EXHIBIT 4.1(i)
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made as of the 7th day of
February, 2002 by and among ION Networks, Inc., a Delaware corporation (the
"Company"), and the Investors set forth on the signature pages affixed hereto
(each an "Investor" and collectively the "Investors").
Recitals
A. The Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended; and
B. The Investors wish to purchase from the Company, and the Company
wishes to sell and issue to the Investors, upon the terms and conditions stated
in this Agreement, (i) an aggregate of 4,000,000 shares of common stock, par
value $.001 per share, of the Company (the "Common Stock"), and (ii) warrants to
purchase an aggregate of 1,120,000 shares of Common Stock in the form attached
hereto as Exhibit A (the "Warrants"); and
C. Contemporaneous with the sale of the Common Stock and Warrants, the
parties hereto will execute and deliver a Registration Rights Agreement, in the
form attached hereto as Exhibit B (the "Registration Rights Agreement"),
pursuant to which the Company will agree to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, and applicable state securities laws.
In consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. In addition to those terms defined above and elsewhere in
this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings here set forth:
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly Controls, is controlled by, or is under common control
with, such Person.
"Agreements" means this Agreement, the Warrants and the Registration
Rights Agreement.
"Business Day" means a day, other than a Saturday or Sunday, on which
banks in New York City are open for the general transaction of business.
"Company's Knowledge" means the actual knowledge of the officers of the
Company, after due inquiry.
"Control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Intellectual Property" means all of the following: (i) patents, patent
applications, patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice); (ii) trademarks, service marks, trade
dress, trade names, corporate names, logos, slogans and Internet domain names,
together with all goodwill associated with each of the foregoing; (iii)
copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; (v) trade secrets, confidential information
and know-how (including but not limited to ideas, formulae, compositions,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, business and marketing plans,
and customer and supplier lists and related information); and (vi) proprietary
computer software (including but not limited to data, data bases and
documentation).
"Material Adverse Effect" means a material adverse effect on the
assets, liabilities, results of operations, condition (financial or otherwise),
business, or prospects of the Company and its subsidiaries taken as a whole.
"Nasdaq" means the NASDAQ Stock Market, Inc. National Market System.
"Person" means an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.
"Purchase Price" means Three Million Four Hundred Eighty Thousand
Dollars ($3,480,000).
"SEC Filings" has the meaning set forth in Section 4.6.
"Securities" means the Shares, the Warrants and the Warrant Shares.
"Shares" means the shares of Common Stock being purchased by the
Investors hereunder.
"Subsidiary" has the meaning set forth in Section 4.1.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of or otherwise pursuant to the Warrants.
"1933 Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
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"1934 Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
2. Purchase and Sale of the Shares and Warrants. Subject to the terms and
conditions of this Agreement, on the Closing Date, each of the Investors shall
severally, and not jointly, purchase, and the Company shall sell and issue to
the Investors, the Shares and Warrants in the respective amounts set forth
opposite the Investors' names on the signature pages attached hereto in exchange
for the Purchase Price as specified in Section 3 below.
3. Closing. Upon confirmation that the conditions to closing specified
herein have been satisfied, the Company shall deliver to Xxxxxxxxxx Xxxxxxx PC,
in trust, a certificate or certificates, registered in such name or names as the
Investors may designate, representing the Shares and Warrants, with instructions
that such certificates are to be held for release to the Investors only upon
payment of the Purchase Price to the Company. Upon receipt by Xxxxxxxxxx Xxxxxxx
PC of the certificates, each Investor shall promptly cause a wire transfer in
same day funds to be sent to the account of the Company as instructed in writing
by the Company, in an amount representing such Investor's pro rata portion of
the Purchase Price as set forth on the signature pages to this Agreement. On the
date (the "Closing Date") the Company receives such funds, the certificates
evidencing the Shares and Warrants shall be released to the Investors (the
"Closing"). The purchase and sale of the Shares and Warrants shall take place at
the offices of Xxxxxxxxxx Xxxxxxx PC, 1330 Avenue of the Americas, 21st Floor,
New York, New York, or at such other location and on such other date as the
Company and the Investors shall mutually agree.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors that, except as set forth in the
schedules delivered herewith (collectively, the "Disclosure Schedules"):
4. 1 Organization, Good Standing and Qualification. Each of the Company
and its Subsidiaries is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to carry on its business as now
conducted and to own its properties. Each of the Company and its Subsidiaries is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property makes such qualification or leasing necessary unless the
failure to so qualify has not and could not reasonably be expected to have a
Material Adverse Effect. The Company's subsidiaries are reflected on Schedule
4.1 hereto (the "Subsidiaries").
4.2 Authorization. The Company has full power and authority and has
taken all requisite action on the part of the Company, its officers, directors
and shareholders necessary for (i) the authorization, execution and delivery of
the Agreements, (ii) authorization of the performance of all obligations of the
Company hereunder or thereunder, and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Securities. The Agreements
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject to bankruptcy,
insolvency,
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fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors' rights generally.
