Material Adverse Effect.
3.13 COMPLIANCE. Neither the Company nor any of its subsidiaries has been
advised, and has no reason to believe, that it is not conducting its
business in compliance with all applicable laws, rules and regulations of
the jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state and federal environmental laws and
regulations, except where failure to be so in compliance would not
individually or in the aggregate have a Material Adverse Effect.
3.14 TAXES. Each of the Company and its subsidiaries has filed or obtained
filing extensions with respect to all federal, state, local and foreign
income and franchise tax returns material to the Company and the
subsidiaries, taken as a whole, and has paid or accrued all taxes shown as
due thereon, and neither the Company nor any of its subsidiaries has
knowledge of a tax deficiency which has been asserted or threatened
against it which would reasonably be expected to have a Material Adverse
Effect.
3.15 TRANSFER TAXES. On the Closing Date, all stock transfers or other
taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares to be sold to the
Purchasers hereunder will be, or will have been, fully paid or provided
for by the Company and all laws imposing such taxes will be or will have
been fully complied with.
3.16 INSURANCE. Each of the Company and its subsidiaries maintains
insurance of the type and in the amount that the Company reasonably
believes is adequate for its business, including, but not limited to,
insurance covering all real and personal property owned or leased by the
Company or its subsidiaries against risks customarily insured against by
similarly situated companies, all of which insurance is in full force and
effect.
3.17 CONTRIBUTIONS. Neither the Company at any time since its
incorporation nor its subsidiaries at any time since they were acquired or
formed by the Company have, directly or indirectly, (i) made any unlawful
contribution to
7
any candidate for public office, failed to disclose fully where required
by law any contribution in violation of law, or (ii) made any payment to
any federal or state governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof and in each case except for instances that would not have a
Material Adverse Effect.
3.18 YEAR 2000 COMPLIANCE. The Company has reviewed its operations to
evaluate the extent to which the business or operations of the Company and
its subsidiaries will be affected by the Year 2000 Problem (as defined
below). As a result of such review, the Company has no reason to believe,
and does not believe, that the Year 2000 Problem will have a Material
Adverse Effect. The "Year 2000 Problem" as used herein means any
significant risk that the Company's computer hardware or software used in
the receipt, transmission, processing, manipulation, storage, retrieval,
retransmissions or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of
dates or time periods occurring after December 31, 1999, function at least
as effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
3.19 INVESTMENT COMPANY. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of
1940, as amended.
3.20 OFFERING MATERIALS. The Company has not distributed and will not
distribute prior to the Closing Date any offering material in connection
with the offering and sale of the Shares other than the Company Reports.
The Company has not nor will it take any action to sell, offer for sale or
solicit offers to buy any securities of the Company which would reasonably
be expected to cause the offer or sale of the Shares, as contemplated by
this Agreement, to be within the provisions of Section 5 of the Securities
Act.
3.21 RELATED PARTY TRANSACTIONS. No transaction has occurred between or
among the Company and its affiliates, officers or directors or any
affiliate or affiliates of any such officer or director that is required
to be described in the Company's Reports and other filings under the
Securities Exchange Act of 1934 (the "Exchange Act") that is not so
described.
3.22 BOOKS AND RECORDS. The books, records and accounts of the Company
accurately and fairly reflect, in reasonable detail, the transactions in,
and dispositions of, the assets of, and the results of operations of, the
Company, all to the extent required by generally accepted accounting
principles. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as
8
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
4. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser, severally and not jointly, represents and warrants to the
Company as follows:
4.1 INVESTMENT. Purchaser (a) is acquiring the Shares solely for its own
account for investment purposes and not with a view to, or for sale in
connection with, any distribution thereof, nor with any present intention
of distributing or selling the same other than pursuant to an effective
registration statement under the Securities Act, (b) has no present or
contemplated agreement, undertaking, arrangement, obligation, indebtedness
or commitment providing for the disposition thereof and (c) is fully aware
that in agreeing to sell the Shares and entering into this Agreement, the
Company is relying upon the truth and accuracy of the representations and
warranties contained herein. Each Purchaser has made its own investment
decision without reliance upon any representation, warranty or covenant
from any other Purchaser.
