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EXPLANATORY NOTE TO EXHIBIT 10.2
Exhibit 10.2 is a Form of Securities Purchase Agreement which we
executed as of February 2, 2001 with each of (1) Societe Generale and (2) each
of the other investors listed on Schedule 1 to the applicable Securities
Purchase Agreement
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EXHIBIT 10.2
FORM OF SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT ("Agreement") is entered into as of
February 2, 2001, by and between The viaLink Company, a Delaware corporation
(the "Company"), with headquarters located at 00000 Xxxx Xxxx Xxxxx 000, Xxxxxx,
Xxxxx 00000 and ___________ ("Purchaser") with regard to the following:
RECITALS
A. The Company and Purchaser 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 United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act").
B. Purchaser desires to purchase, upon the terms and conditions stated
in this Agreement, (i) Series A Convertible Participating Preferred Stock of the
Company having the rights set forth in the Certificate of Designations,
Preferences and Rights (the "Certificate of Designation") attached hereto as
Exhibit A (the "Preferred Stock"), which shall be convertible into shares of the
Company's Common Stock, par value $.001 per share (the "Common Stock"), and (ii)
a Series A Warrant in the form of Exhibit B attached hereto (the "Series A
Warrant"). The Warrant entitles the holder thereof to purchase the number of
shares (the "Warrant Shares") of Common Stock as set forth below. The shares of
Common Stock issuable upon conversion of or otherwise pursuant to the Preferred
Stock are referred to herein as the "Conversion Shares". The Preferred Stock,
the Warrant, the Warrant Shares and the Conversion Shares are each referred to
as a "Security" and collectively the "Securities."
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
in the form attached hereto as Exhibit D (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act, the rules and regulations promulgated thereunder and
applicable state securities laws.
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and Purchaser hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
1.1 Purchase of Preferred Stock and the Warrant. The purchase price
(the "Purchase Price") per share of Preferred Stock shall be equal to $2,750. On
the date of the closing of the purchase of the Preferred Stock and the Warrant
pursuant hereto (the "Closing"), subject to the satisfaction or waiver of the
conditions set forth in Articles VI and VII hereof, the Company shall issue and
sell to Purchaser, and Purchaser, shall purchase from the Company (i) ______
shares of Preferred Stock, and (ii) a Series A Warrant entitling the holder
thereof to purchase that
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number of Warrant Shares as is equal to (x) 1,000 multiplied by (y) _______ [THE
NUMBER OF SHARES OF PREFERRED STOCK PURCHASED BY PURCHASER AT THE CLOSING]. The
aggregate Purchase Price for the Securities purchased at the Closing shall be
_________ million dollars ($_______).
1.2 Form of Payment. At the Closing, Purchaser shall pay the aggregate
Purchase Price for the Preferred Stock and the Warrant being purchased by
Purchaser hereunder by wire transfer to the Company, in accordance with the
Company's written wiring instructions, against delivery of duly executed stock
certificates and certificate representing the Warrant for the same, and the
Company shall deliver such Preferred Stock and certificate representing the
Warrant against delivery of such aggregate Purchase Price.
1.3 Closing Date. Subject to the satisfaction or waiver of the
conditions set forth in Articles VI and VII below, the date and time of the
issuance, sale and purchase of the Securities pursuant to this Agreement and the
Investment Agreements (as defined herein) contemplated hereby shall be within
three (3) business days of the execution of this Agreement. The Closing shall
occur at 10:00 a.m. Chicago time, at the offices of Altheimer & Xxxx, 00 X.
Xxxxxx Xxxxx, Xxxxxxx, XX 00000.
ARTICLE II
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants to the Company as set forth in this
Article II. Purchaser does not make any other representations or warranties,
express or implied, to the Company in connection with the transactions
contemplated hereby or by any other Investment Agreements and any and all prior
representations and warranties, if any, which may have been made by Purchaser to
the Company in connection with the transactions contemplated hereby shall be
deemed to have been merged in this Agreement and any such prior representations
and warranties, if any, shall not survive the execution and delivery of this
Agreement.
2.1 Investment Purpose. Purchaser is purchasing the Preferred Stock and
the Warrant for Purchaser's own account for investment only and not with a view
toward or in connection with the public sale or distribution thereof, and
Purchaser has no present intention of selling, granting any participation in or
otherwise distributing the same. Purchaser is entering into this Agreement to
purchase Securities on its own behalf and is not relying on any other investor
in making its investment decision. By executing this Agreement, Purchaser
further represents that Purchaser does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities. Purchaser will not resell the Preferred Stock, the Warrant or any
securities which may be issued upon conversion thereof except pursuant to sales
that are exempt from the registration requirements of the Securities Act and/or
sales registered under the Securities Act. Purchaser understands that Purchaser
must bear the economic risk of this investment indefinitely, unless the
Securities are registered pursuant to the Securities Act and any applicable
state securities laws or an exemption from such registration is available, and
that the Company has no present intention of registering any such Securities
other than as contemplated by the Registration Rights Agreement. By making the
representations in this Section 2.1, Purchaser does not agree to hold the
Securities for any minimum or other specific term and reserves the
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right to dispose of the Securities at any time in accordance with or pursuant to
a registration statement or an exemption from registration under the Securities
Act.
2.2 Accredited Investor Status. Purchaser is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D.
2.3 Reliance on Exemptions. Purchaser understands that the Securities
are being offered and sold to Purchaser in reliance upon specific exemptions
from the registration requirements of the United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and Purchaser's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of Purchaser set forth herein in order to
determine the availability of such exemptions and the eligibility of Purchaser
to acquire the Securities.
2.4 Information. Purchaser and its counsel have been furnished all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Preferred Stock which have been
specifically requested by Purchaser which is all the information Purchaser
considers necessary or appropriate for deciding to purchase the Securities.
Purchaser has been afforded the opportunity to ask questions of the Company and
has received what Purchaser believes to be complete and satisfactory answers to
any such inquiries. Neither such inquiries nor any other due diligence
investigation conducted by Purchaser or any of its representatives shall modify,
amend or affect Purchaser's right to rely on the Company's representations and
warranties contained in Article III hereof. Purchaser understands that
Purchaser's investment in the Securities involves a high degree of risk.
2.5 Governmental Review. Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities or an
investment therein.