4.3 Capitalization. The Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 2001 (the "10-Q") sets forth (a) the authorized
capital stock of the Company on the date thereof and (b) the number of shares of
capital stock issued and outstanding. All of the issued and outstanding shares
of the Company's capital stock have been duly authorized and validly issued and
are fully paid, nonassessable and free of pre-emptive rights and were issued in
full compliance with applicable law. All of the issued and outstanding shares of
capital stock of each Subsidiary have been duly authorized and validly issued
and are fully paid, nonassessable and free of pre-emptive rights, were issued in
full compliance with applicable law and, except as described on Schedule 4.3,
are owned by the Company, beneficially and of record, subject to no lien,
encumbrance or other adverse claim. No Person is entitled to pre-emptive or
similar statutory or contractual rights with respect to any securities of the
Company. Schedule 4.3 sets forth a true and complete list of (a) the number of
shares of capital stock issuable pursuant to the Company's stock plans and (b)
the number of shares of capital stock issuable and reserved for issuance
pursuant to securities (other than the Shares and the Warrants) exercisable for,
or convertible into or exchangeable for any shares of capital stock of the
Company. Except as described on Schedule 4.3, there are no outstanding warrants,
options, convertible securities or other rights, agreements or arrangements of
any character under which the Company or any of its Subsidiaries is or may be
obligated to issue any equity securities of any kind and except as contemplated
by this Agreement, neither the Company nor any of its Subsidiaries is currently
in negotiations for the issuance of any equity securities of any kind. Except as
described on Schedule 4.3 and except for the Registration Rights Agreement,
there are no voting agreements, buy-sell agreements, option or right of first
purchase agreements or other agreements of any kind among the Company and any of
the securityholders of the Company relating to the securities of the Company
held by them. Except as set forth in the SEC Filings or as described on Schedule
4.3, the Company has not granted any Person the right to require the Company to
register any securities of the Company under the 1933 Act, whether on a demand
basis or in connection with the registration of securities of the Company for
its own account or for the account of any other Person.
Promptly following the date hereof and prior to the Closing Date, the
Company shall deliver to the Investors a true and complete table setting forth
the pro forma capitalization of the Company on a fully diluted basis giving
effect to (i) the issuance of the Shares and the Warrants, (ii) any adjustments
in other securities resulting from such issuance, and (iii) the exercise or
conversion of all outstanding securities. Except as described on Schedule 4.3,
the issuance of the Securities hereunder will not trigger any outstanding
anti-dilution rights.
4.4 Valid Issuance. The Shares have been duly and validly authorized
and, when issued and paid for pursuant to this Agreement, will be validly
issued, fully paid and nonassessable free and clear of all encumbrances and
restrictions, except for restrictions on transfer set forth in this Agreement or
imposed by applicable securities laws. The Warrants have been duly and validly
authorized. Upon the due exercise of the Warrants, the Warrant Shares issuable
upon such exercise will be validly issued, fully paid and non-assessable free
and clear of all encumbrances and restrictions, except for restrictions on
transfer set forth in this Agreement
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or imposed by applicable securities laws. The Company has reserved a sufficient
number of shares of Common Stock for issuance upon the exercise of the Warrants,
free and clear of all encumbrances and restrictions, except for restrictions on
transfer set forth in this Agreement or imposed by applicable securities laws.
4.5 Consents. Assuming the accuracy of the representations and
warranties of the Investors contained in Section 5, the execution, delivery and
performance by the Company of the Agreements and the offer, issuance and sale of
the Securities require no consent of, action by or in respect of, or filing
with, any Person, governmental body, agency, or official other than filings that
have been made pursuant to applicable state securities laws and post-sale
filings pursuant to applicable state and federal securities laws which the
Company undertakes to file within the applicable time periods. Assuming the
Investors have not purchased shares of Common Stock other than from the Company,
(i) the sale of the Securities, (ii) the issuance of the Warrant Shares upon due
exercise of the Warrants, and (iii) the other transactions contemplated by this
Agreement have been exempted from the provisions of any anti-takeover or
business combination law or statute binding on the Company or to which the
Company or any of its assets and properties may be subject.
4.6 Delivery of SEC Filings; Business. The Company has provided the
Investors with copies of the Company's most recent Annual Report on Form 10-K
for the fiscal year ended March 31, 2001 (the "10-K"), and all other reports
filed by the Company pursuant to the 1934 Act since the filing of the 10-K and
prior to the date hereof (collectively, the "SEC Filings"). The SEC Filings are
the only filings required of the Company pursuant to the 1934 Act for such
period. The Company and its Subsidiaries are engaged only in the business
described in the SEC Filings and the SEC Filings contain a complete and accurate
description in all material respects of the business of the Company and its
Subsidiaries, taken as a whole.
4.7 Use of Proceeds. The proceeds of the sale of the Common Stock and
the Warrants hereunder shall be used by the Company for working capital and
general corporate purposes.
4.8 No Material Adverse Change. Since March 31, 2001, except as
identified and described in the SEC Filings, there has not been:
(i) any change in the consolidated assets, liabilities, financial
condition or operating results of the Company from that reflected in the
financial statements included in the 10-K, except for changes in the ordinary
course of business which have not and could not reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate;
(ii) any declaration or payment of any dividend, or any
authorization or payment of any distribution, on any of the capital stock of the
Company, or any redemption or repurchase of any securities of the Company;
(iii) any material damage, destruction or loss, whether or not
covered by insurance to any assets or properties of the Company or its
Subsidiaries;
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(iv) any waiver, not in the ordinary course of business, by the
Company or any Subsidiary of a material right or of a material debt owed to it;
(v) any satisfaction or discharge of any lien, claim or encumbrance
or payment of any obligation by the Company or a Subsidiary, except in the
ordinary course of business and which is not material to the assets, properties,
financial condition, operating results or business of the Company and its
Subsidiaries taken as a whole (as such business is presently conducted and as it
is proposed to be conducted);
(vi) any change or amendment to the Company's Certificate of
Incorporation or by-laws, or material change to any material contract or
arrangement by which the Company or any Subsidiary is bound or to which any of
their respective assets or properties is subject;
(vii) any material labor difficulties or labor union organizing
activities with respect to employees of the Company or any Subsidiary;
(viii) any transaction entered into by the Company or a Subsidiary
other than in the ordinary course of business;
(ix) the loss of the services of any key employee, or material
change in the composition or duties of the senior management of the Company or
any Subsidiary;
(x) the loss or threatened loss of any customer which has had or
could reasonably be expected to have a Material Adverse Effect; or
(xi) any other event or condition of any character that has had or
could reasonably be expected to have a Material Adverse Effect.
