Exhibit 4.1
XXXXXXXXXX.XXX
COMMON STOCK PURCHASE AGREEMENT
BY AND AMONG
XXXXXXXXXX.XXX
AND THE PURCHASERS
LISTED ON EXHIBIT A
DATED AS OF JANUARY 15, 1999
Section 1. Authorization and Sale of Common Stock..................................... 1
1.1 Authorization.............................................................. 1
1.2 Sale of Common Stock....................................................... 1
Section 2. Closing Date; Delivery..................................................... 1
2.1 Closing Date............................................................... 1
2.2 Delivery................................................................... 1
Section 3. Representations and Warranties of the Company.............................. 1
3.1 Organization and Standing.................................................. 2
3.2 Corporate Power............................................................ 2
3.3 Capitalization............................................................. 2
3.4 Authorization.............................................................. 2
3.5 Financial Information; SEC Reports......................................... 2
3.6 Offering................................................................... 3
3.7 Disclosure................................................................. 4
Section 4. Representations, Warranties and Covenants of the Purchasers................ 4
4.1 Authorization.............................................................. 4
4.2 Investment Experience...................................................... 4
4.3 Investment Intent.......................................................... 4
4.4 Registration or Exemption Requirements..................................... 5
4.5 Restriction on Short Sales................................................. 5
4.6 No Legal, Tax or Investment Advice......................................... 5
Section 5. Conditions to Closing of Purchasers........................................ 5
5.1 Representations and Warranties............................................. 5
5.2 Officers' Certificate...................................................... 6
5.3 Covenants.................................................................. 6
5.4 No Injunction, etc......................................................... 6
Section 6. Conditions to Closing of Company........................................... 6
6.1 Representations and Warranties............................................. 6
6.2 Covenants.................................................................. 6
Section 7. Affirmative Covenants of the Company....................................... 6
7.1 Registration Requirements.................................................. 6
(a) Shelf Registration............................................. 6
(b) Filing Obligation.............................................. 7
(c) Effectiveness.................................................. 7
(d) Suspension Periods............................................. 7
(e) Registration Expenses.......................................... 8
(f) Notification................................................... 8
(g) Rule 144....................................................... 8
7.2 Indemnification and Contribution........................................... 9
7.3 Nasdaq NMS Listing......................................................... 11
Section 8. Restrictions on Transferability of Shares: Compliance with Securities Act.. 11
8.1 Restrictions on Transferability............................................ 11
8.2 Restrictive Legend......................................................... 11
8.3 Transfer of Shares after Registration...................................... 11
1.
8.4 Purchaser Information...................................................... 12
Section 9. Miscellaneous.............................................................. 12
9.1 Waivers and Amendments..................................................... 12
9.2 Broker's Fee............................................................... 12
9.3 Governing Law.............................................................. 12
9.4 Survival................................................................... 12
9.5 Successors and Assigns..................................................... 12
9.6 Entire Agreement........................................................... 13
9.7 Notices, etc............................................................... 13
9.8 Severability of this Agreement............................................. 13
9.9 Counterparts............................................................... 13
9.10 Expenses................................................................... 13
9.11 Announcements.............................................................. 13
Exhibit A Schedule of Purchasers
Exhibit B Instruction Sheet for Purchaser
Exhibit C Purchaser's Certificate of Subsequent Sale
2.
XXXXXXXXXX.XXX
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
January 15, 1999, by and among XXXXXXXXXX.XXX, a Delaware corporation (the
"Company"), with its principal office at 000 Xxxxx Xxxxxx, Xxxxxxxx Xxxx,
Xxxxxxxxxx 00000-0000, and the persons listed on the Schedule of Investors
attached hereto as Exhibit A (individually, a "Purchaser," and collectively, the
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"Purchasers").
SECTION 1. Authorization and Sale of Common Stock
1.1 AUTHORIZATION. The Company has authorized the sale and issuance of
up to One Million Five Hundred Thirty Eight Thousand Four Hundred Sixty Two
(1,538,462) shares of its common stock, par value $0.001 per share (the "Common
Stock"), pursuant to this Agreement.
1.2 SALE OF COMMON STOCK. Subject to the terms and conditions of this
Agreement, the Company agrees to issue and sell to each Purchaser, and each
Purchaser severally agrees to purchase from the Company, on the Closing Date
hereinafter defined, the number of shares of Common Stock set forth opposite
such Purchaser's name on Exhibit A (collectively, the "Shares") for a purchase
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price of $2.60 per share, based on the calculation set forth on Exhibit A hereto
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(the "Purchase Price").
SECTION 2. Closing Date; Delivery
2.1 CLOSING DATE. The closing of the purchase and sale of the Shares
hereunder (the "Closing") shall be held at the offices of Xxxxxx Godward llp,
Five Palo Alto Square, 0000 Xx Xxxxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx at 9:00 a.m.
(Pacific Daylight Time), on the third business day following the date hereof or
at such other time and place upon which the Company and the Purchasers shall
agree. The date of the Closing is hereinafter referred to as the "Closing
Date."
2.2 DELIVERY. At the Closing, the Company will deliver to each
Purchaser a certificate, registered in the Purchaser's name as shown on Exhibit
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A, representing the number of shares of Common Stock to be purchased by such
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Purchaser. Such delivery shall be against payment of the Purchase Price therefor
by wire transfer of immediately available funds in the amount set forth opposite
such Purchaser's name on Exhibit A to a bank account designated by the Company
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to each Purchaser at least one (1) business day prior to the Closing Date.