2.6 Transfer or Resale. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not been and
will not be registered under the Securities Act or any state securities laws,
and may not be transferred unless subsequently registered thereunder or an
exemption from such registration is available (which exemption the Company
expressly agrees may be established as contemplated in clauses (b) and (c) of
Section 5.1 hereof); (ii) any sale of such Securities made in reliance on Rule
144 under the Securities Act (or a successor rule) ("Rule 144") may be made only
in accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Securities without registration under the
Securities Act under circumstances in which the seller may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such Securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder (in each case, other than pursuant to this Agreement or
the Registration Rights Agreement).
2.7 Legends. Purchaser understands that, subject to Article V hereof,
the certificates for the Preferred Stock and the Warrant, and until such time as
the Conversion Shares and
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Warrant Shares have been registered under the Securities Act as contemplated by
the Registration Rights Agreement or otherwise may be sold by Purchaser pursuant
to Rule 144, the certificates for the Conversion Shares and Warrant Shares
(respectively) will bear a restrictive legend (the "Legend") in the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY
NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE
SECURITIES LAWS OR UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
Except for the legends contemplated by this Section 2.7, Section 5.1 hereof and
the information required to be set forth on or stated on certificates pursuant
to Section 151(f) of the Delaware General Corporation Law, the Securities shall
bear no other legend.
2.8 Authorization; Enforcement. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of Purchaser and are valid and binding agreements of Purchaser
enforceable against Purchaser in accordance with their terms.
2.9 Residency. Purchaser is a resident of _______________.
2.10 Trading Limitations.
(a) Purchaser represents that it has not (nor others acting on behalf
of, and pursuant to instructions from, Purchaser) engaged in any trading
activity involving the Company's Common Stock (through direct or indirect
purchases or sales) prior to the Closing and agrees that, so long as it owns any
Securities, it will conduct any sales of Common Stock in compliance with all
relevant securities laws and regulations.
(b) During the fifteen (15) consecutive trading days immediately
preceding any Reset Date (as defined in the Certificate of Designation) on which
a reset pursuant to the Certificate of Designation is being calculated (a
"Trading Limitation Period"), Purchaser will not (i) create any daily low
trading prices in the Common Stock, (ii) have a Net Short Position (as defined
below) in the Common Stock or (iii) unless otherwise authorized by the Company
in writing, sell a number of shares of Common Stock, Conversion Shares and/or
Warrant Shares in excess of 15% of the aggregate trading volume of the Common
Stock on Nasdaq (as defined herein) (or the principal trading market on which
the Common Stock is then traded) as reported by Bloomberg during the applicable
Trading Limitation Period; provided that on any such day, Purchaser will not
sell a number of shares of Common Stock in excess of 20% of the trading volume
of the Common Stock on Nasdaq (or the principal trading market on which the
Common Stock is then traded) as reported by Bloomberg for such day; and
provided, further, that the limitations on
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sales contained in this Section 2.10(b)(iii) shall not apply to sales of shares
of Common Stock at or above 110% of the then applicable Conversion Price (as
defined in the Certificate of Designation). "Net Short Position" means that the
aggregate short position of Purchaser and its affiliates at any given time
exceeds the number of shares of Common Stock owned by Purchaser and its
affiliates (including any shares of Common Stock, Conversion Shares issuable
upon conversion of the Preferred Stock and Warrant Shares issuable upon exercise
of the Warrant, without giving effect to any limitations on the conversion or
exercise thereof).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser that as of the date
hereof, as of the Closing, and except as specifically set forth in the Schedule
of Exceptions attached hereto (the "Schedule of Exceptions"):
3.1 Organization and Qualification. The Company and each of its
subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized, and has the requisite
corporate power and authority to own its properties and to carry on its business
as now being conducted. The Company and each of its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction where the failure to so qualify would have a Material Adverse
Effect. "Material Adverse Effect" means any material adverse effect on either
(i) the business, operations, properties, financial condition or operating
results of the Company and its subsidiaries, taken as a whole on a consolidated
basis, (ii) the Securities, (iii) the transactions contemplated hereby or by the
agreements or instruments to be entered into in connection herewith or (iv) the
authority or ability of the Company to perform its obligations under this
Agreement, the Certificate of Designation, the Warrant, the Registration Rights
Agreements, the Management Agreements (as hereinafter defined) or other
agreements or instruments to be entered into in connection herewith and
therewith (collectively, the "Investment Agreements").
3.2 Authorization; Enforcement. (a) The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Warrant, the Certificate of Designation and the Registration Rights Agreement,
and to issue and sell, perform its obligations with respect to, the Preferred
Stock and the Warrant in accordance with the terms hereof and to issue the
Conversion Shares in accordance with the terms and conditions of the Certificate
of Designation and the Warrant Shares in accordance with the terms and
conditions of the Warrant; (b) the execution, delivery and performance of this
Agreement, the Certificate of Designation, the Registration Rights Agreement and
the other Investment Agreements by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation the
issuance of the Preferred Stock and the Warrant and the reservation for issuance
and issuance of the Conversion Shares and the Warrant Shares) have been duly
authorized by all necessary corporate action and, except as set forth on
Schedule 3.2 hereof, no further consent or authorization of the Company, its
board of directors, or its stockholders or any other person, body or agency is
required with respect to any of the transactions contemplated hereby or thereby
(whether under rules of the Nasdaq SmallCap Market or the Nasdaq National Market
("Nasdaq"), the National Association of Securities Dealers or otherwise), other
than the Nasdaq Authorization (as herein defined) and the declaration or
ordering of effectiveness by the SEC of
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the Registration Statement as contemplated by the Registration Rights Agreement
(collectively, the "Consents"); (c) this Agreement, the Registration Rights
Agreement, the Certificate of Designation, the Preferred Stock and the Warrant
have been duly executed and delivered by the Company; and (d) each Investment
Agreement constitutes legal, valid and binding obligations of the Company
enforceable against the Company in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws affecting creditors' rights, and
subject to general equity principles and to limitations on availability of
equitable relief, including specific performance.