4.9 SEC Filings; S-3 Eligibility.
(a) At the time of filing thereof, the SEC Filings complied as to
form in all material respects with the requirements of the 1934 Act and did not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) During the preceding two years, each registration statement and
any amendment thereto filed by the Company pursuant to the 1933 Act and the
rules and regulations thereunder, as of the date such statement or amendment
became effective, complied as to form in all material respects with the 1933 Act
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; and each prospectus filed pursuant to Rule 424(b) under
the 1933 Act, as of its issue date and as of the closing of any sale of
securities pursuant thereto did not contain any
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untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
(c) The Company meets the registrant requirements for use of Form
S-3 set forth in General Instruction I.A. of Form S-3. As of the Closing, the
sale by the Investors of the Registrable Securities (as such term is defined in
the Registration Rights Agreement) in accordance with the Registration Statement
contemplated by the Registration Rights Agreement meets the transaction
requirements for use of Form S-3 set forth in General Instruction I.B.3. of Form
S-3.
4.10 No Conflict, Breach, Violation or Default. The execution, delivery
and performance of the Agreements by the Company and the issuance and sale of
the Securities will not conflict with or result in a breach or violation of any
of the terms and provisions of, or constitute a default under (i) the Company's
Certificate of Incorporation or the Company's Bylaws, both as in effect on the
date hereof (copies of which have been provided to the Investors before the date
hereof), or (ii)(a) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the
Company, any Subsidiary or any of their respective assets or properties, or (b)
any agreement or instrument to which the Company or any Subsidiary is a party or
by which the Company or a Subsidiary is bound or to which any of their
respective assets or properties is subject. The Company has received irrevocable
waivers of any rights of first offer, rights of first refusal or other
preemptive or other subscription rights that may apply to the issuance and sale
of the Securities as contemplated hereby, the Company has complied with the
terms of any such rights and any such waivers with respect thereto, and such
waivers are in full force and effect. Such waivers do not require the Company or
any other Person to take or refrain from taking any action. True and complete
copies of such waivers have been provided to the Investors prior to the
execution and delivery of this Agreement.
4.11 Tax Matters. Except as set forth in Schedule 4.11, the Company and
each Subsidiary has timely prepared and filed all tax returns required to have
been filed by the Company or such Subsidiary with all appropriate governmental
agencies and timely paid all taxes shown thereon or otherwise owed by it. The
charges, accruals and reserves on the books of the Company in respect of taxes
for all fiscal periods are adequate in all material respects, and there are no
material unpaid assessments against the Company or any Subsidiary nor, to the
Company's Knowledge, any basis for the assessment of any additional taxes,
penalties or interest for any fiscal period or audits by any federal, state or
local taxing authority except for any assessment which is not material to the
Company and its Subsidiaries, taken as a whole. All taxes and other assessments
and levies that the Company or any Subsidiary is required to withhold or to
collect for payment have been duly withheld and collected and paid to the proper
governmental entity or third party when due. There are no tax liens or claims
pending or, to the Company's Knowledge, threatened against the Company or any
Subsidiary or any of their respective assets or property. Except as described on
Schedule 4.11, there are no outstanding tax sharing agreements or other such
arrangements between the Company and any Subsidiary or other corporation or
entity.
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4.12 Title to Properties. Except as disclosed in the SEC Filings, the
Company and each Subsidiary has good and marketable title to all real properties
and all other properties and assets owned by it, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or currently planned to be made thereof
by them; and except as disclosed in the SEC Filings, the Company and each
Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.
4.13 Certificates, Authorities and Permits. The Company and each
Subsidiary possess adequate certificates, authorities or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business
now operated by it, and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company or
such Subsidiary, could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.
4.14 No Labor Disputes. No material labor dispute with the employees of
the Company or any Subsidiary exists or, to the Company's Knowledge, is
imminent.
4.15 Intellectual Property.
(a) All Intellectual Property of the Company and its Subsidiaries
is currently in compliance with all legal requirements (including timely
filings, proofs and payments of fees) and is valid and enforceable. No
Intellectual Property of the Company or its Subsidiaries which is necessary for
the conduct of Company's and each of its Subsidiaries' respective businesses as
currently conducted or as currently proposed to be conducted has been or is now
involved in any cancellation, dispute or litigation, and, to the Company's
Knowledge, no such action is threatened. No patent of the Company or its
Subsidiaries has been or is now involved in any interference, reissue,
re-examination or opposition proceeding.
(b) All of the licenses and sublicenses and consent, royalty or
other agreements concerning Intellectual Property which are necessary for the
conduct of Company's and each of its Subsidiaries' respective businesses as
currently conducted or as currently proposed to be conducted to which the
Company or any Subsidiary is a party or by which any of their assets are bound
(other than generally commercially available, non-custom, off-the-shelf software
application programs having a retail acquisition price of less than $10,000 per
license) (collectively, "License Agreements") are valid and binding obligations
of the Company or its Subsidiaries that are parties thereto and, to the
Company's Knowledge, the other parties thereto, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally, and
there exists no event or condition which will result in a material violation or
breach of or constitute (with or without due notice or lapse of time or both) a
default by the Company or any of its Subsidiaries under any such License
Agreement.
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(c) The Company and its Subsidiaries own or, to the Company's
Knowledge, have the valid right to use all of the Intellectual Property
necessary for the conduct of the Company's and each of its Subsidiaries'
businesses substantially as currently conducted or as currently proposed to be
conducted and for the ownership, maintenance and operation of the Company's and
its Subsidiaries' properties and assets.