SECTION 3. Representations and Warranties of the Company
The Company represents and warrants to the Purchasers as follows, effective
as of the date hereof and the Closing Date.
3.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has all requisite corporate power to own or lease and
operate its properties and assets and to carry on
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its business as presently conducted and as proposed to be conducted. The Company
is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to be so qualified would have a material
adverse effect on its business or properties.
3.2 CORPORATE POWER. The Company has all requisite legal and corporate
power to execute and deliver this Agreement, to sell and issue the Shares and to
carry out and perform its obligations under the terms of this Agreement
including all exhibits and schedules hereto.
3.3 CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 60,000,000 shares of Common Stock par value $.001, of which
13,244,385 shares are issued and outstanding as of January 14, 1999, and (ii)
3,500,000 shares of Preferred Stock, par value $.001 per share, none of which
are issued and outstanding as of January 14, 1999. Except for outstanding
options to purchase an aggregate of 2,150,169 shares of Common granted pursuant
to the Company's 1996 Stock Option Plan, (i) there are no outstanding rights of
first refusal, preemptive rights or other rights (contingent or otherwise),
options, warrants, convertible securities, conversion rights, or other
agreements either directly or indirectly for the purchase or acquisition from,
or the issuance by, the Company of any shares of its capital stock, and (ii) the
Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any shares of its capital stock or any interest therein or to
pay any dividend or make any other distribution in respect thereof. The Company
does not own, directly or indirectly, any interest in any joint venture,
partnership, corporation or other business entity. There are no outstanding
stockholder agreements, voting trusts, proxies or other arrangements or
understandings among the stockholders of the Company relating to the voting of
their respective shares.
3.4 AUTHORIZATION
(A) All corporate action on the part of the Company, its directors
and stockholders necessary for the authorization, execution, delivery and
performance of the Agreement by the Company, the authorization, sale, issuance
and delivery of the Shares and the performance of the Company's obligations
under the Agreement has been or will be taken prior to the Closing. The
Agreement, when executed and delivered by the Company, will constitute valid and
binding obligations of the Company enforceable in accordance with their terms,
subject to laws of general application relating to bankruptcy, insolvency, the
relief of debtors, general equity principles, and limitations upon rights to
indemnity. The Shares, when issued in compliance with the provisions of this
Agreement, will be duly and validly issued, fully paid, and nonassessable.
3.5 FINANCIAL INFORMATION; SEC REPORTS.
(A) The Company has made available to the Purchasers an (i)
unaudited consolidated balance sheet at September 30, 1998 and (ii) audited
consolidated balance sheets at December 31, 1997, and December 31, 1996, in each
case, together with the related consolidated statements of operations,
stockholders' equity and cash flows for the period then ended (the
"Financials"). The Financials have been prepared in accordance with generally
accepted accounting principles consistently applied by the Company throughout
the periods involved, except for accounting changes described in the related
notes thereto, and present fairly the
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financial position of the Company as of the respective dates of said balance
sheets and the results of operations of the Company for the respective periods
covered. The Financials at, or for the quarterly period ending, September 30,
1998 are hereinafter referred to as the "September 1998 Financials."
(B) Since September 30, 1998, to the Company's knowledge, there has
not been:
(I) any material change in the assets, liabilities,
financial condition or operating results of the Company from that reflected in
the September 1998 Financials, except changes in the ordinary course of business
which have not been, in the aggregate, materially adverse to the financial
condition, operating results, prospects or business of the Company;
(II) any material damage, destruction or loss or interruption
in use of any material asset or property of the Company, whether or not covered
by insurance, materially and adversely affecting the assets, properties,
financial condition, operating results, prospects or business of the Company (as
such business is presently conducted and as it is proposed to be conducted);
(III) any waiver by the Company of a material right or debt
owed to it; or
(IV) any material change in the accounting or tax methods or
practices of the Company or the making or changing by the Company of any
material tax election.
(C) The Company has filed in a timely manner all documents that the
Company was required to file with the SEC under Sections 13, 14(a) and 15(d) of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the SEC promulgated thereunder (the "Exchange Act"), during the twelve (12)
months preceding the date of this Agreement. As of their respective filing
dates, all documents filed by the Company with the SEC (the "SEC Reports")
complied in all material respects with the requirements of the Exchange Act,
and, to the Company's knowledge, did not contain, as of the respective date of
such SEC Report, any untrue statement of a material fact or omitted as of its
date to state a material fact necessary in order to make the statements made
therein, in light of the circumstances in which they were made, not misleading.
3.6 OFFERING. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4 hereof, the offer, issuance
and sale of the Shares are exempt from the registration and prospectus delivery
requirements of the Securities Act, and the Shares have been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit, or qualification requirements of all applicable state
securities laws.
3.7 DISCLOSURE. For the purposes of this Agreement and the
transactions contemplated hereby, to the Company's knowledge, none of the
representations or warranties made by the Company in this Agreement and no
information in the Exhibits or Schedules hereto by the Company contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained herein and therein, in light of the
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circumstances under which they were made, not misleading. To the extent any
communication or information has been provided to Purchasers which could be
deemed to constitute a forward-looking statement or projection regarding the
Company or its business, prospects, financial condition, results of operations
or otherwise, the Company makes no representation that any such forward-looking
statement or projection will actually be proved true or be achieved, as the case
may be.