3.3 Capitalization. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares reserved for issuance pursuant to the
Company's stock option plans, the number of shares reserved for issuance
pursuant to securities (other than the Preferred Stock and the Warrant)
exercisable for, or convertible into or exchangeable for any shares of Common
Stock and the number of shares to be initially reserved for issuance upon
conversion of the Preferred Stock and the exercise of the Warrant is set forth
on Schedule 3.3. All of such outstanding shares of capital stock have been, or
upon issuance will be, validly issued, fully paid and non-assessable. Except as
set forth in Schedule 3.3, no shares of capital stock of the Company (including
the Preferred Stock, the Warrant, the Conversion Shares and the Warrant Shares)
are subject to preemptive rights or any other similar rights of the stockholders
of the Company or any liens or encumbrances. Except as disclosed in Schedule
3.3, as of the date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exercisable
or exchangeable for, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries,
(ii) there are no agreements or arrangements under which the Company or any of
its subsidiaries is obligated to register the sale of any of its or their
securities under the Securities Act (except the Registration Rights Agreement)
and (iii) there are no anti-dilution or price adjustment provisions contained in
any security issued by the Company (or in any agreement providing rights to
holders of such securities). The Company further specifically represents that
RGC International Investors, LDC has exercised all warrants to purchase shares
of Common Stock owned by it. The Company has furnished to Purchaser true and
correct copies of the Company's Certificate of Incorporation as currently in
effect ("Certificate of Incorporation"), and the Company's Bylaws as currently
in effect (the "Bylaws"). The Company has set forth on Schedule 3.3 all
instruments and agreements (other than the Certificate of Incorporation and
Bylaws) governing securities convertible into or exercisable or exchangeable for
Common Stock of the Company (and the Company shall provide to Purchaser copies
thereof upon the request of Purchaser). Except as set forth on Schedule 3.3, the
Company has no indebtedness for borrowed money and no agreement providing for
indebtedness for borrowed money. Except as set forth on Schedule 3.3, the
Company has no subsidiaries and has no investments, either debt or equity, in
any other entity. The Company shall provide Purchaser with a written update of
this representation signed by the Company's Chief Executive Officer or Chief
Financial Officer on behalf of the Company as of the date of the Closing. The
Company does not have any so-called stockholder rights plan or "poison pill" and
there are no "shark-repellant" charter or bylaw provisions or so-called "state
anti-takeover" statutes applicable, in
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any case, to all or any portion of the transactions contemplated hereby,
including, without limitation, issuance of the Securities.
3.4 Issuance of Shares. The Conversion Shares and Warrant Shares are
duly authorized and reserved for issuance, and, upon conversion of the Preferred
Stock and the exercise of the Warrant in accordance with their respective terms,
will be validly issued, fully paid and non-assessable, and free from all taxes,
liens, claims and encumbrances and will not be subject to preemptive rights or
other similar rights of stockholders of the Company, other than (i) restrictions
on transferability as may be applicable under federal and state securities laws;
(ii) restrictive stock legends contemplated by the Investment Agreements; or
(iii) those created by Purchaser. The Preferred Stock and the Warrant are duly
authorized and are validly issued, fully paid and non-assessable, and free from
all taxes, liens claims and encumbrances and are not and will not be subject to
preemptive rights or other similar rights of stockholders of the Company, other
than (i) restrictions on transferability as may be applicable under federal and
state securities laws; (ii) restrictive stock legends contemplated by the
Investment Agreements; or (iii) those created by Purchaser. The board of
directors of the Company has unanimously approved the issuance of the Preferred
Stock and the Warrant pursuant to the terms hereof and of the Conversion Shares
and Warrant Shares issuable upon conversion of the Preferred Stock and the
exercise of the Warrant pursuant to the terms thereof (without giving effect to
any limitations on conversion or exercise contained therein, including for
purposes of Nasdaq Rule 4350 (the "Nasdaq Authorization")), has unanimously
recommended to the stockholders of the Company the approval of the Nasdaq
Authorization and will seek Stockholder Approval (as defined in Section 4.12) at
the Company's next stockholder meeting, which is currently scheduled for May __,
2001. No further authorization or approval (other than the Stockholder Approval)
is required under the rules of Nasdaq with respect to the transactions
contemplated by this Agreement, including, without limitation, the issuance of
the Conversion Shares and the Warrant Shares and the inclusion thereof on
Nasdaq.
3.5 No Conflicts. The execution, delivery and performance of each of
the Investment Agreements by the Company, and the consummation by the Company of
the transactions contemplated hereby and thereby (including, without limitation,
the issuance and reservation for issuance, as applicable, of the Preferred
Stock, the Conversion Shares, the Warrant and the Warrant Shares) will not (a)
result in a violation of the Certificate of Incorporation or Bylaws, (b)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party (except for such conflicts, defaults, terminations, amendments,
accelerations, and cancellations as would not, individually or in the aggregate,
have a Material Adverse Effect), or (c) result in a violation of any law, rule,
regulation, order, judgment or decree (including, without limitation, U.S.
federal and state securities laws and regulations) applicable to the Company or
any of its subsidiaries, or by which any property or asset of the Company or any
of its subsidiaries, is bound or affected. Neither the Company nor any of its
subsidiaries is in violation of its Certificate of Incorporation, Bylaws or
other organizational documents, and neither the Company nor any of its
subsidiaries is in default (and no event has occurred which, with notice or
lapse of time or both, would put the Company or any of its subsidiaries in
default) under, nor has there occurred any event giving others (with notice or
lapse of time or both) any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or
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instrument to which the Company or any of its subsidiaries is a party, except
for possible defaults or rights as would not, individually or in the aggregate,
have a Material Adverse Effect. To the Company's knowledge, the business of the
Company and its subsidiaries is not being conducted, and shall not be conducted
so long as Purchaser owns any of the Securities, in violation of any law,
ordinance, rule, regulation, order, judgment or decree of any governmental
entity, court or arbitration tribunal except for possible violations the
sanctions for which either singly or in the aggregate would not have a Material
Adverse Effect. Except as set forth on Schedule 3.5, the Company is not required
to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or the Registration Rights Agreement or to
perform its obligations in accordance with the terms hereof or thereof. The
Company is not in violation of the listing requirements of Nasdaq and does not
reasonably anticipate that the Common Stock will be de-listed by Nasdaq for the
foreseeable future. The Company is not aware of any facts or circumstances which
might reasonably be expected to give rise to any of the foregoing.
