EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of November 7,
1997, by and among DATA RACE, Inc., a Texas corporation, with headquarters
located at 00000 Xxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxx 00000-0000 (the
"COMPANY"), and the investors listed on the Schedule of Buyers attached hereto
(individually, a "BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule 506
of Regulation D ("REGULATION D") as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 ACT");
B. The Company has authorized the following new series of its Preferred
Stock, no par value per share (the "PREFERRED STOCK"): the Company's Series C
Convertible Participating Preferred Stock (the "PREFERRED SHARES"), which shall
be convertible into shares of the Company's Common Stock, no par value per share
(the "COMMON STOCK") (as converted, the "CONVERSION SHARES"), in accordance with
the terms of the Company's Statement of Designations, Preferences and Rights of
the Preferred Shares, substantially in the form attached hereto as Exhibit A
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(the "STATEMENT OF DESIGNATIONS");
C. The Buyers wish to purchase, upon the terms and conditions stated in
this Agreement, initially an aggregate of 5,000 of the Preferred Shares (the
"INITIAL PREFERRED SHARES") in the respective amounts set forth opposite each
Buyer's name on the Schedule of Buyers and warrants, in substantially the form
attached hereto as Exhibit E (the "WARRANTS"), to acquire up to that number of
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shares of Common Stock equal to 15% of the aggregate Purchase Price for the
Initial Preferred Shares divided by the Market Price (as defined in the
Statement of Designations) on the Initial Closing Date (as defined below), which
Warrants shall expire three years after the date of issuance;
D. Subject to the terms and conditions set forth in this Agreement, the
Buyers wish to purchase an aggregate of an additional 3,000 of the Preferred
Shares (the "ADDITIONAL PREFERRED SHARES") in the respective amounts set forth
opposite each Buyer's name in the Schedule of Buyers and Warrants to acquire up
to that number of shares of Common Stock equal to 15% of the aggregate Purchase
Price for the Additional Preferred Shares divided by the Market Price on the
Additional Closing Date (as defined below) (the Initial Preferred Shares and the
Additional Preferred Shares are referred to in this Agreement as the "PREFERRED
SHARES"); and
E. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit B (the "REGISTRATION RIGHTS
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AGREEMENT") pursuant to which the
Company has agreed to provide certain registration rights under the 1933 Act and
the rules and regulations promulgated thereunder, and applicable state
securities laws.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
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a. Purchase of Preferred Shares. Subject to the satisfaction (or
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waiver) of the conditions set forth in Sections 6(a) and 7(a) below, the Company
shall issue and sell to each Buyer and each Buyer severally agrees to purchase
from the Company the respective number of Initial Preferred Shares set forth
opposite such Buyer's name on the Schedule of Buyers, along with Warrants to
acquire a number of shares of Common Stock equal to $150 divided by the Market
Price (as defined in the Statement of Designations) on the Initial Closing Date
(as defined below) for each Initial Preferred Share purchased (the "INITIAL
CLOSING"). Subject to the satisfaction (or waiver) of the conditions set forth
in Sections 1(c), 6(b) and 7(b) below, the Company shall issue and sell to each
Buyer and each Buyer severally agrees to purchase from the Company the
respective number of Additional Preferred Shares set forth opposite such Buyer's
name on the Schedule of Buyers, along with Warrants to acquire a number of
shares of Common Stock equal to $150 divided by the Market Price on the
Additional Closing Date (as defined below) for each Additional Preferred Share
purchased (the "ADDITIONAL CLOSING"). The Initial Closing and the Additional
Closing collectively are referred to in this Agreement as the "CLOSINGS." The
purchase price (the "PURCHASE PRICE") of each Preferred Share and the related
Warrant at each of the Closings shall be $1,000.
b. The Initial Closing Date. The date and time of the Initial
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Closing (the "INITIAL CLOSING DATE") shall be 10:00 a.m. Central Time, within
three (3) business days following the date hereof, subject to notification of
satisfaction (or waiver) of the conditions to the Initial Closing set forth in
Sections 6(a) and 7(a) below (or such later date as is mutually agreed to by the
Company and the Buyers). The Initial Closing shall occur on the Initial Closing
Date at the offices of Xxxxxx Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000-0000.
c. The Additional Closing Date. The date and time of the Additional
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Closing (the "ADDITIONAL CLOSING DATE") shall be 10:00 a.m. Central Time, on the
fifth business day following the date of the receipt by each Buyer of the
Additional Share Notice (as defined below) following the later of (x) the date
the Registration Statement (as defined in the Registration Rights Agreement) is
declared effective by the SEC and (y) the date the Company's stockholders
approve the issuance of the Securities (as defined in Section 2(a) below) as
described in Section 4(j) below, subject to satisfaction (or waiver) of the
conditions to the Additional Closing set forth in Sections 6(b) and 7(b) and the
conditions set forth in this paragraph (or such later date as is mutually agreed
to by the Company and the Buyers). The Company shall deliver written notice
(the "ADDITIONAL SHARE NOTICE") to each Buyer of the events described in clauses
(x) and (y) of the preceding sentence on the first business day (the "ADDITIONAL
SHARE NOTICE DATE") following the occurrence of the later to occur of such
events.
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Notwithstanding the foregoing, no Buyer shall be required to purchase the
Additional Preferred Shares or the related Warrants unless each of the following
conditions is satisfied: (i) such Buyer shall have received the Additional
Share Notice on or before January 29, 1998; (ii) the Registration Statement
shall have been declared effective and shall remain effective at all times
during the period beginning on the Additional Share Notice Date and ending on
and including the Additional Share Closing Date; (iii) the provisions of Section
4(j) of this Agreement Shall have been satisfied; (iv) during the period
beginning on the date of this Agreement and ending on and including the
Additional Closing Date, there shall not have occurred a public announcement of
a Major Corporate Event (as defined in Section 2(f) of the Statement of
Designations) which has not been abandoned or terminated, a Triggering Event (as
defined in Section 3(d) of the Statement of Designations) or a Material Adverse
Change (as defined below); (v) at all times during the period beginning on the
date of this Agreement and ending on and including the Additional Closing Date,
the Common Stock shall have been designated on the Nasdaq National Market and
shall not have been suspended from trading and the Company shall not have been
notified of any pending or threatened proceeding or other action to delist or
suspend the Common Stock; and (vi) and the Company shall not have previously
delivered an Additional Share Notice. The Additional Closing shall occur on the
Additional Closing Date at the offices of Xxxxxx Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000-0000. The Initial Closing Date and
the Additional Closing Date collectively are referred to in this Agreement as
the "CLOSING DATES." "MATERIAL ADVERSE CHANGE" means any change, event, result
or happening involving, directly or indirectly, the Company or any of its
subsidiaries resulting in a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, including, without limitation, any of the events
listed in Schedule 1(c) hereto.