SECTION 4. Representations, Warranties and Covenants of the Purchasers
Each Purchaser hereby, severally and not jointly, represents and warrants
to the Company, effective as of the Closing Date, as follows:
4.1 AUTHORIZATION. Purchaser represents and warrants to the Company
that: (i) Purchaser has all requisite legal and corporate or other power and
capacity and has taken all requisite corporate or other action to execute and
deliver this Agreement, to purchase the Shares to be purchased by it and to
carry out and perform all of its obligations under this Agreement; and (ii)
assuming the due execution and delivery of this Agreement by the Company, this
Agreement constitutes the legal, valid and binding obligation of the Purchaser,
enforceable in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, or similar laws relating to or affecting
the enforcement of creditors' rights generally and (b) as limited by equitable
principles generally.
4.2 INVESTMENT EXPERIENCE. Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act of 1933, as amended (the
"Securities Act"). Purchaser is aware of the Company's business affairs and
financial condition and has had access to and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision to
acquire the Shares. Purchaser acknowledges that an investment in the Company is
extremely speculative. Purchaser has such business and financial experience as
is required to give it the capacity to protect its own interests in connection
with the purchase of the Shares. As set forth in Section 3.8 above, Purchaser
acknowledges that there is no assurance that any communication or other
information which could be construed to be a forward-looking statement or
projection relating to the Company or its business, prospects, financial
condition, results of operations, or otherwise, will actually be proved true or
be achieved. Purchaser represents that it is not relying upon any such forward-
looking statement in deciding to purchase the Shares.
4.3 INVESTMENT INTENT. Purchaser is purchasing the Shares for its own
account as principal, for investment purposes only, and not with a present view
to, or for, resale, distribution or fractionalization thereof, in whole or in
part, within the meaning of the Securities Act. Purchaser understands that its
acquisition of the Shares has not been registered under the Securities Act or
registered or qualified under any state securities law in reliance on specific
exemptions therefrom, which exemptions may depend upon, among other things, the
bona fide nature of Purchaser's investment intent as expressed herein.
Purchaser has completed or caused to be completed the Purchaser Questionnaire
attached hereto as Exhibit B for use in preparation of the Shelf Registration
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(as defined below), will deliver the Purchaser Questionnaire to the Company on
or prior to the Closing Date, and the responses provided therein shall be true
and
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correct as of the date hereof and the Closing Date and will be true and correct
as of the effective date of the Shelf Registration.
4.4 REGISTRATION OR EXEMPTION REQUIREMENTS.
(A) Purchaser further acknowledges and understands that the Shares
must be held indefinitely, and they may not be resold or otherwise transferred,
except in a transaction registered under the Securities Act or otherwise exempt
from such registration requirements of the Securities Act. Purchaser understands
that the certificate(s) evidencing the Shares will be imprinted with a legend in
substantially the form set forth in Section 8.2 hereof that indicates that the
transfer of the Shares is prohibited unless (i) they are registered or such
registration is not required to transfer such Shares, or (ii) the transfer is
pursuant to an exemption from registration under the Securities Act and, if the
Company shall so request in writing, an opinion of counsel reasonably
satisfactory to the Company is obtained to the effect that the transaction is so
exempt and in compliance with applicable state law.
(B) Purchaser further acknowledges that resale of the Shares may be
limited by applicable state law even where a registration statement covering
resale of the Shares has been declared effective under the Securities Act. For
example, certain states may limit resale of the Shares to qualified institutions
or in unsolicited qualified broker transactions in the absence of qualification
or another exemption in such state.
4.5 RESTRICTION ON SHORT SALES. Purchaser represents and warrants to
and covenants with the Company that Purchaser has not engaged and will not
engage in any short sale of the Company's Common Stock prior to the earlier to
occur of (i) the date which is 90 days following the Closing Date and (ii) the
effectiveness of the Shelf Registration (as defined below).
4.6 NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands that
nothing in this Agreement or any other materials presented to Purchaser in
connection with the purchase and sale of the Shares constitutes legal, tax or
investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Shares.
SECTION 5. Conditions to Closing of Purchasers
Each Purchaser's obligation to purchase the Shares at the Closing is, at
the option of such Purchaser, subject to the fulfillment or waiver as of the
Closing Date of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Company in Section 3 hereof shall be true and correct in all
material respects on the date hereof, and shall be true and correct in all
material respects on the Closing Date, with the same force and effect as if they
had been made on and as of said date.
5.2 OFFICERS' CERTIFICATE. The Company shall deliver to the Purchasers
a certificate, dated as of the Closing Date, signed by the Chief Executive
Officer and the Chief Financial Officer of the Company, certifying that the
representations and warranties set forth in Section 3
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are true as of, and all of the closing conditions set forth in Section 5 have
been satisfied on, the Closing Date, in all material respects.
5.3 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects as of the
Closing Date.
5.4 NO INJUNCTION, ETC.
(A) No injunction, judgment, order, writ, decree, law, rule or
regulation shall exist that restrains, enjoins or prohibits the consummation of
any of the transactions contemplated hereby or awards damages or other relief in
respect of the consummation of any such transactions.
