Exhibit 4.1
SECURITIES PURCHASE AGREEMENT
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SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of June 30,
1999, by and among Identix Incorporated, a corporation organized under the laws
of the State of Delaware (the "Company"), and the purchasers (the "Purchasers")
set forth on Schedule 1 attached hereto.
WHEREAS:
A. The Company and each 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. Each Purchaser desires to purchase, severally and not jointly, subject
to the terms and conditions stated in this Agreement, (i) the number of shares
of the Company's common stock, $0.01 per share par value (the "Common Stock")
set forth opposite such purchaser's name on Schedule 1, (ii) warrants in the
form attached hereto as Exhibit A (including any warrants issued in replacement
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thereof, the "Series 1 Warrants"), to acquire shares of Common Stock and, (iii)
warrants in the form attached hereto as Exhibit B (including any warrants issued
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in replacement thereof, the "Series 2 Warrants,") and, together with the Series
1 Warrants, the "Warrants", to acquire shares of Common Stock. The shares of
Common Stock issuable upon exercise of or otherwise pursuant to the Warrants are
referred to herein as the "Warrant Shares."
C. Contemporaneous 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 C (the "Registration Rights Agreement"),
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pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act and the rules and regulations promulgated thereunder,
and applicable state securities laws.
NOW, THEREFORE, the Company and the Purchasers hereby agree as follows:
1. CERTAIN DEFINITIONS.
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For purposes of this Agreement, the following terms shall have the meanings
ascribed to them as provided below:
"Business Day" shall mean any day on which the principal United States
securities exchange or trading market on which the Common Stock is listed or
traded as reported by Bloomberg (as defined below) is open for trading.
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"Closing Price" shall mean for the Common Stock as of any date, the closing
bid price of such security on the principal United States securities exchange or
trading market on which such security is listed or traded as reported by
Bloomberg Financial Markets (or a comparable reporting service of national
reputation selected by the Purchasers as provided in Section 8(o) hereof, and
reasonably acceptable to the Company if Bloomberg Financial Markets is not then
reporting closing bid prices of such security) (collectively, "Bloomberg"), or
if the foregoing does not apply, the last reported sale price of such security
in the over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg, or, if no sale price is reported for such
security by Bloomberg, the average of the bid prices of any market makers for
such security as reported in the "pink sheets" by the National Quotation Bureau,
Inc., in each case for such date or, if such date was not a Trading Day (as
defined below) for such security, on the next preceding day which was a Trading
Day provided such next preceding Trading Day occurred no more than 5 business
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days prior to the date for which the Closing Price is being determined. If the
Closing Price cannot be calculated for a share of Common Stock as of any such
dates on any of the foregoing bases, the Closing Price of such security on such
date shall be the fair market value as determined by an investment banking firm
selected by the Purchasers and reasonably acceptable to the Company, with the
costs of such appraisal to be borne by the Company.
"Investment Amount" shall mean the dollar amount to be invested in the
Company at the Closing pursuant to this Agreement by any Purchaser, as set forth
opposite such Purchaser's name on Schedule 1.
"Market Price" shall mean, with respect to any date of determination, the
average Closing Price during the ten (10) Trading Days prior to such date, but
in no event greater than the closing bid price on the Trading Day prior to such
date, in each case appropriately adjusted to reflect any stock dividend, stock
split or similar transaction during such period.
"Material Adverse Effect" shall mean any material adverse effect on (i) the
ability of the Company to perform its obligations hereunder (including the
issuance of the Shares and the Warrants), under the Warrants (including the
issuance of the Warrant Shares) or under the Registration Rights Agreement or
(ii) the business, operations, properties or financial condition of the Company
and its subsidiaries, taken as a whole.
"Penalty Shares" shall mean any shares of Common Stock issued pursuant to
Section 2(c) of the Registration Rights Agreement.
"Pro Rata Percentage" shall mean, with respect to any Purchaser, a
percentage computed by dividing such Purchaser's Investment Amount by the
aggregate Investment Amounts of all Purchasers.