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d. Form of Payment. On each of the Closing Dates, (i) each Buyer
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shall pay the Purchase Price to the Company for the Preferred Shares and the
Warrants to be issued and sold to such Buyer at the respective Closing, by wire
transfer of immediately available funds in accordance with the Company's written
wire instructions, and (ii) the Company shall deliver to each Buyer, stock
certificates (in the denominations as such Buyer shall request) (the "STOCK
CERTIFICATES") representing such number of the Preferred Shares which such Buyer
is then purchasing (as indicated opposite such Buyer's name on the Schedule of
Buyers) along with the Warrants such Buyer is purchasing hereunder, duly
executed on behalf of the Company and registered in the name of such Buyer or
its designee.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
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Each Buyer represents and warrants with respect to only itself that:
a. Investment Purpose. Such Buyer (i) is acquiring the Preferred
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Shares and the Warrants, (ii) upon conversion of the Preferred Shares, will
acquire the Conversion Shares then issuable and (iii) upon exercise of the
Warrants, will acquire the shares of Common Stock issuable upon exercise thereof
(the "WARRANT SHARES") (the Preferred Shares, the Conversion Shares, the
Warrants and the Warrant Shares collectively are referred to herein as the
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"SECURITIES"), for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933 Act;
provided, however, that by making the representations herein, such Buyer does
not agree to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of Securities at any time in accordance with
or pursuant to a registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status. Such Buyer is an "accredited
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investor" as that term is defined in Rule 501(a)(3) of Regulation D.
c. Reliance on Exemptions. Such Buyer understands that the
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Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire such securities.
d. Information. Such Buyer and its advisors, if any, have been
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furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by such Buyer. Such Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. Neither
such inquiries nor any other due diligence investigations conducted by such
Buyer or its advisors, if any, or its representatives shall modify, amend or
affect such Buyer's right to rely on the Company's representations and
warranties contained in Section 3 below. Such Buyer understands that its
investment in the Securities involves a high degree of risk. Such Buyer has
sought such accounting, legal and tax advice as it has considered necessary to
make an informed investment decision with respect to its acquisition of the
Securities.
e. No Governmental Review. Such Buyer understands that no United
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States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. Such Buyer understands that except as
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provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, to the effect
that such Securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration, or (C) such
Buyer provides the Company with reasonable assurance that such Securities can be
sold, assigned or transferred pursuant to Rule 144 promulgated under the 1933
Act (or a successor rule thereto) ("RULE 144"); (ii) any sale of the
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Securities made in reliance on Rule 144 may be made only in accordance with the
terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in
the 0000 Xxx) may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (iii) neither the
Company nor any other person is under any obligation to register such Securities
under the 1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
g. Legends. Such Buyer understands that the certificates or other
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instruments representing the Preferred Shares and the Warrants and, until such
time as the sale of the Conversion Shares and the Warrant Shares have been
registered under the 1933 Act as contemplated by the Registration Rights
Agreement, the stock certificates representing the Conversion Shares and the
Warrant Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR
AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for sale under the 1933 Act, (ii) in connection with a
sale transaction, such holder provides the Company with an opinion of counsel,
in a generally acceptable form, to the effect that a public sale, assignment or
transfer of such Securities may be made without registration under the 1933 Act,
or (iii) such holder provides the Company with reasonable assurances that such
Securities can be sold pursuant to Rule 144 without any restriction as to the
number of securities acquired as of a particular date that can then be
immediately sold. Each Buyer acknowledges, covenants and agrees to sell the
Securities represented by a certificate(s) from which the legend has been
removed, only pursuant to (i) a registration statement effective under the 1933
Act, or (ii) advice of counsel that such sale is exempt from registration
required by Section 5 of the 1933 Act.
h. Authorization; Enforcement. This Agreement has been duly and
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validly authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement
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of such Buyer enforceable in accordance with its terms, subject as to
enforceability to general principles of equity and to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
i. Residency. Such Buyer is a resident of that country specified on the
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Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents and warrants to each of the Buyers that:
a. Organization and Qualification. The Company and its subsidiaries
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(a complete list of which is set forth in Schedule 3(a)) are corporations duly
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organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated, and have the requisite corporate
power to own their properties and to carry on their business as now being
conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect. As used in this
Agreement, "MATERIAL ADVERSE EFFECT" means any material adverse effect on the
business, properties, assets, operations, results of operations, financial
condition or prospects of the Company and its subsidiaries, if any, taken as a
whole, or on the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith.
b. Authorization; Enforcement; Compliance with Other Instruments.
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(i) The Company has the requisite corporate power and authority to enter into
and perform this Agreement, the Registration Rights Agreement, the Warrants and
each of the other agreements entered into by the parties hereto in connection
with the transactions contemplated by this Agreement (collectively, the
"TRANSACTION DOCUMENTS"), and to issue the Securities in accordance with the
terms hereof and thereof, (ii) the execution and delivery of the Transaction
Documents and the Statement of Designations by the Company and the consummation
by it of the transactions contemplated hereby and thereby, including without
limitation the issuance of the Preferred Shares and the Warrants and the
reservation for issuance and the issuance of the Conversion Shares and the
Warrant Shares issuable upon conversion or exercise thereof, have been duly
authorized by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
stockholders, (iii) the Transaction Documents have been duly executed and
delivered by the Company, (iv) the Transaction Documents constitute the valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies, and (v)
prior to each of the Closing Dates, the Statement of
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Designations has been filed with the Secretary of State of the State of Texas
and will be in full force and effect, enforceable against the Company in
accordance with its terms.
c. Capitalization. As of the date hereof, the authorized capital
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stock of the Company consists of (i) 20,000,000 shares of Common Stock, of which
as of November 6, 1997, 5,541,677 shares were issued and outstanding, 2,154,430
shares are issuable and reserved for issuance pursuant to the Company's stock
option and purchase plans and 24,816 shares are issuable and reserved for
issuance pursuant to securities (other than the Preferred Shares and the
Warrants) exercisable or exchangeable for, or convertible into, shares of Common
Stock plus an indeterminate number of shares of Common Stock issuable upon
conversion of the 805 outstanding shares of Series A Convertible Preferred
Stock, no par value per share, of the Company (the "SERIES A PREFERRED STOCK")
and (ii) 1,169,785 shares of preferred stock, which as of the date hereof, 805
were issued and outstanding. All of such outstanding shares have been, or upon
issuance will be, validly issued and are fully paid and nonassessable. Except
as disclosed in Schedule 3(c), no shares of Common Stock or Preferred Stock are
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subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company. Except as disclosed in
Schedule 3(c), as of the effective date of this Agreement, (i) there are no
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outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities and (iii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement). Except as disclosed in Schedule 3(c), there are
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no securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Securities as described in this
Agreement. The Company has furnished to the Buyers true and correct copies of
the Company's Articles of Incorporation, as amended and as in effect on the date
hereof (the "ARTICLES OF INCORPORATION"), and the Company's By-laws, as in
effect on the date hereof (the "BY-LAWS"), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.