(d) The Company and its Subsidiaries own the Intellectual Property
that is necessary for the conduct of Company's and each of its Subsidiaries'
respective businesses as currently conducted or as currently proposed to be
conducted, free and clear of all liens, encumbrances, adverse claims or
obligations to license all such owned Intellectual Property, other than licenses
entered into in the ordinary course of the Company's and its Subsidiaries'
businesses. The Company and its Subsidiaries have a valid and enforceable right
to use all other Intellectual Property used or held for use in the respective
businesses of the Company and its Subsidiaries. The Company and its Subsidiaries
have the right to use all of the owned and licensed Intellectual Property which
is necessary for the conduct of Company's and each of its Subsidiaries'
respective businesses as currently conducted or as currently proposed to be
conducted in all jurisdictions in which they conduct their businesses.
(e) The Company and each of its Subsidiaries have taken reasonable
steps to maintain, police and protect the Intellectual Property which it owns
and which is necessary for the conduct of Company's and each of its
Subsidiaries' respective businesses as currently conducted or as currently
proposed to be conducted, including the execution of appropriate confidentiality
agreements and intellectual property and work product assignments and releases.
The conduct of the Company's and its Subsidiaries' businesses as currently
conducted does not infringe or otherwise impair or conflict with (collectively,
"Infringe") any Intellectual Property rights of any third party, and, to the
Company's Knowledge, the Intellectual Property rights of the Company and its
Subsidiaries which are necessary for the conduct of Company's and each of its
Subsidiaries' respective businesses as currently conducted or as currently
proposed to be conducted are not being Infringed by any third party. There is no
litigation or order pending or outstanding or, to the Company's Knowledge,
threatened or imminent, that seeks to limit or challenge or that concerns the
ownership, use, validity or enforceability of any Intellectual Property of the
Company and its Subsidiaries and the Company's and its Subsidiaries' use of any
Intellectual Property owned by a third party, and, to the Company's Knowledge,
there is no valid basis for the same.
(f) The consummation of the transactions contemplated hereby will
not result in the alteration, loss, impairment of or restriction on the
Company's or any of its Subsidiaries' ownership or right to use any of the
Intellectual Property which is necessary for the conduct of Company's and each
of its Subsidiaries' respective businesses as currently conducted or as
currently proposed to be conducted.
(g) All software owned by the Company or any of its Subsidiaries,
and, to the Company's Knowledge, all software licensed from third parties by the
Company or any of its Subsidiaries, (i) is free from any material defect, bug,
virus, or programming, design or documentation error; (ii) operates and runs in
a reasonable and efficient business manner; and (iii) conforms in all material
respects to the specifications and purposes thereof.
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(h) The Company and its Subsidiaries have taken reasonable steps to
protect the Company's and its Subsidiaries' rights in their confidential
information and trade secrets. Each employee, consultant and contractor who has
had access to proprietary Intellectual Property which is necessary for the
conduct of Company's and each of its Subsidiaries' respective businesses as
currently conducted or as currently proposed to be conducted has executed an
agreement to maintain the confidentiality of such Intellectual Property and has
executed appropriate agreements that are substantially consistent with the
Company's standard forms thereof. Except under confidentiality obligations,
there has been no material disclosure of any of the Company's or its
Subsidiaries' confidential information or trade secrets to any third party.
4.16 Environmental Matters. Neither the Company nor any Subsidiary is
in violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "Environmental Laws"), owns or operates any real
property contaminated with any substance that is subject to any Environmental
Laws, is liable for any off-site disposal or contamination pursuant to any
Environmental Laws, and is subject to any claim relating to any Environmental
Laws, which violation, contamination, liability or claim has had or could
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate; and there is no pending or, to the Company's Knowledge, threatened
investigation that might lead to such a claim.
4.17 Litigation. Except as described on Schedule 4.17, there are no
pending actions, suits or proceedings against or affecting the Company, its
Subsidiaries or any of its or their properties (excluding actions where the
Company or a Subsidiary is the plaintiff); and to the Company's Knowledge, no
such actions, suits or proceedings are threatened or contemplated.
4.18 Financial Statements. The financial statements included in each
SEC Filing present fairly, in all material respects, the consolidated financial
position of the Company as of the dates shown and its consolidated results of
operations and cash flows for the periods shown, and such financial statements
have been prepared in conformity with United States generally accepted
accounting principles applied on a consistent basis (except as may be disclosed
therein or in the notes thereto, and, in the case of quarterly financial
statements, as permitted by Form 10-Q under the 1934 Act). Except as set forth
in the financial statements of the Company included in the SEC Filings filed
prior to the date hereof or as described on Schedule 4.18, neither the Company
nor any of its Subsidiaries has incurred any liabilities, contingent or
otherwise, except those incurred in the ordinary course of business, consistent
(as to amount and nature) with past practices since the date of such financial
statements, none of which, individually or in the aggregate, have had or could
reasonably be expected to have a Material Adverse Effect.
4.19 Insurance Coverage. The Company and each Subsidiary maintain in
full force and effect insurance coverage that is customary for comparably
situated companies for the business being conducted and properties owned or
leased by the Company and each Subsidiary,
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and the Company reasonably believes such insurance coverage to be adequate
against all liabilities, claims and risks against which it is customary for
comparably situated companies to insure.
4.20 Compliance with Nasdaq Continued Listing Requirements. Except as
set forth in Schedule 4.20, the Company is in compliance with applicable Nasdaq
National Market continued listing requirements. There are no proceedings pending
or, to the Company's Knowledge, threatened against the Company relating to the
continued listing of the Company's Common Stock on the Nasdaq National Market
and the Company has not received any notice of, nor to the Company's Knowledge
is there any basis for, the delisting of the Common Stock from the Nasdaq
National Market.