3.6 Registration and SEC Documents. The Common Stock is registered
under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and has been so registered since November 14, 1996. Except as
disclosed in Schedule 3.6, since December 31, 1998, the Company has timely filed
all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of the Exchange
Act (all of the foregoing filed after December 31, 1998 and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being referred to herein as the "SEC
Documents" and all the SEC documents filed prior to the date of this Agreement,
the "Filed SEC Documents"). The Company has made available (which may include
access to the SEC's website) to Purchaser true and complete copies of the SEC
Documents, except for exhibits, schedules and incorporated documents. As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except to the
extent corrected by a subsequent Filed SEC Document. None of the statements made
in any such SEC Documents is currently required to be updated or amended under
applicable law (except for such statements as have been amended or updated by
subsequent Filed SEC Documents prior to the date of this Agreement). The
financial statements of the Company included in the SEC Documents have been
prepared in accordance with U.S. generally accepted accounting principles,
consistently applied, and the rules and regulations of the SEC during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they do not include footnotes or are condensed or
summary statements) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal, immaterial year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the Filed SEC Documents, the
Company has no liabilities, contingent or otherwise, other than (i) liabilities
incurred subsequent
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to the date of such financial statements in the ordinary course of business
consistent with past practice and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
U.S. generally accepted accounting principles to be reflected in such financial
statements, in each case of clause (i) and (ii) next above which, individually
or in the aggregate, are not material to the financial condition, business,
operations, properties, operating results or prospects of the Company and its
subsidiaries taken on a whole. The Filed SEC Documents contain or incorporate by
reference a complete and accurate list of all material undischarged written or
oral contracts, agreements, leases or other instruments to which the Company or
any subsidiary is a party or by which the Company or any subsidiary is bound or
to which any of the properties or assets of the Company or any subsidiary is
subject (each a "Contract"). None of the Company, its subsidiaries or, to the
best knowledge of the Company, any of the other parties thereto, is in breach or
violation of any Contract, which breach or violation would have a Material
Adverse Effect. No event, occurrence or condition exists which, with the lapse
of time, the giving of notice, or both, or the happening of any further event or
condition, would become a breach or default by the Company or its subsidiaries
under any Contract which breach or default would have a Material Adverse Effect.
3.7 Absence of Certain Changes. Since December 31, 1999, there has been
no material adverse change and no material adverse development in the business,
properties, operations, financial condition or results of operations of the
Company or any of its subsidiaries, except as disclosed in Schedule 3.7 or as
disclosed in the SEC Documents filed after such date but prior to the date
hereof.
3.8 Absence of Litigation. Except as disclosed in Schedule 3.8, there
is no action, suit, proceeding, or to the knowledge of the Company or any of its
subsidiaries, inquiry or investigation before or by any court, public board,
governmental agency or authority, or self-regulatory organization or body
pending or, to the knowledge of the Company or any of its subsidiaries,
threatened against or affecting the Company, any of its subsidiaries, or any of
their respective directors or officers in their capacities as such, wherein an
unfavorable decision, ruling or finding would have a Material Adverse Effect or
would adversely affect the transactions contemplated by this Agreement or any of
the other Investment Agreements or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of such other Investment Agreements.
The Company and each of its subsidiaries are unaware of any facts which could
give rise to a claim or proceeding which, if asserted or conducted with results
unfavorable to the Company or any of its subsidiaries, could have a Material
Adverse Effect.
3.9 Disclosure. No information relating to or concerning the Company
set forth in this Agreement or provided to Purchaser in connection with the
transactions contemplated hereby contains an untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were made, not
misleading. Except for the execution and performance of this Agreement and the
other Investment Agreements, no material fact (within the meaning of the federal
securities laws of the United States) exists with respect to the Company or any
of its subsidiaries which has not been publicly disclosed. The Company shall in
no event be deemed to have made to Purchaser any representations or warranties
with respect to any projections, estimates or budgets of future revenues,
expenses or expenditures, or future results of operations, which the
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Company shall have supplied in good faith, except that with respect to
projections contained in the Confidential Private Placement Memorandum dated
January 2001, the Company represents that such projections were prepared in good
faith and that the Company believes there is a reasonable basis for such
projections.
3.10 Acknowledgment Regarding Purchaser's Purchase of the Securities.
The Company acknowledges and agrees that Purchaser is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to
this Agreement or the transactions contemplated hereby, that this Agreement and
the transactions contemplated hereby, and the relationship between Purchaser and
the Company, are "arms-length", and that any statement made by Purchaser, or any
of its representatives or agents, in connection with this Agreement or the
transactions contemplated hereby is not advice or a recommendation, is merely
incidental to Purchaser's purchase of the Securities and has not been relied
upon in any way by the Company, its officers, directors or other
representatives. The Company further represents to Purchaser that the Company's
decision to enter into this Agreement and the transactions contemplated hereby
has been based solely on an independent evaluation by the Company and its
representatives.
3.11 Current Public Information. The Company is currently eligible to
register the resale of the Conversion Shares and Warrant Shares on a
registration statement on Form S-3 under the Securities Act.
3.12 No General Solicitation. Neither the Company nor any person acting
on behalf of the Company has conducted any "general solicitation," as described
in Rule 502(c) under Regulation D, with respect to any of the Securities being
offered hereby.
3.13 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would prevent the parties hereto from
consummating the transactions contemplated hereby pursuant to an exemption from
registration under the Securities Act pursuant to the provisions of Regulation
D. The transactions contemplated hereby are exempt from the registration
requirements of the Securities Act, assuming the accuracy of the representations
and warranties herein contained of Purchaser to the extent relevant for such
determination.
3.14 No Brokers. The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement or the transactions contemplated hereby,
except for dealings with X.X. Xxxxxxx and Sons, Inc., Xxxxxxxx, Inc. and X.X.
Xxxxxxxxxx & Co., Inc. (the fees of which shall be paid in full by the Company).
The Company will indemnify Purchaser from and against any fees and expenses
sought or other claims made by X. X. Xxxxxxx and Sons, Inc., Xxxxxxxx, Inc. and
X.X. Xxxxxxxxxx & Co., Inc.