d. Issuance of Securities. The Preferred Shares are duly authorized
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and, upon issuance in accordance with the terms hereof, shall be (i) validly
issued, fully paid and non-assessable, (ii) free from all taxes, liens and
charges with respect to the issue thereof and (iii) entitled to the rights and
preferences set forth in the Statement of Designations. A number of shares of
Common Stock equal to 200% of the number of Conversion Shares issuable upon
conversion of the Preferred Shares and exercise of the Warrants outstanding on
the applicable Closing Date (after giving effect to the Preferred Shares and
Warrants issued on such Closing Date and assuming all such outstanding Preferred
Shares and Warrants were fully convertible or exercisable on such date
regardless of any limitation on the timing or amount of such
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conversions or exercises) initially have been duly authorized and reserved for
issuance (subject to adjustment pursuant to the Company's covenant set forth in
Section 4(f) below) upon conversion of the Preferred Shares and upon exercise of
the Warrants. Upon conversion or exercise in accordance with the Statement of
Designations or the Warrants, as the case may be, the Conversion Shares and the
Warrant Shares will be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock. The
issuance by the Company of the Securities is exempt from registration under the
1933 Act.
e. No Conflicts. Except as disclosed in Schedule 3(e), the
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execution, delivery and performance of the Transaction Documents by the Company,
the performance by the Company of its obligations under the Statement of
Designations and the consummation by the Company of the transactions
contemplated hereby and thereby will not (i) result in a violation of the
Articles of Incorporation, any Statement of Designations, Preferences and Rights
of any outstanding series of Preferred Stock of the Company or the By-laws or
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any material
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the principal market or exchange on
which the Common Stock is traded or listed) applicable to the Company or any of
its subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected. Except as disclosed in Schedule 3(e),
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neither the Company nor its subsidiaries is in violation of any term of or in
default under the Articles of Incorporation, any Statement of Designations,
Preferences and Rights of any outstanding series of Preferred Stock or the By-
laws or their organizational charter or by-laws, respectively, or any contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the Company or its
subsidiaries, except for possible conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations that would not individually or in
the aggregate have a Material Adverse Effect. The business of the Company and
its subsidiaries is not being conducted, and shall not be conducted, in
violation of any law, ordinance, regulation of any governmental entity, except
for possible violations the sanctions for which either individually or in the
aggregate would not have a Material Adverse Effect. Except as specifically
contemplated by this Agreement and as required under the 1933 Act, the Company
is not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency or any regulatory
or self regulatory agency in order for it to execute, deliver or perform any of
its obligations under or contemplated by the Transaction Documents or to perform
its obligations under the Statement of Designations, in each case in accordance
with the terms hereof or thereof. Except as disclosed in Schedule 3(e), all
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consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company and its subsidiaries are
unaware of any facts or circumstances which might give rise to any of the
foregoing.
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f. SEC Documents; Financial Statements. Since June 30, 1994, the
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Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 ACT") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC DOCUMENTS"). The
Company has delivered to the Buyers or their respective representatives true and
complete copies of the SEC Documents. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to
the Buyers which is not included in the SEC Documents, including, without
limitation, information referred to in Section 2(d) of this Agreement, contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading. Neither the
Company nor any of its subsidiaries or any of their officers, directors,
employees or agents have provided the Buyers with any material, nonpublic
information which will continue to be material, nonpublic information on the
date the Registration Statement is filed with the SEC.
g. Absence of Certain Changes. Except as disclosed in Schedule 3(g)
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or in the SEC Documents filed at least ten days prior to the date hereof, since
June 30, 1997, there has been no material adverse change and no material adverse
development in the business, properties, operations, financial condition,
results of operations or prospects of the Company or its subsidiaries. The
Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy law nor does the Company or
its subsidiaries have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings.
h. Absence of Litigation. There is no action, suit, proceeding,
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inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its subsidiaries,
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threatened against or affecting the Company, the Common Stock or any of the
Company's subsidiaries or any of the Company's or the Company's subsidiaries'
officers or directors in their capacities as such, except as expressly set forth
in Schedule 3(h) or in the SEC Documents filed at least ten days prior to the
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date hereof. The Company is not in violation of the listing requirements of the
Nasdaq National Market and does not reasonably anticipate that the Common Stock
will be delisted by the Nasdaq National Market for the foreseeable future.
i. Acknowledgment Regarding Buyers' Purchase of Preferred Shares.
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The Company acknowledges and agrees that each of the Buyers is acting solely in
the capacity of arm's length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby. The Company further acknowledges
that each Buyer is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by any of the Buyers or
any of their respective representatives or agents in connection with the
Transaction Documents and the transactions contemplated thereby is merely
incidental to such Buyer's purchase of the Securities. The Company further
represents to each Buyer that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.
j. No Undisclosed Events, Liabilities, Developments or
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Circumstances. No event, liability, development or circumstance has occurred or
exists, with respect to the Company or its subsidiaries or their respective
business, properties, prospects, operations or financial condition, that would
be required to be disclosed by the Company under applicable securities laws on a
registration statement filed with the SEC relating to an issuance and sale by
the Company of its Common Stock and which has not been publicly announced.
k. No General Solicitation. Neither the Company, nor any of its
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affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 0000 Xxx) in connection with the offer or sale of the
Securities.
l. No Integrated Offering. Neither the Company, nor any of its
----------------------
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of The Nasdaq Stock Market, Inc., nor will the
Company or any of its subsidiaries take any action or steps that would require
registration of the Securities under the 1933 Act or cause the offering of the
Securities to be integrated with other offerings.
m. Employee Relations. Neither the Company nor any of its
------------------
subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its subsidiaries, is any such dispute threatened. Neither the
Company nor any of its subsidiaries
-10-
is a party to a collective bargaining agreement, and the Company and its
subsidiaries believe that relations with their employees are good.