4.21 Brokers and Finders. No Person will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company.
4.22 No Directed Selling Efforts or General Solicitation. Neither the
Company nor any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation D) in
connection with the offer or sale of any of the Securities.
4.23 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 Company security or solicited any
offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Section 4(2) and Regulation D for the exemption from
registration for the transactions contemplated hereby or would require
registration of the Securities under the 1933 Act.
4.24 Private Placement. Assuming the accuracy of the representations
and warranties of the Investors contained in Section 5, the offer and sale of
the Securities to the Investors as contemplated hereby is exempt from the
registration requirements of the 1933 Act.
4.25 Questionable Payments. Neither the Company nor any of its
Subsidiaries nor, to the Company's Knowledge, any of their respective current or
former shareholders, directors, officers, employees, agents or other Persons
acting on behalf of the Company or any Subsidiary, has on behalf of the Company
or any Subsidiary or in connection with their respective businesses: (a) used
any corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; (d) made any false or fictitious entries on
the books and records of the Company or any Subsidiary; or (e) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment of
any nature.
-11-
4.26 Disclosures. The written materials delivered to the Investors in
connection with the transactions contemplated by the Agreements do not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. None of the matters
described on the Disclosure Schedules have had, or could reasonably be expected
to have, a Material Adverse Effect, individually or in the aggregate.
5. Representations and Warranties of the Investor. Each of the Investors
hereby severally, and not jointly, represents and warrants to the Company that:
5.1 Organization and Existence. The Investor is a validly existing
corporation, limited partnership or limited liability company, as the case may
be, and has all requisite corporate, partnership or limited liability company
power and authority to invest in the Securities pursuant to this Agreement.
5.2 Authorization. The execution, delivery and performance by the
Investor of the Agreements have been duly authorized and the Agreements will
each constitute the valid and legally binding obligation of the Investor,
enforceable against the Investor in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors'
rights generally.
5.3 Purchase Entirely for Own Account. The Securities to be received by
the Investor hereunder will be acquired for the Investor's own account, not as
nominee or agent, and not with a view to the resale or distribution of any part
thereof in violation of the 1933 Act, and the Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same in
violation of the 1933 Act. The Investor is not a registered broker dealer or an
entity engaged in the business of being a broker dealer.
5.4 Investment Experience. The Investor acknowledges that it can bear
the economic risk and complete loss of its investment in the Securities and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
hereby.
5.5 Disclosure of Information. The Investor has had an opportunity to
receive all additional information related to the Company requested by it and to
ask questions of and receive answers from the Company regarding the Company, its
business and the terms and conditions of the offering of the Securities. The
Investor acknowledges receipt of copies of the SEC Filings. Neither such
inquiries nor any other due diligence investigation conducted by the Investor
shall modify, amend or affect the Investor's right to rely on the Company's
representations and warranties contained in this Agreement.
5.6 Restricted Securities. The Investor understands that the Securities
are characterized as "restricted securities" under the U.S. federal securities
laws inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that
-12-
under such laws and applicable regulations such securities may be resold without
registration under the 1933 Act only in certain limited circumstances.
5.7 Legends. It is understood that, until the earlier of (i)
registration for resale pursuant to the Registration Rights Agreement or (ii)
the time when such Securities may be sold pursuant to Rule 144(k), certificates
evidencing such Securities may bear the following or any similar legend:
(a) "The securities represented hereby may not be transferred
unless (i) such securities have been registered for sale pursuant to the
Securities Act of 1933, as amended, (ii) such securities may be sold pursuant to
Rule 144(k), or (iii) the Company has received an opinion of counsel
satisfactory to it that such transfer may lawfully be made without registration
under the Securities Act of 1933 or qualification under applicable state
securities laws."
(b) If required by the authorities of any state in connection with
the issuance of sale of the Securities, the legend required by such state
authority.
Upon the earlier of (i) registration for resale pursuant to the
Registration Rights Agreement and receipt by the Company of the Investor's
written confirmation that such Securities will not be disposed of except in
compliance with the prospectus delivery requirements of the 1933 Act or (ii)
Rule 144(k) becoming available the Company shall, upon an Investor's written
request, promptly cause certificates evidencing the Securities to be replaced
with certificates which do not bear such restrictive legends, and Warrant Shares
subsequently issued in respect of the Warrants shall not bear such restrictive
legends provided the provisions of either clause (i) or clause (ii) above, as
applicable, are satisfied with respect to such Warrant Shares. When the Company
is required to cause unlegended certificates to replace previously issued
legended certificates, if unlegended certificates are not delivered to an
Investor within three (3) Business Days of submission by that Investor of
legended certificate(s) to the Company's transfer agent together with a
representation letter in customary form (copies of which shall be delivered to
the General Counsel of the Company), the Company shall be liable to the Investor
for a penalty equal to 1% of the aggregate purchase price of the Securities
evidenced by such certificate(s) for each thirty (30) day period (or portion
thereof) beyond such three (3) Business Day that the unlegended certificates
have not been so delivered.
5.8 Accredited Investor. The Investor is an accredited investor as
defined in Rule 501(a) of Regulation D, as amended, under the 0000 Xxx.
5.9 No General Solicitation. The Investor did not learn of the
investment in the Securities as a result of any public advertising or general
solicitation.
5.10 Brokers and Finders. No Person will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Investors.
-13-
5.11 Investors' Holdings. Promptly following the date hereof and prior
to the Closing Date, the Investors shall provide to the Company a schedule
setting forth the number of shares of Common Stock owned by each Investor on the
date hereof, and any shares of Common Stock that the Investor may have the right
to acquire on the date hereof (excluding rights created pursuant to the
Agreements).