3.15 Acknowledgment of Dilution. The number of Conversion Shares
issuable upon conversion of the Preferred Stock and/or Warrant Shares issuable
upon exercise of the Warrant may increase substantially in certain
circumstances, including the circumstance wherein the trading price of the
Common Stock declines. The Company's executive officers and directors
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have studied and fully understand the nature of the securities being sold
hereunder and recognize that they have a potential dilutive effect. The board of
directors of the Company has concluded in its good faith business judgment that
such issuance is in the best interests of the Company. The Company acknowledges
that its obligation to issue Conversion Shares upon conversion of the Preferred
Stock and the Warrant Shares upon exercise of the Warrant is binding upon it and
enforceable regardless of the dilution that such issuance may have on the
ownership interests of other stockholders.
3.16 Intellectual Property. Each of the Company and its subsidiaries
owns or possesses adequate and enforceable rights to use all patents, patent
applications, trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
knowledge (collectively, "Intangibles") used or necessary for the conduct of its
business as now being conducted and as previously described in the Company's
Annual Report on Form 10-K for its most recently ended fiscal year. To the
knowledge of the Company and its subsidiaries, neither the Company nor any
subsidiary of the Company infringes on or is in conflict with any right of any
other person with respect to any Intangibles nor is there any claim of
infringement made by a third party against or involving the Company or any of
its subsidiaries, which infringement, conflict or claim, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect.
3.17 Foreign Corrupt Practices. Neither the Company, nor any of its
subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee. Without limiting the generality of the foregoing, the Company and its
subsidiaries have not directly or indirectly made or agreed to make (whether or
not said payment is lawful) any payment to obtain, or with respect to, sales
other than usual and regular compensation to its or their employees and sales
representatives with respect to such sales.
3.18 Key Employees; Company's Knowledge. Each Key Employee (as defined
below) is currently serving the Company in the capacity disclosed in Schedule
3.18. No Key Employee, to the best of the knowledge of the Company and its
subsidiaries, is, or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each Key Employee does not
subject the Company or any of its subsidiaries to any liability with respect to
any of the foregoing matters. No Key Employee has, to the best of the knowledge
of the Company and its subsidiaries, any intention to terminate or limit his
employment with, or services to, the Company or any of its subsidiaries, nor is
any such Key Employee subject to any constraints (e.g., litigation) which would
cause such employee to be unable to devote his full
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time and attention to such employment or services. "Key Employee" means each of
Xxxxx Xxxxxxxxx, Xxxxxx Xxxxx, Xxxxxxx Xxxxxxxx and Xxxxxx Xxx. For purposes
hereof, the term "knowledge of the Company" shall mean the knowledge of each of
the Key Employees.
ARTICLE IV
COVENANTS
4.1 Best Efforts. The Company shall use its best efforts timely to
satisfy each of the conditions described in Articles VI and VII of this
Agreement.
4.2 Securities Laws. The Company agrees to file a Form D with respect
to the Securities with the SEC as required under Regulation D. The Company
shall, on or prior to the date of the Closing, take such action as is necessary
to sell the Securities to Purchaser in accordance with applicable securities
laws of the states of the United States, and shall provide evidence of any such
action so taken to Purchaser on or prior to the date of the Closing. Without
limiting any of the Company's obligations under this Agreement, the Registration
Rights Agreement, the Warrant or the Certificate of Designation, from and after
the date of the Closing, neither the Company nor any person acting on its behalf
shall take any action which would adversely affect any exemptions from
registration under the Securities Act with respect to the transactions
contemplated hereby.
4.3 Reporting Status. So long as Purchaser beneficially owns any of the
Securities, the Company shall timely file all reports required to be filed with
the SEC pursuant to the Exchange Act, and the Company shall not terminate its
status as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination.
4.4 Use of Proceeds. The Company shall use the proceeds from the sale
of the Securities for working capital only, in the ordinary course of its
business, and, without limiting the generality of the foregoing, shall not use
such proceeds to make a loan to any employee, officer, director or stockholder
of the Company, to repay any loan or other obligation of the Company to any such
person or to repurchase or pay a dividend on shares of Common Stock or other
securities of the Company, other than any such payment explicitly required or
permitted by the terms of this Agreement, the Certificate of Designation or the
other Investment Agreements.
4.5 Restriction on Issuance of Securities. For a period beginning on
the date of the Closing and ending on the date which is one hundred and eighty
(180) days following the effective date of the Registration Statement, the
Company shall not issue or agree to issue, (except (i) to Purchaser pursuant to
this Agreement, (ii) pursuant to a bona fide business acquisition of or by the
Company, whether by merger, joint venture, consolidation, sale of assets, sale
or exchange of stock or otherwise that has been approved by the Board of
Directors of the Company, the primary purpose of which is not to raise equity
capital, (iii) in private placements of such securities pursuant to or in
connection with a strategic alliance or partnering relationship, the primary
purpose of which is not to raise equity capital, (iv) in a firm commitment
underwritten public offering of the Company's securities, (v) upon exercise or
conversion of the Company's options, warrants or other convertible securities
outstanding as of the Closings and disclosed in the Schedule of Exceptions, (vi)
pursuant to the Company's stock option plans,
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employee stock purchase plan or restricted stock plans approved by the
stockholders of the Company, (vii) pursuant to written agreements existing on
the date hereof to independent contractors or consultants for professional
services provided to the Company, (viii) in connection with lease lines bank
financings or acquisitions of intellectual property rights, the primary purpose
of which is not to raise equity capital), any equity securities at a price less
than the fair market value thereof or any variably priced equity securities or
equity-linked or equity-like securities of the Company (or any security
convertible into or exercisable or exchangeable, directly or indirectly, for
equity, equity-linked or equity-like securities of the Company), (ix) to Key
Employees of Preferred Stock and warrants upon receipt of Stockholder Approval
(as hereinafter defined), or (x) pursuant to Securities Purchase Agreements of
even date herewith contemplating the sale of Preferred Stock and warrants with
an aggregate purchase price of up to three (3) million dollars ($3,000,000)
(each of the foregoing being a "Restricted Security"). Without implication that
the contrary would otherwise be true, the Company shall not indirectly
accomplish any action which the immediately preceding sentence would have
otherwise prohibited from being effected directly (e.g., by an asset drop-down
to a subsidiary followed by the offering of securities of such subsidiary).
4.6 [Intentionally Omitted].