SECTION 6. Conditions to Closing of Company
The Company's obligation to sell and issue the Shares at the Closing is, at
the option of the Company, subject to the fulfillment or waiver of the following
conditions:
6.1 REPRESENTATIONS AND WARRANTIES. The representations made by the
Purchasers in Section 4 hereof shall be true and correct in all material
respects on the date hereof, and shall be true and correct in all material
respects on the Closing Date with the same force and effect as if they had been
made on and as of such date.
6.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Purchasers on or prior to the Closing Date
shall have been performed or complied with in all material respects.
SECTION 7. Affirmative Covenants of the Company
The Company hereby covenants and agrees as follows:
7.1 REGISTRATION REQUIREMENTS.
(A) SHELF REGISTRATION. The Company shall use its reasonable
commercial efforts to prepare and file with the Securities and Exchange
Commission (the "SEC") a Registration Statement pursuant to Rule 415 (or any
appropriate similar rule that may be adopted by the SEC) under the Securities
Act covering the Shares (including any amendment thereto, the "Shelf
Registration") as soon as practicable but in any event not later than sixty (60)
days after the Closing Date (the "Filing Date"). The Shelf Registration shall be
on Form S-3 or another appropriate form permitting registration of such Shares
for resale by the Purchasers from time to time. Each Purchaser agrees to furnish
promptly to the Company in writing all information required from time to time to
be disclosed in order to make the information previously furnished to the
Company by such holder not misleading.
(B) FILING OBLIGATION. In the event the effectiveness of the Shelf
Registration (as defined below) occurs after June 30, 1999, the Company shall
pay to each Purchaser one
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percent (1%) of such Purchaser's Purchase Price as a remedy of Purchaser
relating to such failure of the effectiveness of the Shelf Registration (as
defined below) to occur by June 30, 1999 for each month such registration has
not been declared effective, provided, however; that no such payments shall be
made if the requirements under this Section 7 are waived in accordance with
Section 9 below and provided, further; that no such payments shall in the
aggregate exceed each Purchaser's Purchase Price.
(C) EFFECTIVENESS. The Company shall use its reasonable commercial
efforts to cause the Shelf Registration to become effective under the Securities
Act within thirty (30) days of the Filing Date (the "Effective Date"). Subject
to the requirements of the Securities Act including, without limitation,
requirements relating to updating through post-effective amendments, prospectus
supplements or otherwise, the Company shall use its reasonable commercial
efforts to keep the Shelf Registration continuously effective and in compliance
with the Securities Act until the earlier of (i) the date twenty (20) days
following the Effective Date, (ii) such date as all of the Shares have been
resold or (iii) such time as all of the Shares held by the Purchasers may be
sold within a given three-month period without compliance with the registration
requirements of the Securities Act pursuant to Rule 144 under the Securities Act
("Rule 144"); provided, however, that in the event of a Suspension Period, as
set forth in Section 7.2(c) hereof, the Company shall extend the period of
effectiveness of such Shelf Registration by the number of days of each such
Suspension Period. The Company shall use its reasonable commercial efforts to
take such actions under the laws of various states as may be required, from time
to time during the effectiveness of the Shelf Registration (and subject to
Purchasers' compliance with their obligations hereunder), to cause the resale of
the Shares pursuant to the Shelf Registration to be lawful. The Company will use
its reasonable commercial efforts to cause, as of the Effective Date, all the
Shares to be listed for quotation on the Nasdaq NMS.
(D) SUSPENSION PERIODS. Following the effectiveness of a Shelf
Registration filed pursuant to this section, the Company may, at any time,
suspend the effectiveness of such Shelf Registration for up to thirty (30) days,
as appropriate (a "Suspension Period"), by giving notice to each Purchaser, if
the Company shall have determined, through action by its Board of Directors,
that the Company may be required to disclose any material corporate development,
which disclosure, in the judgment of the Company's Board of Directors, could
reasonably be expected to have a material adverse effect on the Company; and at
least two (2) business days prior to implementing any such Suspension Period,
the Company shall deliver to each Purchaser a certificate to that effect.
Notwithstanding the foregoing, no more than two (2) Suspension Periods may occur
in any calendar year. The period of any such suspension of the registration
statement shall be added to the period of time the Company agrees to keep the
Shelf Registration effective as provided in Section 7.2(b). The Company shall
use its reasonable commercial efforts to limit the duration and number of any
Suspension Periods, including, without limitation, preparing and filing with the
SEC post-effective amendments to the Shelf Registration and/or prospectus
supplements to the prospectus included in the Shelf Registration. Each Purchaser
agrees that, upon receipt of notice from the Company of a Suspension Period in
accordance with the provisions of this Section 7.2(c), such Purchaser shall
forthwith discontinue disposition of shares covered by such registration
statement or prospectus in accordance with the provisions of this Section 7.2(c)
until such Purchaser (i) is advised in writing by the Company that the
applicable Suspension Period has been terminated and the use of the prospectus
may be resumed,
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(ii) has received copies of a supplemental or amended prospectus, if applicable,
and (iii) has received copies of any additional or supplemental filings which
are incorporated or deemed to be incorporated by reference in such prospectus.
Each Purchaser shall treat any information relating to a Suspension Period,
including its receipt of notice of a Suspension Period, as confidential
information of the Company, and shall not use or disclose any such information
except with the prior written consent of the Company.