"Securities" shall mean the Shares, the Warrants, the Warrant Shares and
the Penalty Shares.
"Shares" means the shares of Common Stock to be issued and sold by the
Company and purchased by the Purchasers at the Closing.
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"Trading Day" shall mean a Business Day on which at least 10,000 shares of
Common Stock are traded on the principal United States securities exchange or
trading market on which such security is listed or traded as reported by
Bloomberg.
2. PURCHASE AND SALE OF SHARES AND WARRANTS.
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a. Generally. Except as otherwise provided in this Section 2 and subject
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to the satisfaction (or waiver) of the conditions set forth in Section 6 and
Section 7 below, each Purchaser shall purchase the number of Shares and
Warrants determined as provided in this Section 2, and the Company shall issue
and sell such number of Shares and Warrants to each Purchaser for such
Purchaser's Investment Amount as provided below.
b. Number of Closing Shares and Warrants; Form of Payment; Closing Date.
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i. On the Closing Date (as defined below), the Company shall sell and
each Purchaser shall buy (A) the number of Shares set forth opposite such
Purchaser's name on Schedule 1 (B) Series 1 Warrants exercisable for the
purchase of the number of shares set forth opposite such Purchaser's name on
Schedule 1 and, (C) Series 2 Warrants exercisable for the purchase of the number
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of shares set forth opposite such Purchaser's name on Schedule 1. On the
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Closing Date, each Purchaser shall pay the Company an amount equal to such
Purchaser's Investment Amount.
ii. On the Closing Date, each Purchaser shall pay its Investment
Amount by wire transfer to the Company, in accordance with the Company's written
wiring instructions against delivery of certificates representing the Shares and
duly executed Warrants being purchased by such Purchaser, and the Company shall
deliver such Shares and Warrants against delivery of the such Purchaser's
Investment Amount.
iii. Subject to the satisfaction (or waiver) of the conditions
thereto set forth in Section 6 and Section 7 below, the date and time of the
sale of the Shares and the Warrants pursuant to this Agreement (the "Closing")
shall be 2:00 p.m. San Francisco Time on July 1, 1999 or such other date or time
as the parties may mutually agree ("Closing Date"). The Closing shall occur at
the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, Xxx Xxxxxxxxxx Xxxxxx, Xxxxxxx
Xxxxx, Xxx Xxxxxxxxx, XX 00000, or at such other place as the parties may
otherwise agree.
3. THE PURCHASER'S REPRESENTATIONS AND WARRANTIES.
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Each Purchaser severally and not jointly represents and warrants to the
Company as follows:
a. Purchase for Own Account. The Purchaser is purchasing the Securities
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for the Purchaser's own account and not with a present view towards the
distribution thereof. The Purchaser understands that the Purchaser must bear
the economic risk of this investment indefinitely, unless the Securities are
registered pursuant to the Securities Act and any applicable
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state securities or blue sky 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. Notwithstanding anything in this Section 3(a) to the contrary, by
making the foregoing representation, the Purchaser does not agree to hold the
Securities for any minimum or other specific term and reserves the 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 and any applicable state securities laws.
b. Information. The Purchaser has been furnished all materials relating
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to the business, finances and operations of the Company and its subsidiaries and
materials relating to the offer and sale of the Securities which have been
requested by the Purchaser. The Purchaser has been afforded the opportunity to
ask questions of the Company and has received satisfactory answers to any such
inquiries. Neither such inquiries nor any other due diligence investigation
conducted by the Purchaser or its counsel or any of its representatives shall
modify, amend or affect the Purchaser's right to rely on the Company's
representations and warranties contained in Section 4 below.