6. Conditions to the Closings.
6.1 Conditions to the Investors' Obligations. The obligation of the
Investors to purchase the Securities at the Closing is subject to the
fulfillment to the Investors' satisfaction, on or prior to the Closing Date, of
the following conditions, any of which may be waived by the Investors agreeing
hereunder to purchase a majority of the Shares and Warrants (the "Required
Investors"):
(a) The representations and warranties made by the Company in
Section 4 hereof qualified as to materiality shall be true and correct at all
times prior to the Closing Date, except to the extent any such representation or
warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct as of such earlier date,
and, the representations and warranties made by the Company in Section 4 hereof
not qualified as to materiality shall be true and correct in all material
respects at all times prior to the Closing Date, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct in all material
respects as of such earlier date. The Company shall have performed in all
material respects all obligations and conditions herein required to be performed
or observed by it on or prior to the Closing Date.
(b) The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary or appropriate
for consummation of the purchase and sale of the Securities all of which shall
be in full force and effect.
(c) The Company shall have executed and delivered the Registration
Rights Agreement.
(d) The Company shall have received (A) written notice from Nasdaq
to the effect that the issuance and sale of the Securities as contemplated
hereby will not require shareholder approval pursuant to the requirements of
Nasdaq Marketplace Rule 4350(i), and (B) oral confirmation from Nasdaq that the
Shares and the Warrant Shares shall have been approved for inclusion in Nasdaq
upon official notice of issuance.
(e) No judgment, writ, order, injunction, award or decree of or by
any court, or judge, justice or magistrate, including any bankruptcy court or
judge, or any order of or by any governmental authority, shall have been issued,
and no action or proceeding shall have been instituted by any governmental
authority, enjoining or preventing the consummation of the transactions
contemplated hereby or in the other Agreements.
-14-
(f) The Company shall have delivered a Certificate, executed on
behalf of the Company by its Chief Executive Officer or its Chief Financial
Officer, dated as of the Closing Date, certifying to the fulfilment of the
conditions specified in subsections (a), (b) and (d) of this Section 6.1.
(g) The Company shall have delivered a Certificate, executed on
behalf of the Company by its Secretary, dated as of the Closing Date, certifying
the resolutions adopted by the Board of Directors of the Company approving the
transactions contemplated by this Agreement and the other Agreements and the
issuance of the Securities, certifying the current versions of the Certificate
of Incorporation and Bylaws of the Company and certifying as to the signatures
and authority of persons signing the Agreements and related documents on behalf
of the Company.
(h) The Investors shall have received an opinion from Jenkens &
Xxxxxxxxx Xxxxxx Xxxxxx LLP, the Company's counsel, dated as of the Closing
Date, in form and substance reasonably acceptable to the Investors and
addressing such legal matters as the Investors may reasonably request.
(i) No stop order or suspension of trading shall have been imposed
by Nasdaq, the SEC or any other governmental regulatory body with respect to
public trading in the Common Stock.
(j) The Company shall have provided to the Investors a true and
complete capitalization table showing the Company's capitalization as of the
date of this Agreement and such capitalization table shall not contain any
information which, in the good faith judgment of the Investors, represents a
material adverse change in the information contained in the 10-Q.
6.2 Conditions to Obligations of the Company. The Company's obligation
to sell and issue the Securities at the Closing is subject to the fulfillment to
the satisfaction of the Company on or prior to the Closing Date of the following
conditions, any of which may be waived by the Company:
(a) The representations and warranties made by the Investors in
Section 5 hereof, other than the representations and warranties contained in
Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 (the "Investment
Representations"), shall be true and correct in all material respects when made,
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. The
Investment Representations shall be true and correct in all respects when made,
and shall be true and correct in all respects on the Closing Date with the same
force and effect as if they had been made on and as of said date. The Investors
shall have performed in all material respects all obligations and conditions
herein required to be performed or observed by them on or prior to the Closing
Date.
(b) The Investors shall have executed and delivered the
Registration Rights Agreement.
-15-
(c) The Investors shall have delivered the Purchase Price to the
Company.
(d) The Company shall have received (A) written notice from Nasdaq
to the effect that the issuance and sale of the Securities as contemplated
hereby will not require shareholder approval pursuant to the requirements of
Nasdaq Marketplace Rule 4350(i), and (B) oral confirmation from Nasdaq that the
Shares and the Warrant Shares shall have been approved for inclusion in Nasdaq
upon official notice of issuance.
6.3 Termination of Obligations to Effect Closing; Effects.
(a) The obligations of the Company, on the one hand, and the
Investors, on the other hand, to effect the Closing shall terminate as follows:
(i) Upon the mutual written consent of the Company and the
Required Investors;
(ii) By the Company if any of the conditions set forth in
Section 6.2 shall have become incapable of fulfillment on or prior to February
28, 2002, and shall not have been waived by the Company;
(iii) By the Required Investors if any of the conditions set
forth in Section 6.1 shall have become incapable of fulfillment on or prior to
February 28, 2002, and shall not have been waived by the Required Investors; or
(iv) By either the Company or the Required Investors if the
Closing has not occurred on or prior to February 28, 2002;
provided, however, that, except in the case of clause (i) above, the party
seeking to terminate its obligation to effect the Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Agreements if such breach has resulted
in the circumstances giving rise to such party's seeking to terminate its
obligation to effect the Closing.
(b) In the event of termination by the Company or the Required
Investors of their obligations to effect the Closing pursuant to this Section
6.3, written notice thereof shall forthwith be given to the other parties hereto
and the obligation of all parties to effect the Closing shall be terminated,
without further action by any party. Nothing in this Section 6.3 shall be deemed
to release any party from any liability for any breach by such party of the
terms and provisions of this Agreement or the other Agreements or to impair the
right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Agreements.