(E) REGISTRATION EXPENSES. The Company shall pay all Registration
Expenses (as defined below) in connection with any registration, qualification
or compliance hereunder, and each Purchaser shall pay all Selling Expenses (as
defined below) and other expenses that are not Registration Expenses relating to
the Shares resold by such Purchaser. "Registration Expenses" shall mean all
expenses, except for Selling Expenses, incurred by the Company in complying with
the registration provisions herein described, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and expenses in connection with listing the Shares for quotation on Nasdaq
NMS, fees and disbursements of counsel for and the independent auditors of the
Company, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration. "Selling Expenses" shall mean
selling commissions, underwriting fees and stock transfer taxes applicable to
the Shares and all fees and disbursements of counsel for any Purchaser.
(F) NOTIFICATION. In addition to the Company's other obligations
under this Section 7.1, in connection with the registration of the Shares on the
Shelf Registration, the Company shall:
(I) As promptly as practicable after becoming aware of such
event, notify each Purchaser of the occurrence of any event, as a result of
which the prospectus included in the Shelf Registration, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
promptly prepare an amendment to the Shelf Registration and supplement to the
prospectus to correct such untrue statement or omission, and deliver a number of
copies of such supplement and amendment to each Purchaser as such Purchaser may
reasonably request; and
(II) As promptly as practicable after becoming aware of such
event, notify each Purchaser who holds Shares being sold of the issuance by the
SEC of any stop order or other suspension of the effectiveness of the Shelf
Registration at the earliest possible time and take all lawful action to effect
the withdrawal, recession or removal of such stop order or other suspension; and
(G) RULE 144..With a view to making available to the Purchasers the
benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and any
other rule or regulation of the SEC that may at any time permit a Purchaser to
sell Shares to the public without registration or pursuant to registration, the
Company covenants and agrees to use its reasonable commercial efforts to: (i)
make and keep public information available, as those terms are understood and
defined in Rule 144, until the earlier of (A) the second anniversary of the
Closing Date or (B) such date as all of the Shares shall have been resold; and
(ii) file with the SEC in a
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timely manner all reports and other documents required of the Company under the
Exchange Act.
7.2 INDEMNIFICATION AND CONTRIBUTION.
(A) The Company agrees to indemnify and hold harmless each
Purchaser from and against any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) to which such Purchaser (including
for such purpose its officers, directors, partners, attorneys and agents) may
become subject (under the Securities Act or otherwise) to the extent such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of, or are based upon, any untrue statement of a material
fact contained in the Shelf Registration or the prospectus (including any
supplement) contained therein or arise out of, or are based upon, the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein (in light of the circumstances under which they were
made in the case of the prospectus), not misleading, or to the extent arising
out of any failure by the Company to fulfill any undertaking included in the
Shelf Registration, and the Company will, on a quarterly basis, reimburse such
Purchaser for any legal or other expenses reasonably incurred in investigating
or defending any such action, proceeding or claim; provided, however, that the
Company shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of, or is based upon (i) an untrue
statement made in such Shelf Registration in reliance upon and in conformity
with information furnished to the Company by or on behalf of such Purchaser,
(ii) the failure of such Purchaser to comply with the covenants and agreements
contained in this Agreement, or (iii) any untrue statement in any prospectus
that is corrected in any subsequent prospectus that was delivered to the
Purchaser prior to the pertinent sale or sales by the Purchaser.
(B) Each Purchaser, severally and not jointly, agrees to indemnify
and hold harmless the Company (including for such purpose its officers,
directors, partners, attorneys and agents) from and against any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) to which
the Company may become subject (under the Securities Act or otherwise) to the
extent such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Shelf Registration or the
prospectus (including any supplement) contained therein or to the extent arising
out of, or are based upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in light of the circumstances under which they were made in the case of
the prospectus), not misleading, in each case, to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Purchaser
specifically for use in preparation of the Shelf Registration.
(C) Promptly after receipt by any indemnified person of a notice of
a claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 7.2, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action (but the omission to so notify the
indemnifying party shall not relieve it from any liability that it
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otherwise may have to the indemnified party, except to the extent that the
indemnifying party is materially prejudiced and forfeits substantive rights and
defenses by reason of such failure), and, subject to the provisions hereinafter
stated, in case any such action shall be brought against an indemnified person
and the indemnifying person shall have been notified thereof, the indemnifying
person shall be entitled to participate therein, and, in the case of any claim
as to which both the indemnified party and the indemnifying party are parties,
to the extent that it shall wish, the indemnifying party may assume the defense
thereof, with counsel reasonably satisfactory to the indemnified person. After
notice from the indemnifying person to such indemnified person of the
indemnifying person's election to assume the defense thereof, the indemnifying
person shall not be liable to such indemnified person for any legal expenses
subsequently incurred by such indemnified person in connection with the defense
thereof; provided, however, that if there exists or shall exist a conflict of
interest that would make it inappropriate in the reasonable judgment of the
indemnified person for the same counsel to represent both the indemnified person
and such indemnifying person or any affiliate or associate thereof, the
indemnified person shall be entitled to retain its own counsel at the expense of
such indemnifying person. If the indemnifying party shall assume the defense of
any such claim, it shall not, without prior written consent of the indemnified
party (which consent shall not unreasonably be withheld), settle or compromise
any such claim or consent to the entry of any judgment that does not include an
unconditional release of the indemnified party from all liabilities with respect
to such claim or judgment. Further, no indemnifying party shall have any
obligation with respect to any settlement entered into by an indemnified party
without the prior written approval of this indemnifying party.