c. Governmental Review. The Purchaser understands that no United States
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federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
d. Authorization; Enforcement. The Purchaser has the requisite power and
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authority to enter into and perform its obligations under this Agreement and to
purchase the Shares and the Warrants in accordance with the terms hereof. This
Agreement has been duly and validly authorized, executed and delivered on behalf
of the Purchaser and is a valid and binding agreement of the Purchaser
enforceable against the Purchaser in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other laws affecting creditors' rights and remedies generally and
to general principles of equity (regardless of whether enforcement is sought in
a proceeding at law or in equity).
e. Transfer or Resale. The Purchaser understands that (i) except as
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provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be transferred unless (a) subsequently registered thereunder, (b)
the Purchaser shall have delivered to the Company an opinion of counsel
reasonably acceptable to the Company (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable transactions) to the
effect that the Securities to be sold or transferred may be sold or transferred
under an exemption from such registration, (c) sold under Rule 144 promulgated
under the Securities Act (or a successor rule), or (d) sold or transferred to an
affiliate of the Purchaser pursuant to an exemption under the Securities Act;
and (ii) 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 the Registration Rights Agreement.
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f. Legends. The Purchaser understands that the Shares and the Warrants
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and, until such time as the Shares and Warrant Shares have been registered under
the Securities Act as contemplated by the Registration Rights Agreement or
otherwise may be sold by the Purchaser under Rule 144, the certificates for the
Shares and Warrant Shares may bear a restrictive legend in substantially 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 in the absence of an
effective registration statement for the securities under applicable
securities laws unless offered, sold or transferred under an available
exemption from the registration requirements of those laws.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, (a) the sale of such Security is registered under the Securities
Act, (b) such holder provides the Company with an opinion of counsel, in form,
substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Security may
be made without registration under the Securities Act or (c) such holder
provides the Company with reasonable assurances that such Security can be sold
under Rule 144(k). The Purchaser agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been removed, pursuant
to an effective registration statement or under an exemption from the
registration requirements of the Securities Act. The legend shall be removed
when such Security may be sold pursuant to an effective registration statement
or sold under Rule 144(k). In consideration of such removal, the Purchaser
agrees and covenants that, except with respect to sales under Rule 144(k), it
will sell all Securities in accordance with the plan of distribution contained
in the registration statement pursuant to which it is selling its Securities, it
will deliver a prospectus in accordance with the prospectus delivery
requirements of the Securities Act, and in the event that the Company informs
such Purchaser that the registration statement has ceased to be effective under
the Securities Act, such Purchaser shall, at the request of the Company, return
its Securities for legending unless at such time such Securities may be sold
under Rule 144(k).
g. Accredited Investor Status. The Purchaser is an "accredited investor"
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as that term is defined in Rule 501(a) of Regulation D. The Purchaser is not
registered as a broker or dealer under Section 15(a) of the Securities Exchange
Act of 1934, as amended, or a member of the NASD (as defined below).
h. Company Reliance. The Purchaser understands that the Shares are being
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offered and sold and the Warrants are being issued to it in reliance on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying upon the truth and
accuracy of, and the Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments, and understandings of the Purchaser
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set forth herein in order to determine the availability of such exemptions and
the eligibility of the Purchaser to acquire the Shares and the Warrants.
i. No Tax Advice Provided By Company. Purchaser acknowledges and agrees
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that the Company and its advisors have not provided any advice to the Purchaser
regarding the federal, state, local or foreign tax implications of the
acquisition, ownership or disposition of the Securities and that it has been
advised to consult its own tax advisor with respect to such implications.
j. HSR. The Purchaser has no present intention of (1) participating in
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the formulation, determination or direction of the basic decisions of the
Company; (2) nominating a candidate for the board of directors of the Company;
(3) proposing corporate action requiring shareholder approval; (4) soliciting
proxies; (5) having a controlling shareholder, director, or employee of the
Purchaser simultaneously serving as an officer or director of the Company; (6)
being a competitor of the Company; or (7) doing any of the foregoing with
respect to any entity directly or indirectly controlling the Company. If at the
time the Purchaser exercises the Warrant the Purchaser's intention is any
different than the foregoing, and in light of such change a filing under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 is required in connection
with such exercise, the Purchaser shall so notify the Company in writing at or
prior to the time of such exercise.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents and warrants to each Purchaser as follows:
a. Organization and Qualification. The Company and each of its
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subsidiaries is a corporation duly organized and existing under the laws of the
jurisdiction in which it is incorporated, and has the requisite corporate power
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 in which the nature
of the business conducted by it makes such qualification necessary and where the
failure so to qualify would have a Material Adverse Effect. Schedule 4(a) sets
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forth the Company's jurisdiction of incorporation and the name of each of the
Company's subsidiaries and its jurisdiction of incorporation.