4.2 AUTHORITY FOR AGREEMENT. Purchaser has full power and authority to
execute, deliver and perform its obligations under this Agreement in
accordance with its terms. Purchaser represents that it has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Company. This Agreement has been duly executed and
delivered by Purchaser and constitutes a valid and binding obligation of
Purchaser, enforceable against such Purchaser in accordance with its
terms.
4.3 INFORMATION. Purchaser or its attorney-in-fact (a) has reviewed the
representations of the Company contained in this Agreement and the Company
Reports and (b) has had the opportunity to make inquiry concerning the
Company and its business and personnel. The officers of the Company have
made available to each such person any and all written information that it
has requested and have answered to each such person's satisfaction all
inquiries made.
4.4 ACCREDITED INVESTOR. Purchaser is an "Accredited Investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act.
Purchaser, either alone or with its purchaser representative or
attorney-in-fact, has sufficient knowledge and experience in investing in
companies similar to the Company so as to be able to evaluate the risks
and merits of its investment in the
9
Company and is able financially to bear the risks thereof, including a
complete loss of its entire investment.
4.5 TRANSFER OF SHARES. Purchaser will not, directly or indirectly, offer,
sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Shares
except in compliance with the Securities Act, the rules and regulations
promulgated thereunder, and applicable state securities laws.
4.6 PURCHASER REPRESENTATIVES. In the event that any signatory hereto is
signing as attorney-in-fact for one or more advisory client Purchaser(s),
as indicated by checking the box above the signature for the Purchaser at
the end hereof, the undersigned signatory represents and warrants that the
undersigned has been duly appointed as attorney-in-fact of such
Purchaser(s), that the undersigned has sufficient discretionary authority
to enter into this Agreement on behalf of such Purchaser(s), and that each
of the representations and warranties contained in this Section 4 are true
and correct with respect to each of such Purchaser(s). Except as
specifically disclosed in writing prior to the date hereof to the Company,
the Purchaser is not an affiliate of the Company, a broker-dealer or
affiliated with a broker-dealer.
5. COVENANTS. The Company and the Purchasers agree as follows:
5.1 INFORMATION TO BE FURNISHED. The Company shall deliver to the
Purchaser with reasonable promptness, such material notices, information
and data with respect to the Company as the Company files with the SEC and
delivers to all holders of its Common Stock.
5.2 REGISTRATION OF SHARES. The Company will, at its expense, within 20
business days after the Closing Date file with the SEC a registration
statement on Form S-3, or if Form S-3 is unavailable to the Company, on
Form S-1, to register, under the Securities Act, the resale of the Shares
by the holders thereof (the "Registration Statement"), and will use its
reasonable best efforts to cause such Registration Statement to become
effective as promptly as possible (including by filing when and as
appropriate amendments and supplements thereto and to the related
prospectus, and by making all required "Blue Sky" filings, if any) and to
remain effective continuously until the earlier of (a) two years from the
Closing Date, (b) such time as all of the Shares held by Purchaser may be
sold pursuant to Rule 144 promulgated under the Securities Act on a single
day without regard to volume limitations or (c) such time as all Shares
have been sold. After the Registration Statement is declared effective
under the Securities Act, the Company will furnish holders of Shares (and
to each underwriter, if any, of the Shares) with such number of copies of
the prospectus included in the Registration Statement as the holders may
reasonably request to facilitate the resale of the Shares. Each Purchaser
will cooperate in promptly
10
providing all information or certificates required from it in order to be
included as a selling stockholder on such Registration Statement. In the
event that the Company shall fail to cause the Registration Statement to
be declared effective within 90 days after the Closing Date, the Company
shall pay to each holder of Shares, as compensation therefor, a cash
payment equal to 1% of the product obtained by multiplying the Purchase
Price and the number of Shares held by such holder. In addition, if the
Registration Statement is not declared effective within 180 days after the
Closing Date, the Company shall pay to each holder of Shares an additional
cash payment equal to 2% of the product obtained by multiplying the
Purchase Price and the number of Shares held by such holder for each 30
day-period or part thereof that effectiveness of the Registration
Statement is delayed beyond 180 days after the Closing Date. After the
Closing Date, the Company shall not file or maintain any registration
statement with the Securities and Exchange Commission under the Securities
Act prior to the time it files the Registration Statement. The Company,
upon reasonable request of a Purchaser, will meet with such Purchaser or a
representative thereof at the Company's headquarters to discuss
information relevant for disclosure in the Registration Statement covering
the Shares, subject to appropriate confidentiality limitations as the
Company may require.