4.7 Information. The Company agrees to deliver the following reports to
Purchaser until Purchaser transfers, assigns or sells all of its Securities: (a)
within five (5) business days after the filing with the SEC, a copy of its
Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, any proxy
statements and any Current Reports on Form 8-K; and (b) on the same business day
as released, copies of all press releases issued by the Company or any of its
subsidiaries.
4.8 Listing. For so long as Purchaser owns any of the Securities, the
Company shall continue the listing and trading of its Common Stock on the Nasdaq
SmallCap Market, the Nasdaq National Market, the New York Stock Exchange or the
American Stock Exchange, secure and maintain listing and trading of the
Conversion Shares and Warrant Shares on such exchange, and comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of such exchange.
4.9 Prospectus Delivery Requirement. Purchaser understands that the
Securities Act may require delivery of a prospectus relating to the Common Stock
in connection with any sale thereof pursuant to a registration statement under
the Securities Act covering the resale by Purchaser of the Common Stock being
sold, and Purchaser shall use its reasonable efforts to comply with the
applicable prospectus delivery requirements of the Securities Act in connection
with any such sale.
4.10 Intentional Acts or Omissions. The Company shall not intentionally
perform any act which if performed, or intentionally omit to perform any act
which, if omitted to be performed, would prevent or excuse the performance of
this Agreement or any of the other Investment Agreements or any of the
transactions contemplated hereby or thereby or the benefits intended to be
secured thereby by Purchaser (including, without limitation, pursuant to any
agreements or documents obtained by the Company as a condition to any Closing
hereunder). In addition, the Company shall not waive, and shall use its best
efforts to enforce any material
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rights under and shall not amend, the Subscription Agreement of even date
herewith among the Company and certain of the Company's officers and the Escrow
Agreement of even date herewith among the Company, The Chase Manhattan Bank and
the other parties listed thereto (the "Management Agreements").
4.11 Corporate Existence. So long as Purchaser beneficially owns any
Securities, the Company shall use all commercially reasonable efforts to
maintain its corporate existence, except in the event of a merger, consolidation
or sale of all or substantially all of the Company's assets, as long as the
surviving or successor entity in such transaction (i) assumes the Company's
obligations hereunder and under the agreements and instruments entered into in
connection herewith regardless of whether or not the Company would have had a
sufficient number of shares of Common Stock authorized and available for
issuance in order to effect the conversion of all Preferred Stock and the
exercise of the Warrant outstanding as of the date of such transaction
(including, without limitation, without giving effect to any limitations on
conversion or exercise thereof) and (ii) is a publicly traded corporation whose
common stock is listed for trading on the Nasdaq SmallCap Market, the Nasdaq
National Market, the New York Stock Exchange or the American Stock Exchange.
4.12 Share Authorization. The Company covenants and agrees that it
shall (i) solicit by proxy Stockholder Approval (as defined below) and (ii) use
its best efforts to obtain Stockholder Approval at its next stockholder meeting
which shall be held no later than May 31, 2001 (the "Stockholder Approval
Date"). For purposes hereof, "Stockholder Approval" means (a) authorization by
the required vote under Nasdaq Rule 4350 of the stockholders of the Company of
(i) the issuance of shares of Common Stock upon conversion of shares of
Preferred Stock pursuant to the terms of the Certificate of Designation and the
exercise of the Warrant pursuant to the terms thereof in the aggregate in excess
of 19.99% of the outstanding shares of Common Stock, and (ii) the issuance of
Preferred Stock and warrants for an aggregate purchase price of at least
$1,000,000 to one or more of the Key Employees, and (b) if necessary and to the
extent effected by stockholder vote, the elimination of any prohibitions under
the rules or regulations of any stock exchange, interdealer quotation system or
other self-regulatory organization with jurisdiction over the Company or any of
its securities on the Company's ability to issue shares of Common Stock in
excess of the Cap Amount (as defined in the Certificate of Designation) and for
all other applicable purposes. In addition, the Company shall, unless otherwise
consented to by Purchaser, have a definitive proxy statement mailed to each
stockholder of the Company at least ten (10) days prior to the Stockholder
Approval Date. The Company shall deliver any SEC comments it receives with
respect to its proxy statement to Purchaser and will not file such proxy
statement (or any revisions thereto), whether such proxy statement is in
preliminary or definitive form, without the approval of Purchaser, which
approval shall not be unreasonably withheld or delayed.
4.13 Transactions with Affiliates. The Company and each of its
subsidiaries will not enter into any agreement or arrangement, written or oral,
directly or indirectly, with an affiliate, or provide services or sell goods to,
or for the benefit of, or pay or otherwise distribute monies, goods or other
valuable consideration to, an affiliate, except upon fair and reasonable terms
under the circumstances as determined by the Company in good faith, taking into
account all of the facts and circumstances of such agreement or arrangement, and
except for existing intercompany debt or transactions with or between the
Company and any of its wholly-owned
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subsidiaries and payments and benefits to officers and directors in their
capacities as such in the ordinary course of business, consistent with past
practices.
4.14 Limitation of Agreements. The Company will not, and will not
permit any subsidiary to, enter into any Contract, or any amendment,
modification, extension or supplement to any existing Contract, which limits the
Company from performing its obligations under any of the Investment Agreements
or that would limit the number of shares of Common Stock issuable to Purchaser
upon conversion of the Preferred Stock or exercise of the Warrant without
Stockholder Approval, including, without limitation, by integration of other
shares of Common Stock with the Cap Amount.
ARTICLE V
LEGEND REMOVAL, TRANSFER, AND CERTAIN SALES
5.1 Removal of Legend. The Legend shall be removed and the Company
shall issue a certificate without any legend to the holder of any Security upon
which such Legend is stamped, and a certificate for a Security shall be
originally issued without any legend, if, unless otherwise required by
applicable state securities laws, (a) the sale thereof is registered under the
Securities Act pursuant to an effective registration statement, (b) such holder
provides the Company with an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions and reasonably
acceptable to the Company (the reasonable cost of which shall be borne by the
Company), to the effect that a public sale or transfer of such Security may be
made without registration under the Securities Act or (c) Purchaser provides
reasonable assurances that such Security can be sold pursuant to Rule 144.