b. Authorization; Enforcement. (i) The Company has the requisite
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corporate power and authority to enter into and perform its obligations under
this Agreement, the Warrants and the Registration Rights Agreement, to issue and
sell the Shares and the Warrants in accordance with the terms hereof and to
issue the Warrant Shares upon exercise of the Warrants in accordance with the
terms of the Warrants and to issue the Penalty Shares in accordance with the
Registration Rights Agreement; (ii) the execution, delivery and performance of
this Agreement, the Warrants and the Registration Rights Agreement by the
Company and the consummation by it of the transactions contemplated hereby and
thereby (including, without limitation, the reservation for issuance and
issuance of the Shares and the issuance of the Warrants, and the reservation for
issuance and issuance of the Warrant Shares) have been duly authorized by the
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Company's Board of Directors and no further consent or authorization of the
Company, its Board of Directors or its stockholders is required; (iii) this
Agreement has been duly executed and delivered by the Company; and (iv) this
Agreement constitutes, and, upon execution and delivery by the Company of the
Registration Rights Agreement and the Warrants, such agreements will constitute,
valid and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other laws
affecting creditors' rights and remedies generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity).
c. Capitalization. The capitalization of the Company and each of its
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subsidiaries as of the date hereof is set forth on Schedule 4(c), including the
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authorized capital stock, the number of shares issued and outstanding, the
number of shares issuable and reserved for issuance pursuant to the Company's
stock option plans, the number of shares issuable and reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for
any shares of capital stock. Schedule 4(c) also sets forth the number of Shares
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to be issued pursuant to the terms hereof and the number of Warrant Shares to be
issued upon the exercise of the Warrants. All of such outstanding shares of the
Company's capital stock have been, or upon issuance will be, validly issued,
fully paid and nonassessable. Except as set forth on Schedule 4(c), no shares
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of capital stock of the Company (including the Shares, the Warrant Shares or the
Penalty Shares, if any) or any of the subsidiaries are subject to preemptive
rights or any other similar rights of the stockholders of the Company or any
liens or encumbrances. Except for the Securities and as disclosed in Schedule
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4(c), as of the date of this Agreement, (i) there are no outstanding options,
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warrants, scrip, rights to subscribe to, 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 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 such subsidiaries, and (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). Except as set forth on Schedule 4(c), there are
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no securities or instruments containing antidilution or similar provisions that
may be triggered by the issuance of the Securities in accordance with the terms
of this Agreement, the Warrants or the Registration Rights Agreement and the
holders of the securities and instruments listed on such Schedule 4(c) have
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waived any rights they may have under such antidilution or similar provisions in
connection with the issuance of the Securities in accordance with the terms of
this Agreement, the Warrants or the Registration Rights Agreement. The Company
has made available to each Purchaser true and correct copies of the Company's
Certificate of Incorporation as in effect on the date hereof ("Certificate of
Incorporation"), the Company's By-laws as in effect on the date hereof (the "By-
laws") and all other instruments and agreements governing securities convertible
into or exercisable or exchangeable for capital stock of the Company, except for
stock options granted under any employee benefit plan or director stock option
plan of the Company.