5.3 PURCHASER SALES PROCEDURES.
(a) Each Purchaser agrees that such Purchaser will not effect any
disposition of the Shares that would constitute a sale within the meaning
of the Securities Act, except as contemplated in the Registration
Statement, and that the Purchaser will promptly notify the Company of any
changes in the information set forth in the Registration Statement
regarding the Purchaser or such Purchaser's plan of distribution set forth
in such Registration Statement.
(b) For so long as the prospectus delivery requirement under the
Securities Act is in effect, the Purchaser shall not make any sale of the
Shares without complying with such requirement.
(c) Notwithstanding the provisions of Section 5.2, each Purchaser
acknowledges that there may occasionally be times when the Company must
suspend the use of the prospectus forming a part of the Registration
Statement if there then exists material, non-public information regarding
the Company, of such a nature that the public disclosure of which would
not, in the reasonable opinion of the Company, be appropriate at that
time; provided, however, that the Company shall not suspend the use of the
prospectus for a period or periods that, in the aggregate, exceed 90 days
in any twelve-month period. The Purchaser hereby covenants that, prior to
selling any Shares pursuant to the Registration Statement, the Purchaser
shall notify the Company in writing of its intent to sell Shares. The
Company shall have the two business days immediately following the date of
delivery of such notice during which to notify the Purchaser of a
11
suspension of the prospectus forming a part of the Registration Statement.
During this two-day period, the Purchaser will not sell any Shares. If the
Company notifies the Purchaser that use of the prospectus has been
suspended, the Purchaser will not sell any Shares pursuant to said
prospectus until such time that the Company gives the Purchaser notice
(all such notices shall be given by the Company as promptly as practicable
following the suspension notice) that the Purchaser may thereafter effect
sales pursuant to said prospectus, from which time the Purchaser may sell
shares for a period of ten business days without complying with the
pre-sale notification requirements set forth above. The Purchaser further
covenants to promptly notify the Company following the sale of all of the
Purchaser's Shares.
5.4 LISTING OF SHARES. The Company will, within twenty business days after
the Closing Date, file with The Nasdaq Stock Market, Inc. a Notification
of Listing of Additional Shares (together with the required listing fee),
thereby listing the Shares on the NASDAQ National Market.
5.5 FUTURE SALES BY THE COMPANY. The Company will not, without the prior
written consent of General Electric Capital Corporation or its affiliate,
which consent shall not be unreasonably withheld, for a period from the
date hereof through the date that is 45 days following the initial
effective date of the Registration Statement, offer, sell or contract to
sell Common Stock at a price per share less than $15.36; provided,
however, that such period shall be extended for the number of days, if
any, during such period that the Company has suspended the use of the
prospectus pursuant to Section 5.3(c) herein; and further provided, that
the Company may (a) issue and sell Common Stock pursuant to any director
or employee stock option or purchase plan of the Company and (b) issue
Common Stock in connection with a merger or acquisition transaction or a
licensing or strategic partnering transaction approved by the Board of
Directors of the Company (and the stockholders, if required under
applicable law or regulation).
5.6 MARKET STAND-OFF. If requested by the managing underwriters in an
underwritten offering composed primarily of newly issued shares of Common
Stock, the Purchasers, or any assignees thereof, will not sell any of the
Shares for up to 90 days (as requested by such underwriters) following
such public.