Purchaser agrees to sell all Securities, including those represented by a
certificate(s) from which the Legend has been removed, or which were originally
issued without the Legend, pursuant to an effective registration statement and
to deliver a prospectus in connection with such sale or in compliance with an
exemption from the registration requirements of the Securities Act. In the event
the Legend is removed from any Security or any Security is issued without the
Legend and thereafter the effectiveness of a registration statement covering the
resale of such Security is suspended or the Company determines that a supplement
or amendment thereto is required by applicable securities laws, then upon
reasonable advance notice to Purchaser holding such Security, the Company may
require that the Legend be placed on any such Security that cannot then be sold
pursuant to an effective registration statement or Rule 144 or with respect to
which the opinion referred to in clause (b) next above has not been rendered,
which Legend shall be removed when such Security may be sold pursuant to an
effective registration statement or Rule 144 or such holder provides the opinion
with respect thereto described in clause (b) next above.
5.2 Transfer Agent Instructions. The Company shall instruct its
transfer agent to issue certificates, registered in the name of Purchaser or its
nominee, for the Conversion Shares and/or Warrant Shares in such amounts as
specified from time to time by Purchaser to the Company upon, and in accordance
with, the conversion of the Preferred Stock and the exercise of the Warrant.
Such certificates shall bear a legend only in the form of the Legend and only to
the extent permitted by Section 5.1 above. The Company warrants that no
instruction other than such instructions referred to in this Article V, and no
stop transfer instructions other than stop transfer instructions to give effect
to Section 2.6 hereof in the case of the Conversion Shares and/or Warrant Shares
prior to registration of the Conversion Shares and/or Warrant Shares
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under the Securities Act, will be given by the Company to its transfer agent and
that the Securities shall otherwise be freely transferable on the books and
records of the Company. Nothing in this Section shall affect in any way
Purchaser's obligations and agreement set forth in Section 5.1 hereof to resell
the Securities pursuant to an effective registration statement and to deliver a
prospectus in connection with such sale or in compliance with an exemption from
the registration requirements of applicable securities laws. Without limiting
the foregoing, if (a) Purchaser provides the Company with an opinion of counsel,
which opinion of counsel shall be in form, substance and scope customary for
opinions of counsel in comparable transactions and reasonably acceptable to the
Company (the reasonable cost of which shall be borne by the Company), to the
effect that the Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from registration or (b) Purchaser transfers Securities
to an affiliate or pursuant to Rule 144, the Company shall permit the transfer,
and, in the case of the Conversion Shares and/or Warrant Shares, promptly
instruct its transfer agent to issue one or more certificates in such name and
in such denomination as specified by Purchaser in order to effect such a
transfer or sale. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to Purchaser by vitiating the
intent and purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Article V will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Article V, that
Purchaser shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 Conditions to the Company's Obligation to Sell. The obligation of
the Company hereunder to issue and sell the Preferred Stock and the Warrant to
Purchaser at the Closing is subject to the satisfaction, as of the date of the
Closing, of each of the following conditions thereto, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
(i) Purchaser shall have executed the signature page to this
Agreement and the Registration Rights Agreement and delivered the same
to the Company.
(ii) Purchaser shall deliver the applicable Purchase Price for
the Preferred Stock purchased at the Closing.
(iii) The representations and warranties of Purchaser shall be
true and correct as of the date when made and as of the Closing as
though made at that time, and Purchaser shall have performed, satisfied
and complied in all material respects with the covenants and agreements
required by this Agreement to be performed or complied with by
Purchaser at or prior to the Closing.
(iv) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority
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over the matters contemplated hereby which restricts or prohibits the
consummation of any of the transactions contemplated by this Agreement.
ARTICLE VII
CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE
7.1 Conditions to the Closing. The obligation of Purchaser hereunder to
purchase the Preferred Stock and the Warrant to be purchased by it on the date
of the Closing is subject to the satisfaction of each of the following
conditions (including conditions to be performed at the Closing), provided that
these conditions are for Purchaser's sole benefit and may be waived by Purchaser
at any time in Purchaser's sole discretion:
(i) The Company shall have executed the signature page to this
Agreement and the Registration Rights Agreement and delivered the same
to Purchaser's counsel.
(ii) The Company shall have delivered duly executed
certificates for the Preferred Stock and duly executed the Warrant
being so purchased by Purchaser at the Closing (each in such
denominations as Purchaser shall request).
(iii) The Common Stock shall be listed on the Nasdaq SmallCap
Market, the Nasdaq National Market, the New York Stock Exchange or the
American Stock Exchange and trading in the Common Stock shall not have
been suspended by the Nasdaq SmallCap Market, the Nasdaq National
Market, the New York Stock Exchange or the American Stock Exchange, the
SEC or other regulatory authority and no de-listing or suspension shall
be reasonably likely for the foreseeable future.
(iv) The representations and warranties of the Company shall
be true and correct as of the date when made and as of the Closing as
though made at that time and the Company shall have performed,
satisfied and complied with the covenants and agreements required by
this Agreement to be performed or complied with by the Company at or
prior to the Closing. Purchaser's counsel shall have received a
certificate, executed by the Chief Executive Officer or Chief Financial
Officer of the Company, dated as of the Closing to the foregoing effect
and as to such other matters as may be reasonably requested by
Purchaser.
(v) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any
of the transactions contemplated by this Agreement.
(vi) Purchaser's counsel shall have received the officer's
certificate described in Section 3.3, dated as of the Closing.
(vii) Purchaser's counsel shall have received an opinion of
the Company's outside legal counsel, dated as of the Closing in the
form attached hereto as Exhibit E.
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(viii) The Company's transfer agent has agreed to act in
accordance with irrevocable instructions in the form attached hereto as
Exhibit F.
(ix) The Certificate of Designation shall have been accepted
for filing with the Secretary of State of the State of Delaware and a
copy thereof certified by the Secretary of State of Delaware shall have
been delivered to Purchaser's counsel.
(x) Simultaneously with or prior to the Closing, the Company
shall have sold Preferred Stock and warrants for an aggregate purchase
price of seven million dollars ($7,000,000) (including the Securities
sold pursuant hereto and excluding the sale of Preferred Stock and
warrants contemplated by Section 7.1(xii)).