d. Issuance of Shares. The Shares are duly authorized and when issued and
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paid for in accordance with the terms hereof, will be validly issued, fully paid
and non-assessable, and
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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
and will not impose personal liability upon the holder thereof. The Warrant
Shares are duly authorized and reserved for issuance, and, upon exercise of
the Warrants in accordance with the terms thereof, will be validly issued,
fully paid and non-assessable and free from all taxes and liens, claims and
encumbrances and will not be subject to preemptive rights or other similar
rights of stockholders of the Company and will not impose personal liability
upon the holder thereof.
e. No Conflicts. The execution, delivery and performance of this
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Agreement, the Registration Rights Agreement and the Warrants by the Company,
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the reservation for issuance and
issuance of the Shares and the Warrant Shares and the issuance of the Warrants)
will not (i) conflict with or result in a violation of the Certificate of
Incorporation or By-laws or (ii) conflict with, or constitute a default (or an
event which, with notice or lapse of time or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including United States 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 (except, with respect to clause (ii), for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation, By-laws and 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 instrument to which the Company or any of its subsidiaries is a
party, except for actual or possible violations, defaults or rights as would
not, individually or in the aggregate, have a Material Adverse Effect, and
except as set forth on Schedule 4(e). The businesses of the Company and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental entity, except for actual or possible violations,
if any, the sanctions for which either singly or in the aggregate would not have
a Material Adverse Effect. Except as specifically contemplated by this
Agreement or the Warrants and as required under the Securities Act and any
applicable state securities laws, the Company is not required to obtain any
consent, approval, 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 (including, without limitation, the issuance and sale of
the Shares and Warrants as provided hereby), or the Warrants (including the
issuance of the Warrant Shares), in each case in accordance with the terms
hereof or thereof. The Company is not in violation of the listing requirements
of the American Stock Exchange ("AMEX") and does not reasonably anticipate that
the Common Stock will be delisted by AMEX in the foreseeable future based on its
rules (and interpretations thereof) as currently in effect.
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f. SEC Documents; Financial Statements. Since June 30, 1997, the Company
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has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and has filed all registration
statements and other documents required to be filed by it with the SEC pursuant
to the Securities Act (all of the foregoing filed prior to the date hereof, and
financial statements and schedules thereto and documents incorporated by
reference therein, being hereinafter referred to herein as the "SEC Documents").
The Company has made available to each Purchaser true and complete copies of the
SEC Documents, except for the exhibits and schedules thereto and the documents
incorporated therein. The exhibits filed by the Company with the SEC Documents
are true and complete copies of the indicated documents. As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Exchange Act or the Securities Act, as the case may be, 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. Any statements made in any such SEC Documents that are or were
required to be updated or amended under applicable law have been so updated or
amended. As of their respective dates, the financial statements of the Company
included in the SEC Documents complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
applicable with respect thereto. Such financial statements have been prepared
in accordance with United States generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the consolidated financial position of the Company and its
subsidiaries as of the dates thereof and the results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
SEC Documents, the Company has no liabilities, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent to
the date of such SEC Documents and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in such SEC Documents,
which liabilities and obligations referred to in clauses (i) and (ii),
individually or in the aggregate, would not have a Material Adverse Effect.
g. Absence of Certain Changes. Except as disclosed in the SEC Documents,
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since March 31, 1999, there has been no change or development which individually
or in the aggregate has had or could reasonably be expected to have a Material
Adverse Effect.
h. Absence of Litigation. Except as disclosed in the SEC Documents, there
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is no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, threatened in writing against or affecting the Company, or any of its
subsidiaries, or any of their directors or officers in their capacities as such
which would reasonably be expected to have a Material Adverse Effect or which
would adversely affect the validity, enforceability of, or the authority or
ability of the
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Company to perform its obligations under this Agreement (including the
issuance of the Shares and the Warrants), the Registration Rights Agreement,
the Warrants (including the issuance of the Warrant Shares) or any other
agreement or document delivered pursuant hereto or thereto.