(D) If the indemnification provided for in this Section 7.2 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the Purchasers on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or a Purchaser on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Purchasers agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by pro rata
allocation (even if the Purchasers were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, or liabilities (or actions in respect thereof) referred to above in
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The
12.
Purchasers' obligations in this subsection (d) to contribute are several in
proportion to their respective sales of Shares to which such loss relates and
not joint.
7.3 NASDAQ NMS LISTING. The Company shall use its reasonable commercial
efforts as soon as practicable after the Closing Date, and in any event no later
than the Effective Date, to cause the Shares to be listed for inclusion on the
Nasdaq National Market System.
SECTION 8. Restrictions on Transferability of Shares: Compliance with
Securities Act
8.1 RESTRICTIONS ON TRANSFERABILITY. The Shares shall not be
transferable in the absence of a registration under the Securities Act or an
exemption therefrom or in the absence of compliance with any term of this
Agreement. The Company shall be entitled to give stop transfer instructions to
its transfer agent with respect to the Shares in order to enforce the foregoing
restrictions.
8.2 RESTRICTIVE LEGEND. Each certificate representing Shares shall
bear substantially the following legends (in addition to any legends required
under applicable securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS. THE SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.
8.3 TRANSFER OF SHARES AFTER REGISTRATION. Each Purchaser hereby
covenants with the Company not to make any sale of the Shares except either (i)
in accordance with the Shelf Registration, in which case Purchaser covenants to
comply with the requirement of delivering a current prospectus, or (ii) in
accordance with Rule 144, in which case Purchaser covenants to comply with Rule
144. Purchaser further acknowledges and agrees that such Shares are not
transferable on the books of the Company unless the certificate submitted to the
Company's transfer agent evidencing such Shares is accompanied by a separate
certificate executed by an officer of, or other person duly authorized by, the
Purchaser in the form attached hereto as Exhibit C.
8.4 PURCHASER INFORMATION. Each Purchaser covenants that it will
immediately notify the Company in writing of any changes in the information set
forth in the Shelf Registration regarding such Purchaser or such Purchaser's
"Plan of Distribution."
SECTION 9. Miscellaneous
9.1 WAIVERS AND AMENDMENTS. With the exception of Sections 7 and 9
hereof, the terms of this Agreement may be waived or amended with the written
consent of the Company and each Purchaser. With respect to Sections 7 hereof,
with the written consent of the Company and the record holders of more than
fifty percent (50%) of the Shares then outstanding and held by Purchasers, the
terms of the Agreement may be waived or amended and any such amendment or waiver
shall be binding upon the Company and all holders of Shares. No delay or
omission to exercise any right, power or remedy accruing to a Purchaser, upon
any breach or default of the
13.
Company under this Agreement, shall impair any such right, power or remedy of
the Purchaser nor shall it be construed to be a waiver or any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of the Purchaser of any breach or default under this Agreement, or any
waiver on the part of the Purchaser of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing.
9.2 BROKER'S FEE. Each of the parties hereto hereby represents that,
on the basis of any actions and agreements by it, there are no other brokers or
finders entitled to compensation of any kind or nature in connection with the
sale of the Shares to the Purchasers.
9.3 GOVERNING LAW. This Agreement shall be governed in all respects by
and construed in accordance with the laws of the State of New York without any
regard to conflicts of laws principles.
9.4 SURVIVAL. All covenants and agreements of the Company and the
Purchasers herein, and the indemnity and contribution agreements contained in
Section 7.2 hereof shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Purchaser or any
person controlling any Purchaser within the meaning of the Securities Act, or by
or on behalf of the Company, or any of its officers, directors or controlling
persons within the meaning of the Securities Act, and shall survive the delivery
of the Shares to the Purchasers hereunder. All representations and warranties
of the Company and the Purchasers herein shall no longer be operative and shall
of no effect as of the Closing Date.
9.5 SUCCESSORS AND ASSIGNS.
(A) The provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties to this Agreement. Notwithstanding the foregoing, no Purchaser shall
assign its rights or obligation under this Agreement without the prior written
consent of the Company.
9.6 ENTIRE AGREEMENT. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
9.7 NOTICES, ETC. All notices and other communications required or
permitted under this Agreement shall be effective upon receipt and shall be in
writing and may be delivered in person, by telecopy, overnight delivery service
or registered or certified United States mail, addressed to the Company or the
Purchasers, as the case may be, at their respective addresses set forth at the
beginning of this Agreement or on Exhibit A, or at such other address as the
---------
Company or the Purchasers shall have furnished to the other party in writing.
All notices and other communications shall be effective upon the earlier of
actual receipt thereof by the person to whom notice is directed or (i) in the
case of notices and communications sent by personal delivery or telecopy, one
business day after such notice or communication arrives at the
14.
applicable address or was successfully sent to the applicable telecopy number,
(ii) in the case of notices and communications sent by overnight delivery
service, at noon (local time) on the second business day following the day such
notice or communication was sent, and (iii) in the case of notices and
communications sent by United States mail, seven days after such notice or
communication shall have been deposited in the United States mail.