6. INDEMNIFICATION AND CONTRIBUTION.
6.1 INDEMNIFICATION BY THE COMPANY. The Company will indemnify and hold
harmless each Purchaser, and each other person, if any, who controls or is
an affiliate of such Purchaser within the meaning of the Securities Act or
the Exchange Act, against any losses, claims, damages or liabilities,
joint or several, to which such Purchaser, controlling person or affiliate
may become subject under the Securities Act, the Exchange Act, state
securities or Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions
12
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement under which the Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
in the Registration Statement, or any amendment or supplement to such
Registration Statement, or arise out of or are based upon the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and the Company
will reimburse such Purchaser and each such controlling person and
affiliate for any legal or any other expenses reasonably incurred by such
Purchaser, controlling person or affiliate in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises
out of or is based upon any untrue statement or omission made in such
Registration Statement, preliminary prospectus or final prospectus, or any
such amendment or supplement, in reliance upon and in conformity with
information furnished to the Company, in writing, by or on behalf of such
Purchaser, controlling person or affiliate specifically for use in the
preparation thereof.
6.2 INDEMNIFICATION BY THE PURCHASERS. Each Purchaser, severally and not
jointly, will indemnify and hold harmless the Company, each of its
directors and officers and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages or liabilities, joint or several, to which the
Company, such directors and officers or controlling person may become
subject under the Securities Act, Exchange Act, state securities or Blue
Sky laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement under which the Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based
upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, but only to the extent the statement or omission was made in
reliance upon and in conformity with information relating to such
Purchaser furnished in writing to the Company by or on behalf of such
Purchaser specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement; provided,
however, that the obligations of each Purchaser hereunder shall be limited
to an amount equal to the net proceeds to such Purchaser of Shares sold in
connection with such registration.
6.3 INDEMNIFICATION PROCEDURES. Each party entitled to indemnification
under this Section 6 (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying Party")
promptly
13
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom;
provided, that counsel for the Indemnifying Party, who shall conduct the
defense of such claim or litigation, shall be approved by the Indemnified
Party (whose approval shall not be unreasonably withheld); and, provided
further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 6, unless and except to the extent that the
Indemnifying Party is prejudiced by the failure of the Indemnified Party
to provide timely notice. The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying
Party shall pay such expense if representation of such Indemnified Party
by the counsel retained by the Indemnifying Party would be inappropriate
in the judgment of the Indemnified Party due to actual or potential
differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect of such claim or litigation, and no
Indemnified Party shall consent to entry of any judgment or settle such
claim or litigation without the prior written consent of the Indemnifying
Party.
6.4 CONTRIBUTION. In order to provide for just and equitable contribution
to joint liability under the Securities Act in any case in which either
(a) any Purchaser, or any controlling person of any such Purchaser, makes
a claim for indemnification pursuant to this Section 6 but it 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 this Section 6
provides for indemnification in such case, or (b) contribution under the
Securities Act may be required on the part of any such Purchaser or any
such controlling person in circumstances for which indemnification is
provided under this Section 6; then, in each such case, the Company and
such Purchaser will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others)
in such proportions so that such Purchaser is responsible for the portion
represented by the percentage that the public offering price of its Shares
offered by the Registration Statement bears to the public offering price
of all securities offered by such Registration Statement, and the Company
is responsible for the remaining portion; provided, however, that, in any
such case, (x) no such Purchaser will be required to contribute any amount
in excess of the net proceeds to it of all Shares sold by it pursuant to
such Registration Statement and (y) no person or entity guilty of
fraudulent misrepresentation, within the meaning of Section 11(f) of the
Securities Act, shall
14
be entitled to contribution from any person or entity who is not guilty of
such fraudulent misrepresentation.
7. RIGHT OF FIRST REFUSAL.
7.1 LIMITATION ON FUTURE ISSUANCES. For a period of one year from the date
hereof, the Company shall not issue, sell or exchange, or agree to issue,
sell or exchange (a) any shares of its Common Stock or (b) any option,
warrant or other right that is exercisable for, or convertible into,
shares of its Common Stock (collectively, "Offered Securities"), unless in
each such case the Company shall have first complied with this Section 7.