n. Intellectual Property Rights. The Company and its subsidiaries
----------------------------
own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on Schedule 3(n), none of the
-------------
Company's trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other intellectual
property rights necessary to conduct its business as now or as proposed to be
conducted have expired or terminated, or are expected to expire or terminate
within two years from the date of this Agreement. The Company and its
subsidiaries do not have any knowledge of any infringement by the Company or its
subsidiaries of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service xxxx
registrations, trade secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical information by
others and, except as set forth on Schedule 3(n), there is no claim, action or
-------------
proceeding being made or brought against, or to the Company's knowledge, being
threatened against, the Company or its subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service names,
service marks, service xxxx registrations, trade secret or other infringement;
and the Company and its subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing. The Company and its subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties.
o. Environmental Laws. The Company and its subsidiaries (i) are in
------------------
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval where, in each of the three
foregoing cases, the failure to so comply would have, individually or in the
aggregate, a Material Adverse Effect.
p. Title. The Company and its subsidiaries have good and marketable
-----
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as are described in Schedule 3(p) or such as do not
-------------
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company or any of its
subsidiaries. Any real property and facilities held under lease by the Company
or any of its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material
-11-
and do not interfere with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries.
q. Insurance. The Company and each of its subsidiaries are insured
---------
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its subsidiaries are
engaged. Neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole.
r. Regulatory Permits. The Company and its subsidiaries possess all
------------------
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
s. Internal Accounting Controls. The Company and each of its
----------------------------
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
t. No Materially Adverse Contracts, Etc. Neither the Company nor
-------------------------------------
any of its subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.
u. Tax Status. Except as set forth on Schedule 3(u), the Company
---------- -------------
and each of its subsidiaries has made or filed all federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods
-12-
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.
v. Certain Transactions. Except as set forth on Schedule 3(v) and
-------------------- -------------
in the SEC Documents filed at least ten days prior to the date hereof and except
for arm's length transactions pursuant to which the Company makes payments in
the ordinary course of business upon terms no less favorable than the Company
could obtain from third parties and other than the grant of stock options
disclosed on Schedule 3(c), none of the officers, directors, or employees of the
-------------
Company is presently a party to any transaction with the Company or any of its
subsidiaries (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
w. Dilutive Effect. The Company understands and acknowledges that
---------------
the number of Conversion Shares issuable upon conversion of the Preferred Shares
and the Warrant Shares issuable upon exercise of the Warrants will increase in
certain circumstances. The Company further acknowledges that, subject to such
limitations as are expressly set forth in the Transaction Documents, its
obligation to issue Conversion Shares upon conversion of the Preferred Shares in
accordance with this Agreement and the Statement of Designations and its
obligation to issue the Warrant Shares upon exercise of the Warrants in
accordance with this Agreement and the Warrants, is, in each case, absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company.
x. No Other Agreements. The Company has not, directly or
-------------------
indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.
4. COVENANTS.
---------
a. Best Efforts. Each party shall use its best efforts timely to
------------
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D with respect to the
------
Securities as required under Regulation D and to provide a copy thereof to each
Buyer promptly after such filing. The Company shall, on or before each of the
Closing Dates, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for, or obtain exemption for the Securities
for, sale to the Buyers at each of the Closings pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the Buyers on or prior to
the Closing Date.
-13-
c. Reporting Status. Until the earlier of (i) the date which is one
----------------
year after the date as of which the Investors (as that term is defined in the
Registration Rights Agreement) may sell all of the Conversion Shares and the
Warrant Shares without restriction pursuant to Rule 144(k) promulgated under the
1933 Act (or successor thereto), or (ii) the date on which (A) the Investors
shall have sold all the Conversion Shares and the Warrant Shares and (B) none of
the Preferred Shares or Warrants is outstanding (the "REGISTRATION PERIOD"), the
Company shall file all reports required to be filed with the SEC pursuant to the
1934 Act, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
d. Use of Proceeds. The Company will use the proceeds from the sale
---------------
of the Preferred Shares for working capital and general corporate purposes.
e. Financial Information. The Company agrees to send the following
---------------------
to each Investor (as that term is defined in the Registration Rights Agreement)
during the Registration Period: (i) within two (2) days after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports
on Form 10-Q, any Current Reports on Form 8-K and any registration statements or
amendments (other than on Form S-8) filed pursuant to the 1933 Act; (ii) on the
same day as the release thereof, facsimile copies of all press releases issued
by the Company or any of its subsidiaries and (iii) copies of any notices and
other information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders.
f. Reservation of Shares. The Company shall take all action
---------------------
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 200% of the number of shares of Common Stock needed to
provide for the issuance of the Conversion Shares and the Warrant Shares.
g. Right of First Refusal. Subject to the exceptions described
----------------------
below, the Company and its subsidiaries shall not contract with any party for
any equity financing (including any debt financing with an equity component) or
issue any equity securities of the Company or any subsidiary or securities
convertible or exchangeable into or for equity securities of the Company or any
subsidiary (including debt securities with an equity component) in any form
("FUTURE OFFERINGS") during the period beginning on the Closing Date and ending
on and including the date which is 365 days after the Closing Date, unless it
shall have first delivered to each Buyer or a designee appointed by such Buyer
written notice (the "FUTURE OFFERING NOTICE") describing the proposed Future
Offering, including the terms and conditions thereof, and providing each Buyer
an option to purchase up to its Aggregate Percentage (as defined below), as of
the date of delivery of the Future Offering Notice, in the Future Offering (the
limitations referred to in this sentence are collectively referred to as the
"CAPITAL RAISING LIMITATION"). For purposes of this Section 4(g), "AGGREGATE
PERCENTAGE" at any time with respect to any Buyer shall mean the percentage
obtained by dividing (i) the aggregate number of Preferred Shares purchased by
such Buyer at the Closings by (ii) the aggregate number of
-14-
Preferred Shares purchased by all Buyers at the Closings. A Buyer can exercise
its option to participate in a Future Offering by delivering written notice
thereof to participate to the Company within ten (10) business days of receipt
of a Future Offering Notice, which notice shall state the quantity of securities
being offered in the Future Offering that such Buyer will purchase, up to its
Aggregate Percentage, and that number of securities it is willing to purchase in
excess of its Aggregate Percentage. In the event that one or more Buyers fail
to elect to purchase up to each such Buyer's Aggregate Percentage then each
Buyer which has indicated that it is willing to purchase a number of securities
in excess of its Aggregate Percentage shall be entitled to purchase its pro rata
portion (determined in the same manner as described in the preceding sentence)
of the securities in the Future Offering which one or more Buyers have not
elected to purchase. In the event the Buyers fail to elect to fully participate
in the Future Offering within the periods described in this Section 4(g), the
Company shall have 45 days thereafter to sell the securities of the Future
Offering respecting which such Buyer's rights were not exercised, upon terms and
conditions, no more favorable to the purchasers thereof than specified in the
Future Offering Notice. In the event the Company has not sold such securities
of the Future Offering within such 45 day period, the Company shall not
thereafter issue or sell such securities without first offering such securities
to the Buyers in the manner provided in this Section 4(g). The Capital Raising
Limitation shall not apply to (i) a loan from a commercial bank, (ii) any
transaction involving the Company's issuances of securities (A) as consideration
in a merger or consolidation, (B) in connection with any strategic partnership
or joint venture (the primary purpose of which is not to raise equity capital),
or (C) as consideration for the acquisition of a business, product or license or
other assets by the Company, (iii) the issuance of Common Stock in a firm
commitment, underwritten public offering, (iv) the issuance of securities upon
exercise or conversion of the Company's options, warrants or other convertible
securities outstanding as of the date hereof, (v) the grant of additional
options or warrants, or the issuance of additional securities, under any Company
stock option plan, restricted stock plan, stock purchase plan or other plan or
written compensation contract for the benefit of the Company's employees or
directors, or (vi) the issuance of securities pursuant to the Rights Agreement,
dated September 15, 1997, between the Company and ChaseMellon Shareholder
Services, L.L.C., as amended from time to time in accordance with its terms (the
"RIGHTS AGREEMENT"). The Buyers shall not be required to participate or
exercise their right of first refusal with respect to a particular Future
Offering in order to exercise their right of first refusal with respect to later
Future Offerings.