(xi) The Company shall have provided evidence satisfactory to
Purchaser that Hewlett-Packard Company has converted a portion of the
convertible notes of the Company held by it into the Company's Common
Stock and agreed to a six-month lock-up period from the effective date
of the Registration Statement in accordance with the terms and
conditions contained in the term sheet attached hereto as Exhibit G,
and consented to the payment of dividends on the Preferred Stock.
(xii) Simultaneously with or prior to the Closing, the Company
shall have entered into agreements reasonably satisfactory to the
Purchaser with one or more of the Key Employees providing for the
purchase and sale of Preferred Stock and warrants for an aggregate
purchase price of at least $745,000 and the applicable Key Employees
shall have placed at least $745,000 in escrow on terms reasonably
satisfactory to the Purchaser to be released to the Company upon
consummation of the sale of such Preferred Stock and warrants or to the
Key Employees if such purchase and sale does not receive Stockholder
Approval.
(xiii) The Company shall have filed a Form 8-K regarding (i)
the conversion by Hewlett-Packard Company of one-half of the amount of
convertible notes held by it into the Company's Common Stock and (ii)
its revised financial projections for calendar year 2001.
ARTICLE VIII
GOVERNING LAW; MISCELLANEOUS
8.1 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. The parties hereto
irrevocably consent to the jurisdiction of the United States federal courts
located in the State of Delaware and the state courts located in the County of
New Castle in the State of Delaware in any suit or proceeding based on or
arising under this Agreement or the transactions contemplated hereby and
irrevocably agree that all claims in respect of such suit or proceeding may be
determined in such courts. The Company irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The Company
further agrees that service of process upon the Company mailed by the first
class mail shall be deemed in every respect effective service of process upon
the Company in any suit or proceeding arising hereunder. Nothing
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herein shall affect Purchaser's right to serve process in any other manner
permitted by law. The parties hereto agree that a final non-appealable judgment
in any such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
8.2 Counterparts; Facsimile Signatures. This Agreement may be executed
in two or more counterparts, including, without limitation, by facsimile
transmission, all of which counterparts shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause additional original executed signature pages to be delivered to the
other parties via a reputable overnight courier for next business day delivery.
8.3 Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
8.4 Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
8.5 Scope of Agreement; Amendments. Except as specifically set forth
herein, Purchaser makes no representation, warranty, covenant or undertaking
with respect to the transactions contemplated hereby. No provision of this
Agreement may be waived other than by an instrument in writing signed by the
party to be charged with enforcement and no provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and
Purchaser.
8.6 Notice. Any notice herein required or permitted to be given shall
be in writing and may be personally served or delivered by courier or by
facsimile-machine confirmed telecopy, and shall be deemed delivered at the time
and date of receipt (which shall include telephone line facsimile transmission).
The addresses for such communications shall be:
If to the Company:
THE VIALINK COMPANY
00000 Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
XXXXXXX, PHLEGER & XXXXXXXX, LLP
0000 Xxxxx xx xxx Xxxx
Xxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: J. Xxxxxxx Xxxxx, P.C.
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If to Purchaser:
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
Telecopy:
-----------------------------
Attention:
----------------------------
with a copy to:
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
Telecopy:
-----------------------------
Attention:
----------------------------
Each party shall provide notice to the other parties of any change in address.
8.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers.
8.8 Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
8.9 Survival. The representations and warranties of Purchaser and the
Company shall survive the Closing hereunder for a period of two (2) years after
the date of the Closing and the covenants of the parties shall survive the
Closing, in each case notwithstanding any due diligence investigation conducted
by or on behalf of Purchaser. The Company agrees to indemnify (which indemnity
shall include advancement of expenses as they are incurred) and hold harmless
Purchaser and each of Purchaser's officers, directors, employees, partners,
agents and affiliates for loss or damage or expenses (including reasonable
attorneys fees) arising as a result of or related to (a) any breach or alleged
breach by the Company of any of its representations or covenants set forth
herein, (b) any cause of action, suit or claim brought or made against Purchaser
and arising out of or resulting from the execution, delivery, performance or
enforcement of the Investment Agreements or the Certificate of Designations or
any other certificate, instrument or document contemplated hereby or thereby,
(c) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (d) the status
of Purchaser or holder of the Securities as an investor in the Company or (e)
any claim by i2 Technologies, Inc. that it has not waived its rights of first
refusal with respect to sales by the Company of the Company's Common Stock or
securities convertible into shares of the Company's Common Stock, including,
without limitation, sales of the Securities contemplated hereunder. To the
extent that the foregoing undertaking by the
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Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.
8.10 Public Filings; Publicity. Immediately following the Closing, the
Company shall issue a press release with respect to the transactions
contemplated hereby. On the date of the Closing, the Company shall file a Form
8-K regarding (i) the transaction contemplated by this Agreement and (ii) the
change in the Company's relationship with i2 Technologies; such Form 8-K shall
have as exhibits thereto the material documents executed in connection with this
transaction contemplated hereby. Purchaser shall have the right to approve
before issuance any press releases (including the foregoing press releases), SEC
or other filings, or any other public statements, with respect to the
transactions contemplated hereby; provided, however, that the Company shall be
entitled, without the prior approval of Purchaser, to make any press release or
SEC, NASDAQ, NASD or exchange filings with respect to such transactions as is
required by applicable law and regulations (although Purchaser shall (to the
extent time permits) be consulted by the Company in connection with any such
press release prior to its release and shall be provided with a copy thereof).
8.11 Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
8.12 Remedies. No provision of this Agreement providing for any remedy
to Purchaser shall limit any remedy which would otherwise be available to
Purchaser at law or in equity. Nothing in this Agreement shall limit any rights
Purchaser may have with any applicable federal or state securities laws with
respect to the investment contemplated hereby. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to
Purchaser and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, Purchaser shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.
8.13 Termination. In the event that the Closing shall not have occurred
within three (3) business days of the execution of this Agreement, unless the
parties agree otherwise, this Agreement shall terminate.
8.14 Directly or Indirectly. Where any provision in this Agreement
refers to action to be taken by any person, or which such person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such person.
8.15 Failure or Indulgence Not Waiver. No failure or delay on the part
of a party in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.
* * *
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IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Securities Purchase Agreement to be duly executed as of the date
first above written.
PURCHASER:
-----------------------------------
By:
--------------------------------
Its:
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COMPANY:
THE VIALINK COMPANY
By:
--------------------------------
Its:
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