7.2 PROCEDURE.
(a) The Company shall deliver to each Purchaser a written notice of
any proposed or intended issuance, sale or exchange of Offered Securities
(the "Offer"), which Offer shall (i) identify and describe the Offered
Securities, (ii) describe the price and other terms upon which they are to
be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged and (iii) offer to issue and
sell to or exchange with such Purchaser that number of the Offered
Securities which represents the same percentage of the total Offered
Securities as the number of Shares held by such Purchaser represents of
the total number of shares of Common Stock outstanding (the "Basic
Amount"). Each Purchaser shall have the right, for a period of 10 business
days following delivery of the Offer, to accept the Offer in the manner
set forth below. The Offer by its term shall remain open and irrevocable
for such 10-business day period. To accept an Offer, in whole or in part,
a Purchaser must deliver a written notice to the Company prior to the end
of the 10-business day period of the Offer, setting forth the portion of
such Purchaser's Basic Amount that such Purchaser elects to purchase (the
"Notice of Acceptance").
(b) The Company shall have 60 days from the expiration of the
10-business day period set forth above to issue, sell or exchange all or
any part of such Offered Securities as to which a Notice of Acceptance has
not been given by the Investors, but only upon terms and conditions which
are not more favorable, in the aggregate, to the acquiring person or
persons or less favorable to the Company than those set forth in the
Offer.
(c) Any Offered Securities not acquired by the Purchasers or other
persons in accordance with Section 7.2 may not be issued, sold or
exchanged until they are again offered to the Purchasers under the
procedures specified in this Section 7.
7.3 EXCLUDED ISSUANCES. The rights of the Purchasers under this Section 7
shall not apply to:
15
(a) Common Stock issued as a stock dividend to holders of Common
Stock or upon any subdivision or combination of shares of Common Stock;
(b) the issuance of shares of Common Stock, or options exercisable
therefor, to employees, consultants, directors, equipment lessors or banks
(in commercial bank financing arrangements) or similar institutional
credit financing sources;
(c) securities issued solely in consideration for the acquisition
(whether by merger or otherwise) by the Company or any of its subsidiaries
of stock or assets of any other entity, or in connection with a licensing
or strategic partnering transaction approved by the Board of Directors of
the Company (and the stockholders, if required under applicable law or
regulation); or
(d) shares of Common Stock sold by the Company in an underwritten
public offering pursuant to an effective registration statement under the
Securities Act.
8. MISCELLANEOUS.
8.1 ASSIGNABILITY. This Agreement, and the rights and obligations of the
Purchaser hereunder, may not be assigned in whole or in part by Purchaser
to any person or entity other than to an affiliate of such Purchaser or
its ultimate parent entity.
8.2 CONFIDENTIALITY. Purchaser agrees that it will keep confidential and
will not disclose or divulge any confidential, proprietary or secret
information which Purchaser may obtain from the Company pursuant to this
Agreement, unless such information is known, or until such information
becomes known, to the public; provided, however, that Purchaser may
disclose such information (a) to its attorneys, accountants, consultants
and other professionals to the extent necessary to obtain their services
in connection with its investment in the Company, (b) to any prospective
purchaser of any Shares from a Purchaser as long as such prospective
purchaser agrees in writing to be bound by the provisions of this Section
or (c) to any affiliate of a Purchaser; subject, in each case, to the
agreement of such party to keep such information confidential as set forth
herein.
8.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements,
representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the closing of the
transactions contemplated hereby.
8.4 NOTICES. All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be delivered by hand,
sent via a
16
reputable nationwide overnight courier service, transmitted via facsimile
with hard copy via U.S. mail, or mailed by first class certified or
registered mail, return receipt requested, postage prepaid:
If to the Company, at White Pine Software, Inc., 000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxx Xxxxxxxxx 00000, Attention: Chief Executive Officer, or
at such other address as may have been furnished in writing by the
Company to the Purchaser, with a copy to: Xxxx X. Xxxxxxx, Esq.,
Xxxxx, Xxxx & Xxxxx LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000; or
If to any Purchaser, at its address as indicated on Exhibit A below,
or at such other address or addresses as may have been furnished in
writing by the Purchaser to the Company.