h. Listing. The Company shall promptly secure the listing of all of
-------
the Registrable Securities (as defined in the Registration Rights Agreement)
upon each national securities exchange and automated quotation system (including
the Nasdaq National Market), if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall use its best efforts
to maintain, so long as any other shares of Common Stock shall be so listed,
such listing of all Registrable Securities from time to time issuable under the
terms of the Transaction Documents and the Statement of Designations. The
Company shall use its best efforts to maintain the Common Stock's authorization
for quotation on the Nasdaq National Market, The New York Stock Exchange, Inc.
("NYSE") or The American Stock Exchange, Inc. ("AMEX"). Neither the Company nor
any of its subsidiaries shall take any action which would
-15-
be reasonably expected to result in the delisting or suspension of the Common
Stock on the Nasdaq National Market, NYSE or AMEX. The Company shall promptly
provide to each Buyer copies of any notices it receives from the Nasdaq National
Market, NYSE or AMEX regarding the continued eligibility of the Common Stock for
listing on such automated quotation system or securities exchange. The Company
shall pay all fees and expenses in connection with satisfying its obligations
under this Section 4(h).
i. Expenses. Subject to Section 9(l) below, following the Closing,
--------
the Company shall reimburse the Buyers for the Buyers' reasonable expenses
(including attorneys fees and expenses) in connection with negotiating and
preparing the Transaction Documents and consummating the transactions
contemplated thereby.
j. Proxy Statement. The Company shall hold its next meeting of
---------------
stockholders on or before January 15, 1998 or, in the event the proxy statement
described in the following sentence is reviewed by the SEC, January 29, 1998
(the "STOCKHOLDER MEETING DEADLINE"). The Company shall provide each
stockholder entitled to vote at such meeting of stockholders of the Company, a
proxy statement, which has been previously reviewed by the Buyers and a counsel
of their choice, soliciting each such stockholder's affirmative vote at such
annual stockholder meeting for approval of the Company's issuance of all of the
Securities pursuant to the Statement of Designations and the Warrants and the
Company shall use its best efforts to solicit its stockholders' approval of such
issuance of the Securities and cause the Board of Directors of the Company to
recommend to the stockholders that they approve such proposal. Such proxy
statement shall not seek approval of any matters other than the approval
described in the preceding sentence, the election of directors, the approval of
a stock option plan of the Company for up to 500,000 shares of Common Stock and
such other matters which broker votes have discretionary authority to approve.
The Company shall file such proxy statement with the SEC as soon as possible but
in no event later than November 19, 1997 (the "PROXY STATEMENT FILING DUE
DATE"). If the Company fails to file the proxy statement referred to above by
the Proxy Statement Filing Due Date or fails to hold a meeting of its
stockholders by the Stockholder Meeting Deadline, then, as partial relief (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to each holder of Preferred Shares an amount in
cash per Preferred Share equal to the product of (i) $1,000 multiplied by (ii)
.02 multiplied by (iii) the quotient of (x) the sum of (A) the number of days
after the Proxy Statement Filing Due Date and prior to the date that the proxy
statement referred to above is filed with the SEC and (B) the number of days
after the Stockholder Meeting Deadline and prior to the date that a meeting of
the Company's stockholders is held, divided by (y) 30. The payments referred to
above shall be paid within five business days of the date incurred. In the
event the Company fails to make such payments in a timely manner, such payments
shall bear interest at the rate of 2.0% per month (pro rated for partial months)
until paid in full.
k. Filing of Form 8-K. On or before the fifth (5th) business day
------------------
following each of the Closing Dates, the Company shall file a Form 8-K with the
SEC describing the terms
-16-
of the transaction contemplated by the Transaction Documents and consummated at
such Closing, in each case in the form required by the 1934 Act.
l. Limitation on Short Sales of the Common Stock. Each Buyer
---------------------------------------------
severally agrees that during the period beginning on the Initial Closing Date
and ending on the date which is 180 days after the Initial Closing Date, such
Buyer agrees that it will not enter into, directly or indirectly, any "short
sale" (as such term is defined in Rule 3b-3 of the 0000 Xxx) of Common Stock;
provided, however, that the restrictions on short sales set forth above shall
not apply (i) at any time during which the last reported bid price for the
Common Stock (as reported by Bloomberg Financial Markets "BLOOMBERG") is not
less than the product of (A) 1.1 and (B) the Market Price (as defined in Section
1(b) of the Statement of Designations) for the Common Stock as of the Closing
Date, (ii) if there has been any Material Adverse Change (as defined in Section
2(j) of the Statement of Designations) or Triggering Event (as defined in
Section 3(d) of the Statement of Designations), (iii) if a potential Major
Corporate Event is publicly announced or (iv) the Company is in default under
the Statement of Designations for failing to effect any requested conversion or
redemption of any Preferred Shares pursuant to the Statement of Designations.