7. Covenants and Agreements of the Company.
-16-
7.1 Limitation on Certain Actions. Commencing on the date hereof
and continuing until such time as the Investors no longer own in the aggregate
at least 400,000 shares (appropriately adjusted for any stock split, reverse
stock split, stock dividend or other reclassification or combination of the
Common Stock occurring after the date hereof), the Company shall not offer or
sell or enter into any agreement, arrangement or understanding to offer or sell
any Equity Security (as defined below) if the Equity Security (or any agreement,
arrangement or understanding entered into in connection therewith) provides for
the future adjustment of (i) the purchase price therefor, (ii) the number of
Equity Securities to be issued, or (iii) the conversion, exercise or exchange
rate applicable thereto (other than customary anti-dilution provisions no more
favorable to the holder than those contained in the Warrants) without the prior
written consent of the Required Investors, which consent shall not be
unreasonably withheld or delayed. The term "Equity Securities" means the
Company's capital stock, warrants, rights, and options giving the holder thereof
the right to acquire shares of capital stock, and any security directly or
indirectly convertible into or exercisable for or exchangeable into shares of
the Company's capital stock. Nothing in this Section 7.1 shall prohibit or limit
the Company from entering into or performing its obligations under an "earn-out"
or similar arrangement entered into in good faith in connection with the
acquisition of another entity or line of business pursuant to which the Company
agrees to issue Equity Securities to the principals of such entity or business
line upon the achievement of certain performance targets established at the time
of the acquisition.
7.2 Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of providing for the exercise of the Warrants,
such number of shares of Common Stock as shall from time to time equal the
number of shares sufficient to permit the exercise of the Warrants issued
pursuant to this Agreement in accordance with their respective terms.
7.3 Reports. The Company will furnish to such Investors and/or
their assignees such information relating to the Company and its Subsidiaries as
from time to time may reasonably be requested by such Investors and/or their
assignees; provided, however, that such Investors and/or assignees shall hold in
confidence any confidential or proprietary information received from the Company
and identified as such at the time of disclosure such information and shall use
any such confidential or proprietary information solely for the purpose of
monitoring and evaluating their investment in the Company and; provided,
further, that the Company shall not be required to provide any information to
the Investors which, if disclosed to such Investors and/or their assignees
pursuant to the terms of this Section 7.3, would, in the good faith judgment of
the Company, cause the Company or any Subsidiary to violate the terms of a
confidentiality undertaking binding on the Company or such Subsidiary. Each
Investor and/or assignee acknowledges that it is aware, and that it will advise
its representatives who are given access to such information, that the United
States securities laws may prohibit a person who has material, non-public
information concerning matters that may be disclosed to it pursuant to this
Section 7.3 from purchasing or selling securities of the Company or a company
which may be, or may be affiliated with, a party to a business arrangement or
proposed business arrangement with the Company or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.
-17-
7.4 No Conflicting Agreements. The Company will not take any
action, enter into any agreement or make any commitment that would conflict or
interfere in any material respect with the obligations to the Investors under
the Agreements.
7.5 Insurance. The Company shall not materially reduce the
insurance coverages described in Section 4.19.
7.6 Compliance with Laws. The Company will comply in all material
respects with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities.
7.7 Listing of Underlying Shares and Related Matters. Promptly
following the date hereof, the Company shall take such action as may be required
to cause the Shares and the Warrant Shares to be listed on Nasdaq no later than
the Closing Date. Further, if the Company applies to have its Common Stock or
other securities traded on any other principal stock exchange or market, it
shall include in such application the Shares and the Warrant Shares and will
take such other action as is necessary to cause such Common Stock to be so
listed. The Company will use commercially reasonable efforts to continue the
listing and trading of its Common Stock on Nasdaq and, in accordance, therewith,
will use commercially reasonable efforts to comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
such exchange, as applicable.
7.8 Termination of Covenants. The provisions of Sections 7.3
through 7.6 shall terminate and be of no further force and effect upon the
earlier of (i) the mutual consent of the Company and the Required Investors or
(ii) the date on which the Company's obligations under the Registration Rights
Agreement terminate.
8. Survival and Indemnification.
8.1 Survival. All representations, warranties, covenants and
agreements contained in this Agreement shall be deemed to be representations,
warranties, covenants and agreements as of the date hereof and shall survive the
execution and delivery of this Agreement for a period of three (3) years from
the date of this Agreement; provided, however, that the provisions contained in
Section 7 hereof shall survive in accordance therewith.
8.2 Indemnification. The Company agrees to indemnify and hold
harmless, on an after-tax and after insurance recovery basis, each Investor and
its Affiliates and their respective directors, officers, employees and agents
from and against any and all losses, claims, damages, liabilities and expenses
(including without limitation reasonable attorney fees and disbursements and
other expenses incurred in connection with investigating, preparing or defending
any action, claim or proceeding, pending or threatened and the costs of
enforcement hereof) (collectively, "Losses") to which such Person may become
subject as a result of any breach of representation, warranty, covenant or
agreement made by or to be performed on the part of the Company under the
Agreements, and will reimburse any such Person for all such amounts as they are
incurred by such Person.
-18-
8.3 Conduct of Indemnification Proceedings. Promptly after receipt
by any Person (the "Indemnified Person") of notice of any demand, claim or
circumstances which would or might give rise to a claim or the commencement of
any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 8.2, such Indemnified Person shall promptly notify
the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided,
however, that the failure of any Indemnified Person so to notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
that the Company is materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Company and the Indemnified Person shall
have mutually agreed to the retention of such counsel; or (ii) in the reasonable
judgment of counsel to such Indemnified Person representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. The Company shall not be liable for any settlement of
any proceeding effected without its written consent, which consent shall not be
unreasonably withheld, but if settled with such consent, or if there be a final
judgment for the plaintiff, the Company shall indemnify and hold harmless such
Indemnified Person from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment. Without the prior written
consent of the Indemnified Person, which consent shall not be unreasonably
withheld, the Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such proceeding.