Notices provided in accordance with this Section 8.4 shall be deemed
delivered upon personal delivery, one business day after being sent via a
reputable nationwide overnight courier service for next business day
delivery, or two business days after deposit in the mail and on the next
business day following transmittal via facsimile.
8.5 EXPENSES. The Company and each Purchaser each agree to indemnify and
save the other harmless from and against any and all claims, liabilities
or obligations with respect to brokerage or finders' fees or commissions
in connection with the transactions contemplated by this Agreement
asserted by any person on the basis of any agreement, statement or
representation alleged to have been made by such indemnifying party. The
Company shall pay its own expenses, including attorneys' fees, and the
reasonable fees and out-of-pocket expenses of one legal counsel for CFE,
Inc.
8.6 ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
8.7 AMENDMENT AND WAIVER. Except as otherwise expressly set forth in this
Agreement, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), with the
written consent of the Company and of Purchasers holding in the aggregate
not less than two-thirds (67%) of all the Shares then outstanding and held
by the Purchasers. Any amendment or waiver effected in accordance with
this Section 6.7 shall be binding upon each holder of any Shares. No
waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition
or provision.
17
8.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which shall be one and the same document.
8.9 SEPARATE AGREEMENT WITH EACH PURCHASER. While this Agreement is being
executed in multiple counterparts with multiple Purchasers, the
transaction with each Purchaser shall be considered a separate transaction
and none of the rights or obligations of any Purchaser shall be the in any
way affected by actions of any other Purchasers except to the extent that
Purchasers are required by the terms hereof to act as a group.
8.10 HEADINGS. The section headings are for the convenience of the parties
and in no way alter, modify, amend, limit or restrict the contractual
obligations of the parties.
8.11 ENFORCEABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
8.12 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
the choice of law provisions thereof.
* * *
18
Executed as of the date first written above.
WHITE PINE SOFTWARE, INC.
By:______________________________
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
PURCHASER:
Shares Purchased Dollars Invested
---------------- ----------------
325,521 $5,000,003
CFE, Inc.
---------
(Purchaser's name here)
/ / Check this box to indicate that the undersigned is acting as
attorney-in-fact for certain advisory client Purchasers with respect to
which it has discretionary authority.
By:_______________________________
Name:_____________________________
Title:____________________________
Date:_____________________________
Address for delivery of shares:
__________________________________
__________________________________
19
Exhibit A
LIST OF PURCHASERS
Purchaser Dollars
Name and Address Shares Purchased Invested
---------------- ---------------- --------
CFE, Inc. 325,521 $5,000,003
c/o General Electric Capital Corporation
00 Xxxxx XxXxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: White Pine Account Manager
Phone: 000.000.0000
Fax: 000.000.0000
with copies to:
General Electric Capital Corporation
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Phone: 000.000.0000
Fax: 000.000.0000
and
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Corporate Counsel/Commercial Finance
Phone: 000.000.0000
Fax: 000.000.0000
20
Executed as of the date first written above.
WHITE PINE SOFTWARE, INC.
By:______________________________
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
PURCHASER:
Shares Purchased Dollars Invested
---------------- ----------------
325,521 $5,000,003
CFE, Inc.
---------
(Purchaser's name here)
/ / Check this box to indicate that the undersigned is acting as
attorney-in-fact for certain advisory client Purchasers with respect to
which it has discretionary authority.
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: XXXX X. XXXXXX
-----------------------------
Title: Duly Authorized Signatory
----------------------------
Date: 12/29/99
-----------------------------
Address for delivery of shares:
__________________________________
__________________________________
19
Executed as of the date first written above.
WHITE PINE SOFTWARE, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
PURCHASER:
Shares Purchased Dollars Invested
---------------- ----------------
325,521 $5,000,003
CFE, Inc.
---------
(Purchaser's name here)
/ / Check this box to indicate that the undersigned is acting as
attorney-in-fact for certain advisory client Purchasers with respect to
which it has discretionary authority.
By:_______________________________
Name:_____________________________
Title:____________________________
Date:_____________________________
Address for delivery of shares:
__________________________________
__________________________________
20