m. Limitation on Filing Registration Statements. The Company shall
--------------------------------------------
not file a registration statement (other than the Registration Statement
pursuant to the terms of the Registration Rights Agreement, a registration
statement on Form S-4 relating to the Reorganization (as defined in Schedule
--------
4(m)) or a registration statement on Form S-8) covering the sale or resale of
----
shares of Common Stock with SEC during the period beginning on the date hereof
and ending on the date which is the earlier of (i) 90 days after the Additional
Closing Date and (ii) May 5, 1998. Notwithstanding the foregoing, the Company
shall not file with the SEC the Form S-4 registration statement relating to the
Reorganization before the later of (x) the date on which the preliminary proxy
statement relating to the approval of the issuance of the Securities (as
described in Section 4(j)) has been approved by the SEC (or the period of time
in which the SEC has to review the preliminary proxy statement has expired) and
(y) the date on which the SEC declares the Registration Statement effective.
n. Corporate Indebtedness. So long as any Buyer beneficially owns
----------------------
any Preferred Shares, the Company shall not (i) incur any indebtedness pursuant
to its line of credit with Imperial Bank unless and until the Company receives a
waiver, in form and substance satisfactory to the holders of the Preferred
Shares, the ("WAIVER") of the covenant contained in the documentation executed
by the Company in connection with that certain Security and Loan Agreement dated
November 12, 1996, between the Company and Imperial Bank prohibiting the Company
from making any distribution with respect to, or purchasing, redeeming or
retiring, the Preferred Shares or Warrants or (ii) incur any indebtedness for
borrowed money except pursuant to lines of credit, with reputable financial
institutions, which do not contain any terms which may have the effect of
impairing the rights of the holders of the Preferred Shares, whether such lines
of credit now exist or are hereafter established.
-17-
o. Rights Agreement. The Company specifically represents, warrants
----------------
and agrees that, in accordance with Section 1 of the Rights Agreement and clause
(iii) of the definition of "Acquiring Person" contained therein, regardless of
the number of Conversion Shares and Warrant Shares of which each Buyer is deemed
the Beneficial Owner (as defined in the Rights Agreement), none of the Buyers is
intended to be or will be deemed to be an Acquiring Person within the meaning of
the Rights Plan because of the acquisition of the Securities (including the
Conversion Shares and the Warrant Shares) pursuant to this Agreement, and the
acquisition of the Securities (including the Conversion Shares and the Warrant
Shares) pursuant to this Agreement, shall not, under any circumstances, trigger
a Distribution Date within the meaning of the Rights Plan; provided, however,
that only Securities (including the Conversion Shares and the Warrant Shares)
acquired pursuant to this Agreement shall be deemed excluded from the number of
Common Shares (as defined in the Rights Agreement) deemed beneficially owned by
each Buyer in determining whether such Buyer is an Acquiring Person within the
meaning of the Rights Plan.
5. TRANSFER AGENT INSTRUCTIONS.
---------------------------
The Company shall issue irrevocable instructions to its transfer
agent, and any subsequent transfer agent, to issue certificates, registered in
the name of each Buyer or its respective nominee(s), for the Conversion Shares
and the Warrant Shares in such amounts as specified from time to time by each
Buyer to the Company upon conversion of the Preferred Shares or exercise of the
Warrants (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). Prior to registration
of the Conversion Shares and the Warrant Shares under the 1933 Act, all such
certificates shall bear the restrictive legend specified in Section 2(g) of this
Agreement. The Company warrants that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 5, and stop transfer
instructions to give effect to Section 2(f) hereof (in the case of the
Conversion Shares and the Warrant Shares, prior to registration of the
Conversion Shares and the Warrant Shares under the 0000 Xxx) will be given by
the Company to its transfer agent and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. Nothing in
this Section 5 shall affect in any way each Buyer's obligations and agreements
set forth in Section 2(g) to comply with all applicable prospectus delivery
requirements, if any, upon resale of the Securities. If a Buyer provides the
Company with an opinion of counsel, in generally acceptable form, that
registration of a resale by such Buyer of any of such Securities is not required
under the 1933 Act, the Company shall permit the transfer, and, in the case of
the Conversion Shares and the Warrant Shares, promptly instruct its transfer
agent to issue one or more certificates in such name and in such denominations
as specified by such Buyer and without any restrictive legends. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyers by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5, that the Buyers shall be entitled,
in addition to all other available remedies, to an
-18-
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
a. Initial Closing Date. The obligation of the Company hereunder to
--------------------
issue and sell the Initial Preferred Shares to each Buyer at the Initial Closing
is subject to the satisfaction, at or before the Initial Closing Date, of each
of the following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion by providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the Transaction Documents
and delivered the same to the Company.
(ii) The Statement of Designations shall have been filed with the
Secretary of State of the State of Texas.
(iii) Such Buyer shall have delivered to the Company the Purchase
Price for the Initial Preferred Shares and the related Warrants being
purchased by such Buyer at the Initial Closing by wire transfer of
immediately available funds pursuant to the wire instructions provided by
the Company.
(iv) The representations and warranties of such Buyer shall be true
and correct as of the date when made and as of the Initial Closing Date as
though made at that time (except for representations and warranties that
speak as of a specific date), and such Buyer shall have performed,
satisfied and complied with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or
complied with by such Buyer at or prior to the Initial Closing Date.
b. Additional Closing Dates. The obligation of the Company
------------------------
hereunder to issue and sell the Additional Preferred Shares to each Buyer at the
Additional Closing is subject to the satisfaction, at or before the Additional
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with prior written
notice thereof:
(i) Such Buyer shall have delivered to the Company the Purchase
Price for the Additional Preferred Shares and the related Warrants being
purchased by such Buyer at the Additional Closing by wire transfer of
immediately available funds pursuant to the wire instructions provided by
the Company.
(ii) The representations and warranties of such Buyer shall be true
and correct as of the date when made and as of the Additional Closing Date
as though made at that time (except for representations and warranties that
speak as of a specific date), and such
-19-
Buyer shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by such Buyer at or prior to the
Additional Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
-------------------------------------------------
a. Initial Closing Date. The obligation of each Buyer hereunder to
--------------------
purchase the Initial Preferred Shares at the Initial Closing is subject to the
satisfaction, at or before the Initial Closing Date, of each of the following
conditions, provided that these conditions are for each Buyer's sole benefit and
may be waived by such Buyer at any time in its sole discretion:
(i) The Company shall have executed each of the Transaction
Documents, and delivered the same to such Buyer.