9.8 SEVERABILITY OF THIS AGREEMENT. If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
9.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9.10 EXPENSES. The Company and each such Purchaser shall bear its own
expenses incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby, including fees of legal counsel.
9.11 ANNOUNCEMENTS. The parties hereto agree that all public announcements
by any Purchaser regarding the transactions contemplated by this Agreement shall
be approved in advance in writing by the Company; provided, however that any
Purchaser will not be precluded hereby from making such disclosures as it may be
required to make in order to comply with all applicable laws or listing
agreements.
15.
The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY"
XXXXXXXXXX.XXX
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Xxxxx X. Xxxxxx
Chief Executive Officer
"PURCHASERS"
SPECIAL SITUATIONS FUND III, L.P.
XXXXX GREENHOUSE
By: /s/ Xxxxx Greenhouse
--------------------------------
Xxxxx Greenhouse
Title: Executive Vice President
--------------------------------
SPECIAL SITUATIONS CAYMAN FUND, L.P.
XXXXX GREENHOUSE
By: /s/ Xxxxx Greenhouse
--------------------------------
Xxxxx Greenhouse
Title: Executive Vice President
--------------------------------
SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
XXXXX GREENHOUSE
By: /s/ Xxxxx Greenhouse
--------------------------------
Xxxxx Greenhouse
Title: Executive Vice President
--------------------------------
SPECIAL SITUATIONS TECHNOLOGY FUND, L.P.
XXXXX GREENHOUSE
By: /s/ Xxxxx Greenhouse
--------------------------------
Xxxxx Greenhouse
Title: Executive Vice President
--------------------------------
XXXXXX XXXXXX
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Xxxxxx Xxxxxx
EXHIBIT A
SCHEDULE OF PURCHASERS
INVESTOR NAME SHARES PURCHASED PURCHASE PRICE*
Special Situations Fund III, L.P. 442,308 $1,150,000.80
Special Situations Cayman Fund, L.P. 134,615 $ 349,999.00
Special Situations Private Equity Fund, L.P. 288,462 $ 750,001.20
Special Situations Technology Fund, L.P. 96,154 $ 250,000.40
Xxxxxx Xxxxxx 576,923 $1,499,999.80
---------------- ----------------
TOTAL 1,538,462 $4,000,001.20
---------------- ----------------
* Per share purchase price of $2.60 was based on the average closing price of
the Company's Common Stock as reported on the Nasdaq Stock Market for the thirty
trading days immediately preceding the date hereof less a 20% discount to
account for (i) the lack of liquidity associated with the "restricted" nature of
the Shares; (ii) the uncertainty as to when the Registration Statement on Form
S-3 relating to the Shares being purchased will be filed and declared effective;
(iii) the volatility of the Company's Common Stock over the last 45 days; (iv)
the trading of the Company's Common Stock for a substantial period of time at
substantially below the closing price on January 14, 1999; (v) the Company's
desire to consummate the Closing promptly in order to achieve compliance with
the listing requirements of the Nasdaq Stock Market; and (vi) other factors.
A-1.
EXHIBIT B
INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Common Stock Purchase Agreement)
A. Complete the following items in the Common Stock Purchase Agreement:
1. Provide the information regarding the Purchaser requested on the
signature page. The Agreement must be executed by an individual
authorized to bind the Purchaser.
2. Exhibit B-1 - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire;
3. Exhibit B-2 - Registration Statement Questionnaire:
Provide the information requested by the Registration Statement
Questionnaire.
4. Exhibit B-3 - Purchaser Certificate:
Provide the information requested by the Certificate for Individual
Purchasers or the Certificate for Corporate, Partnership, Trust,
Foundation and Joint Purchasers, as applicable.
5. Return the signed Purchase Agreement including the properly completed
Exhibit B to:
Xxxxxx Godward llp
Attn: Xxxxxx X. Xx
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000-0000
B. Instructions regarding the transfer of funds for the purchase of Shares
will be provided by facsimile to the Purchaser by the Company at a later
date.
C. Upon the resale of the Shares by the Purchaser after the Registration
Statement covering the Shares is effective, as described in the Purchase
Agreement, the Purchaser:
(i) must deliver a current prospectus, and annual and quarterly
reports of the Company to the buyer (prospectuses, and annual and
quarterly reports may be obtained from the Company at the
Purchaser's request); and
(ii) must send a letter in the form of Exhibit C to the Company so
that the Shares may be properly transferred.
B-1.
EXHIBIT B-1
XXXXXXXXXX.XXX
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 4.3 of the Agreement, please provide us with the
following information:
1. The exact name that the Shares are to be
registered in (this is the name that will
appear on the stock certificate(s)). You
may use a nominee name if appropriate: ________________________________________
2. The relationship between the Purchaser of
the Shares and the Registered Holder listed in
response to item 1 above: ________________________________________
3. The mailing address of the Registered ________________________________________
Holder listed in response to item 1 above: ________________________________________
________________________________________
4. The Tax Identification Number of the
Registered Holder listed in response to item
1 above: ________________________________________
B(1)-1.
EXHIBIT B-2
XXXXXXXXXX.XXX
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information regarding the Purchaser.
1. Please state your organization's name exactly as it should appear in
the Registration Statement:
2. Have you or your organization had any position, office or other
material relationship within the past three years with the Company?