9. Miscellaneous.
9.1 Successors and Assigns. This Agreement may not be assigned by a
party hereto without the prior written consent of the Company or the Required
Investors, as applicable, provided, however, (i) an Investor may assign its
rights and delegate its duties hereunder in whole or in part to an Affiliate or
to a third party acquiring some portion or all of its Securities in a private
transaction without the prior written consent of the Company or the other
Investors, after notice duly given by such Investor to the Company and the other
Investors, provided, that no such assignment or obligation shall affect the
obligations of such Investor hereunder, and (ii) the Company may assign its
rights and delegate its duties hereunder to any surviving or successor
corporation in connection with a merger or consolidation of the Company with
another corporation, or a sale, transfer or other disposition of all or
substantially all of the Company's assets to another corporation, without the
prior written consent of the Investors, after notice duly given by the Company
to the Investors. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective permitted successors and assigns
of the parties. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
-19-
9.2 Counterparts; Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.
9.3 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.4 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or telecopier, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three days after such notice is deposited in first class mail,
postage prepaid, and (iv) if given by an internationally recognized overnight
air courier, then such notice shall be deemed given one day after delivery to
such carrier. All notices shall be addressed to the party to be notified at the
address as follows, or at such other address as such party may designate by ten
days' advance written notice to the other party:
If to the Company:
ION Networks, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention:
Fax:
With a copy to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
If to the Investors, to the addresses set forth on the
signature pages hereto.
9.5 Expenses. The parties hereto shall pay their own costs and expenses
in connection herewith, except that the Company shall pay the reasonable fees
and expenses of counsel to the Investors at the Closing, but not in excess of
$20,000. The Company shall reimburse the Investors upon demand for all
reasonable out-of-pocket expenses incurred by the Investors, including without
limitation reimbursement of attorneys' fees and disbursements, in
-20-
connection with any amendment, modification or waiver of this Agreement or the
other Agreements. In the event that legal proceedings are commenced by any party
to this Agreement against another party to this Agreement in connection with
this Agreement or the other Agreements, the party or parties which do not
prevail in such proceedings shall severally, but not jointly, pay their pro rata
share of the reasonable attorneys' fees and other reasonable out-of-pocket costs
and expenses incurred by the prevailing party in such proceedings.
9.6 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the Required Investors. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any Securities purchased under this Agreement at the time
outstanding, each future holder of all such securities, and the Company.
9.7 Publicity. No public release or announcement concerning the
transactions contemplated hereby shall be issued by the Company or the Investors
without the prior consent of the Company (in the case of a release or
announcement by the Investors) or Special Situations Fund III, L.P. ("SSF") (in
the case of a release or announcement by the Company) (which consents shall not
be unreasonably withheld), except as such release or announcement may be
required by law or the applicable rules or regulations of any securities
exchange or securities market, in which case the Company or the Investors, as
the case may be, shall allow SSF or the Company, as applicable, to the extent
reasonably practicable in the circumstances, reasonable time to comment on such
release or announcement in advance of such issuance.
9.8 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.
9.9 Entire Agreement. This Agreement, including the Exhibits and the
Disclosure Schedules, and the other Agreements constitute the entire agreement
among the parties hereof with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof and thereof.
9.10 Further Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
9.11 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
New York
-21-
without regard to the choice of law principles thereof. Each of the parties
hereto irrevocably submits to the exclusive jurisdiction of the courts of the
State of New York located in New York County and the United States District
Court for the Southern District of New York for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Agreement and the
transactions contemplated hereby. Service of process in connection with any such
suit, action or proceeding may be served on each party hereto anywhere in the
world by the same methods as are specified for the giving of notices under this
Agreement. Each of the parties hereto irrevocably consents to the jurisdiction
of any such court in any such suit, action or proceeding and to the laying of
venue in such court. Each party hereto irrevocably waives any objection to the
laying of venue of any such suit, action or proceeding brought in such courts
and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
[signature page follows]
-22-
IN WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the date first
above written.
The Company: ION NETWORKS, INC.
By:/s/ Xxx X. Xxxxx
---------------------------------
Name: Xxx X. Xxxxx
Title: President and CEO
-23-
The Investors: SPECIAL SITUATIONS FUND III, L.P.
By:/s/ Xxxxx Greenhouse
--------------------------------
Name: Xxxxx Greenhouse
Title: General Partner
Aggregate Purchase Price: $1,822,476
Number of Shares: 2,094,800
Number of Warrants: 586,600
Address for Notice:
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
SPECIAL SITUATIONS CAYMAN FUND, L.P.
By:/s/ Xxxxx Greenhouse
--------------------------------
Name: Xxxxx Greenhouse
Title: General Partner
Aggregate Purchase Price: $607,521
Number of Shares: 698,300
Number of Warrants: 195,500
Address for Notice:
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
-24-
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
By:/s/ Xxxxx Greenhouse
--------------------------------
Name: Xxxxx Greenhouse
Title: General Partner
Aggregate Purchase Price: $700,002
Number of Shares: 804,600
Number of Warrants: 225,300
Address for Notice:
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
-25-
SPECIAL SITUATIONS TECHNOLOGY FUND, L.P.
By:/s/ Xxxxx Greenhouse
--------------------------------
Name: Xxxxx Greenhouse
Title: General Partner
Aggregate Purchase Price: $350,001
Number of Shares: 402,300
Number of Warrants: 112,600
Address for Notice:
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
-26-