(ii) The Statement of Designations shall have been filed with the
Secretary of State of the State of Texas, and a copy thereof certified by
such Secretary of State shall have been delivered to such Buyer.
(iii) The Common Stock shall be authorized for quotation on the
Nasdaq National Market, NYSE or AMEX, trading in the Common Stock shall not
have been suspended by the SEC, The Nasdaq Stock Market, Inc., NYSE or AMEX
on the Initial Closing Date.
(iv) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Initial Closing Date as
though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed,
satisfied and complied with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or
complied with by the Company at or prior to the Initial Closing Date. Such
Buyer shall have received a certificate, executed by the Chief Financial
Officer of the Company, dated as of the Initial Closing Date, to the
foregoing effect and as to such other matters as may be reasonably
requested by such Buyer including, without limitation, an update as of the
Initial Closing Date regarding the representation contained in Section 3(c)
above.
(v) Such Buyer shall have received the opinion of the Company's
counsel dated as of the Initial Closing Date, in form, scope and substance
reasonably satisfactory to such Buyer and in substantially the form of
Exhibit C attached hereto.
---------
(vi) The Company shall have executed and delivered to such Buyer the
Warrants and the Stock Certificates (in such denominations as such Buyer
shall request) for the Preferred Shares being purchased by such Buyer at
the Initial Closing.
-20-
(vii) The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b)(ii) above and in a form reasonably
acceptable to such Buyer (the "RESOLUTIONS").
(viii) As of the Initial Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Preferred Shares and the
exercise of the Warrants, a number of shares of Common Stock equal to at
least 200% of the number of Conversion Shares issuable upon conversion of
the Preferred Shares and exercise of the Warrants outstanding on the
Initial Closing Date (after giving effect to the Preferred Shares and
Warrants to be issued on the Initial Closing Date and assuming all such
Preferred Shares and Warrants were fully convertible or exercisable on such
date regardless of any limitation on the timing or amount of such
conversions or exercises).
(ix) The Irrevocable Transfer Agent Instructions, in the form of
Exhibit D attached hereto, shall have been delivered to and acknowledged in
---------
writing by the Company's transfer agent.
(x) The Company shall have delivered to such Buyer a certificate
evidencing the incorporation and good standing of the Company and each
subsidiary in such corporation's state of incorporation issued by the
Secretary of State of such state of incorporation as of a date within 10
days of the Initial Closing.
(xi) The Company shall have delivered to such Buyer certified copies
of its Articles of Incorporation and Bylaws, each as in effect at the
Initial Closing.
(xii) The Company shall have delivered to such Buyer copies of proxy
agreements, in a form reasonably acceptable to such Buyer, executed by each
executive officer and director of the Company pursuant to which such
persons agree to vote in favor of the matters described in Section 4(j).
(xiii) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement as
such Buyer or its counsel may reasonably request.
b. Additional Closing Dates. The obligation of each Buyer
------------------------
hereunder to purchase the Additional Preferred Shares at the Additional
Closing is subject to the satisfaction, at or before the Additional Closing
Date, of each of the following conditions, provided that these conditions
are for each Buyer's sole benefit and may be waived by such Buyer at any
time in its sole discretion:
(i) The Statement of Designations shall be in full force and effect
and shall not have been amended since the Initial Closing Date, and a copy
thereof certified by the Secretary of State of the State of Texas shall
have been delivered to such Buyer.
-21-
(ii) The Common Stock shall be authorized for quotation on the
Nasdaq National Market, NYSE or AMEX, trading in the Common Stock shall not
have been suspended by the SEC, The Nasdaq Stock Market, Inc., NYSE or AMEX
on the Additional Closing Date.
(iii) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Additional Closing Date
as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed,
satisfied and complied with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or
complied with by the Company at or prior to the Additional Closing Date.
Such Buyer shall have received a certificate, executed by the Chief
Financial Officer of the Company, dated as of the Additional Closing Date,
to the foregoing effect and as to such other matters as may be reasonably
requested by such Buyer including, without limitation, an update as of the
Additional Closing Date regarding the representation contained in Section
3(c) above.
(iv) Such Buyer shall have received the opinion of the Company's
counsel dated as of the Additional Closing Date, in form, scope and
substance reasonably satisfactory to such Buyer and in substantially the
form of Exhibit C attached hereto.
---------
(v) The Company shall have executed and delivered to such Buyer the
Warrants and the Stock Certificates (in such denominations as such Buyer
shall request) for the Preferred Shares being purchased by such Buyer at
the Additional Closing.
(vi) The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b)(ii) above and in a form reasonably
acceptable to such Buyer (the "RESOLUTIONS").
(vii) As of the Additional Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Preferred Shares and the
exercise of the Warrants, a number of shares of Common Stock equal to at
least 200% of the number of Conversion Shares issuable upon conversion of
the Preferred Shares and exercise of the Warrants outstanding on the
Additional Closing Date (after giving effect to the Preferred Shares and
Warrants to be issued on such Additional Closing Date and assuming all such
outstanding Preferred Shares and Warrants were fully convertible or
exercisable on such date regardless on any limitation on the timing or
amount of such conversions or exercises).
(viii) The Irrevocable Transfer Agent Instructions, in the form of
Exhibit D attached hereto, shall have been delivered to and acknowledged in
---------
writing by the Company's transfer agent.
-22-
(ix) The Company shall have delivered to such Buyer a certificate
evidencing the incorporation and good standing of the Company and each
subsidiary in such corporation's state of incorporation issued by the
Secretary of State of such state of incorporation as of a date within 10
days of the Additional Closing.
(x) The Company shall have delivered to such Buyer certified copies
of its Articles of Incorporation and Bylaws, each as in effect at the
Additional Closing.
(xi) The conditions of Section 1(c) of this Agreement shall have
been satisfied.
(xii) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement as
such Buyer or its counsel may reasonably request.
8. INDEMNIFICATION. In consideration of each Buyer's execution and
---------------
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each other holder of the Securities and all of their stockholders,
officers, directors, employees and direct or indirect investors and any of the
foregoing person's agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the "INDEMNITEES") from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the "INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents or
the Statement of Designations or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in the Transaction Documents or the
Statement of Designations or any other certificate, instrument or document
contemplated hereby or thereby, or (c) any cause of action, suit or claim
brought or made against such Indemnitee and arising out of or resulting from the
execution, delivery, performance in accordance with its terms or enforcement of
this Agreement against the Company or any other instrument, document or
agreement executed pursuant hereto by any of the Indemnitees, any transaction
financed or to be financed in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Securities or the status of such Buyer or holder
of the Securities as an investor in the Company. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
-23-
9. GOVERNING LAW; MISCELLANEOUS.
----------------------------
a. Governing Law. This Agreement shall be governed by and
-------------
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws. Each party hereby irrevocably submits to
the non-exclusive jurisdiction of the state and federal courts sitting the City
of New York, borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
b. Counterparts. This Agreement may be executed in two or more
------------
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
c. Headings. The headings of this Agreement are for convenience of
--------
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be
------------
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement supersedes all
----------------------------
other prior oral or written agreements between the Buyers, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the holders of at least two-thirds (2/3) of the Preferred Shares
then outstanding, and no provision hereof may be waived other than by an
-24-
instrument in writing signed by the party against whom enforcement is sought.