______ Yes ______ No
If yes, please indicate the nature of any such relationships below:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
B(2)-1.
EXHIBIT B-3
XXXXXXXXXX.XXX
CERTIFICATE FOR INDIVIDUAL PURCHASERS
If the investor is an individual Purchaser (or married couple) the
Purchaser must complete, date and sign this Certificate.
CERTIFICATE
I certify that the representations and responses below are true and
accurate:
In order for the Company to offer and sell the Shares in conformance with
state and federal securities laws, the following information must be obtained
regarding your investor status. Please initial each category applicable to you
as an investor in the Company.
______ (1) A natural person whose net worth, either individually or
jointly with such person's spouse exceeds $1,000,000;
______ (2) A natural person who had an income in excess of $200,000, or
joint income with that person's spouse in excess of $300,000 in 1997 and 1998,
and reasonably expects to have individual income reaching the same level in
1999;
______ (3) An executive officer or director of the Company.
My principal residence is in the state of_______________________________.
Dated:_ _____________
Name(s) of Purchaser
_____________________________
Signature
_____________________________
Signature
B(3)-1.
EXHIBIT B-3
XXXXXXXXXX.XXX
CERTIFICATE FOR CORPORATE, PARTNERSHIP,
TRUST, FOUNDATION AND JOINT PURCHASERS
If the investor is a corporation, partnership, trust, pension plan,
foundation, joint purchaser (other than a married couple) or other entity, an
authorized officer, partner, or trustee must complete, date and sign this
Certificate.
CERTIFICATE
The undersigned certifies that the representations and responses below are
true and accurate:
(a) The investor has been duly formed and is validly existing and has full
power and authority to invest in the Company. The person signing on behalf of
the undersigned has the authority to execute and deliver the Common Stock
Purchase Agreement on behalf of the Purchaser and to take other actions with
respect thereto.
(b) Indicate the form of entity of the undersigned:
______ Limited Partnership
______ General Partnership
______ Corporation
______ Revocable Trust (identify each grantor and indicate
under what circumstances the trust is revocable by the grantor):
______________________________________________
______________________________________________
______________________________________________
______________________________________________
______________________________________________.
(Continue on a separate piece of paper, if necessary.)
______ Other Type of Trust (indicate type of trust and, for
trusts other than pension trusts, name the grantors and beneficiaries):
______________________________________________
______________________________________________
______________________________________________
______________________________________________
(Continue on a separate piece of paper, if necessary.)
_________________________ Other form of organization (indicate form of
organization):
2.
(c) Indicate the date the undersigned entity was formed:____.
(d) In order for the Company to offer and sell the Shares in conformance
with state and federal securities laws, the following information must be
obtained regarding your investor status. Please initial each category
applicable to you as an investor in the Company.
________ 1. A bank as defined in Section 3(a)(2) of the Securities
Act, or any savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities Act whether acting in
its individual or fiduciary capacity;
________ 2. A broker or dealer registered pursuant to Section 15 of
the Securities Exchange Act of 1934;
________ 3. An insurance company as defined in Section 2(13) of the
securities Act;
________ 4. An investment company registered under the Investment
Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act;
________ 5. A Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958;
________ 6. A plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or
its political subdivisions, for the benefit of its employees, if such
plan has total assets in excess of $5,000,000;
________ 7. An employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of
such act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if
a self-directed plan, with investment decisions made solely by persons
that are accredited investors;
________ 8. A private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
________ 9. An organization described in Section 501(c)(3) of the
Internal Revenue Code, a corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of
acquiring the Shares, with total assets in excess of $5,000,000;
________ 10. A trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Shares, whose
purchase is directed by a sophisticated person who has such knowledge
and experience in financial and
3.
business matters that such person is capable of evaluating the merits
and risks of investing in the Company;
________ 11. An entity in which all of the equity owners qualify
under any of the above subparagraphs. If the undersigned belongs to
this investor category only, list the equity owners of the
undersigned, and the investor category which each such equity owner
satisfies:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(Continue on a separate piece of paper, if necessary.)
(e) The state of incorporation or formation of the investor is_______ and
the investor's principal office is located in the state of______________.
Dated:_________,199_
_______________________________________
Name of investor
_______________________________________
Signature and title of authorized
officer, partner or trustee
4.
EXHIBIT C
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
To: Xxxxxx Xxxxxx
XxxxxxxXxx.xxx
000 Xxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000-0000
The undersigned, the Purchaser or an officer of, or other person duly
authorized by the Purchaser, hereby certifies that [ ]
was the Purchaser of the shares evidenced by the attached certificate, and as
such, proposes to transfer such shares on or about ___________ either (check the
applicable box) : (i) in accordance with the registration statement, file number
____ in which case the Purchaser certifies that the requirement of delivering a
current prospectus has been complied with or will be complied with in connection
with such sale, or: (ii) in accordance with Rule 144 under the Securities Act of
1933 ("Rule 144"), in which case the Purchaser certifies that it has complied
with or will comply with the requirements of Rule 144.
Print or type:
Name of Purchaser: ________________________
Name of Individual
representing Purchaser
(if an Institution): ______________________
Title of Individual
representing Purchaser
(if an Institution): ______________________
Signature by:
Purchaser or
Individual representing Purchaser: __________________
5.