No such amendment shall be effective to the extent that it applies to less than
all of the holders of the Preferred Shares then outstanding. No consideration
shall be offered or paid to any person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents or the
Statement of Designations unless the same consideration also is offered to all
of the parties to the Transaction Documents or holders of Preferred Shares, as
the case may be.
f. Notices. Any notices consents, waivers or other communications
-------
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically generated and kept on file by the
sending party); (iii) three (3) days after being sent by U.S. certified mail,
return receipt requested, or (iv) one (1) day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
DATA RACE, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxx 00000-0000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Chief Financial Officer
With a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 XxxxxxxXxxx Xxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxxx Xxxx, Esq.
If to the Transfer Agent:
ChaseMellon Shareholder Services, L.L.C.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxx Xxxxxxx
-25-
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers.
Each party shall provide five (5) days' prior written notice to the other
party of any change in address or facsimile number.
g. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Preferred Shares. Except as in compliance with
Section 3 of the Statement of Designations, the Company shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the holders of two-thirds (2/3) of the Preferred Shares then
outstanding including by merger or consolidation. A Buyer may assign some or
all of its rights hereunder to affiliates or associates of such Buyer, without
the consent of the Company, and to others, with the consent of the Company;
provided, however, that any such assignment shall not release such Buyer from
its obligations hereunder unless such obligations are assumed by such assignee
and the Company has consented to such assignment and assumption.
Notwithstanding anything to the contrary contained in this Agreement, Buyer
shall be entitled to pledge the Securities in connection with a bona fide margin
account.
h. No Third Party Beneficiaries. This Agreement is intended for the
----------------------------
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Survival. Unless this Agreement is terminated under Section
--------
9(l), the representations and warranties of the Company and the Buyers contained
in Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and
9, and the indemnification provisions set forth in Section 8, shall survive the
Closing. Each Buyer shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.
j. Publicity. The Company and each Buyer shall have the right to
---------
approve before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Buyer, to make any
press release or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).
k. Further Assurances. Each party shall do and perform, or cause to
------------------
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
-26-
l. Termination. In the event that the Initial Closing shall not have
-----------
occurred with respect to a Buyer on or before three (3) business days from the
date hereof due to the Company's or such Buyer's failure to satisfy the
conditions set forth in Sections 6 and 7 above (and the nonbreaching party's
failure to waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of business on such date without liability of any party to any
other party; provided, however, that if this Agreement is terminated pursuant to
this Section 9(l), the Company shall remain obligated to reimburse the non-
breaching Buyers for the expenses described in Section 4(i) above.
m. Placement Agent. The Company acknowledges that it has engaged
---------------
Loewenbaum & Company Incorporated (f/k/a Southcoast Capital Corporation) as
placement agent in connection with the sale of the Preferred Shares and the
related Warrants. The Company shall be responsible for the payment of any
placement agent's fees or broker's commissions relating to or arising out of the
transactions contemplated hereby, to the extent such placement agent or brokers
were engaged by the Company. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
attorneys' fees and out of pocket expenses) arising in connection with any such
claim.
n. No Strict Construction. The language used in this Agreement will
----------------------
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
-27-
IN WITNESS WHEREOF, the Buyers and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
COMPANY: BUYERS:
DATA RACE, INC. XXXXXX PARTNERS
By: /s/XXXXXXX X. XXXXXX By: /s/ XXXXX XXXXXXXX
------------------------------ ------------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxx Xxxxxxxx
Its: Vice President and Chief Its: Officer
Financial Officer
OLYMPUS SECURITIES, LTD.
By: /s/ XXXXX XXXXXXXX
------------------------------------
Name: Xxxxx Xxxxxxxx
Its: Director
CC INVESTMENTS, LDC
By: /s/ XXXXXX XXXXX
------------------------------------
Name: Xxxxxx Xxxxx
Its: Director
CAPITAL VENTURES INTERNATIONAL
By: Heights Capital Management
Its: Authorized Agent
By: /s/ XXXXXX X. XXXXXX
------------------------------------
Name: Xxxxxx X. Xxxxxx
Its: Investment Manager
SCHEDULE OF BUYERS
NUMBER OF
INVESTOR ADDRESS PREFERRED SHARES INVESTOR'S REPRESENTATIVES' ADDRESS
INVESTOR NAME AND FACSIMILE NUMBER INITIAL/ADDITIONAL AND FACSIMILE NUMBER
--------------------------------- ---------------------------------- -------------------- ---------------------------------------
Xxxxxx Partners %Leeds Management Services 840/504 Citadel Investment Group, L.L.C.
000 Xxxxx Xxxxxx, 0xx Xxxxx 000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxx XX00 Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxx Attention: Xxxxxxx X. Simpler
Facsimile: (000) 000-0000 Xxxxxxx X. Xxxxxxx
Residence: Bermuda Facsimile: (000) 000-0000
Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
Olympus Securities, Ltd. %Leeds Management Services 1,035/621 Citadel Investment Group, L.L.C.
000 Xxxxx Xxxxxx, 0xx Xxxxx 000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxx XX00 Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxx Attention: Xxxxxxx X. Simpler
Facsimile: (000) 000-0000 Xxxxxxx X. Xxxxxxx
Residence: Bermuda Facsimile: (000) 000-0000
Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: 312-902-1061
Capital Ventures International %Heights Capital Management 1,250/750
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
Residence: Xxxxxx Xxxxxxx
XX Xxxxxxxxxxx, XXX x/x Xxxxx Fund Services 1,875/1,125 Castle Creek Partners, LLC
X.X. Xxx 00000, SMB 000 Xxxx Xxxxxx Xxxxx
Corporate Centers Suite 1410
Grand Cayman, Cayman Islands Xxxxxxx, Xxxxxxxx 00000
Attn: _________________ Attn: Xxxx X. Xxxxxxxx
Facsimile: 000-000-0000 Facsimile: (000) 000-0000