i. Intellectual Property. The Company and each of its subsidiaries owns
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or is licensed to use all patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, copyright applications,
licenses, permits, 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")
necessary for the conduct of its business as now being conducted and as proposed
to be conducted. To the knowledge of the Company, after reasonable inquiry,
neither the Company nor any of its subsidiaries is infringing or in conflict
with any other person with respect to any Intangibles which, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect. Except as set forth in Schedule 4(i),
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neither the Company nor any of its subsidiaries has received written notice
that it is infringing upon third party Intangibles. Neither the Company nor any
of its subsidiaries has entered into any consent, indemnification, forbearance
to xxx or settlement agreements with respect to the validity of the Company's or
such subsidiary's ownership or right to use its Intangibles and to the Company's
knowledge, after reasonable inquiry, there is no basis for any claim relating to
any consent, indemnification, forbearance to xxx or settlement agreement with
respect to the validity of the Company's or such subsidiary's ownership or right
to use its Intangibles to be successful. The Intangibles are valid and
enforceable, and no registration relating thereto has lapsed, expired or been
abandoned or canceled or is the subject of cancellation or other adversarial
proceedings, and all applications therefor are pending and in good standing.
The Company has complied, in all material respects, with its contractual
obligations relating to the protection of the Intangibles used pursuant to
licenses. To the Company's knowledge, no person is infringing on or violating
the Intangibles owned or used by the Company.
j. Foreign Corrupt Practices. Neither the Company, nor any of its
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subsidiaries, nor any director or officer, nor, to the Company's knowledge, any
agent, employee or other person acting on behalf of the Company or any of its
subsidiaries has, in the course of such person's actions for, or on behalf of,
the Company, or any of its subsidiaries, 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 United States Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
k. Environment. Except as disclosed in the SEC Documents (i) there is no
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environmental liability, nor factors likely to give rise to any environmental
liability, affecting any of the properties of the Company or any of its
subsidiaries that, individually or in the aggregate, would have a Material
Adverse Effect and (ii) neither the Company nor any of the subsidiaries has
violated any environmental law applicable to it now or previously in effect,
other than such
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violations or infringements that, individually or in the aggregate, have not
had and will not have a Material Adverse Effect.
l. Title. The Company and each of its subsidiaries has good title in fee
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simple to all real property and good title to all personal property owned by it
which is material to its business, free and clear of all liens, encumbrances and
defects except for liens to secure the Company's bank lines of credit and such
defects in title that, individually or in the aggregate, could not have a
Material Adverse Effect. Any real property and facilities held under lease by
the Company or any of its subsidiaries are held by the Company or such
subsidiary under valid, subsisting and enforceable leases with such exceptions
which have not had and will not have a Material Adverse Effect.
m. Insurance. The Company and its subsidiaries maintain such insurance
---------
relating to their business, operations, assets, key-employees and officers and
directors as is appropriate to their business, assets and operations, in such
amounts and against such risks as are customarily carried and insured against by
owners of comparable businesses, assets and operations, and such insurance
coverages will be continued in full force and effect to and including the
Closing Date other than those insurance coverages in respect of which the
failure to continue in full force and effect could not reasonably be expected to
have a Material Adverse Effect.
n. Disclosure. All information relating to or concerning the Company and
----------
its subsidiaries set forth in this Agreement or provided to the Purchaser in
connection with the transactions contemplated hereby (excluding analyst reports
prepared by investment banking firms), including the disclosure contained in
Schedule 4(n), viewed in its entirety, is true and correct in all material
-------------
respects and the Company has not omitted to state any 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, provided, that as to
--------
forward-looking information provided by the Company, the Company represents only
that there is a good-faith basis for such information. No event or circumstance
has occurred or exists with respect to the Company or its subsidiaries or their
businesses, properties, operations, prospects or financial conditions, which has
not been publicly disclosed but, under applicable law, rule or regulation, would
be required to be disclosed by the Company in a registration statement filed on
the date hereof by the Company under the Securities Act with respect to a
primary issuance of the Company's securities. The Company has not provided, and
without the Purchaser's request therefore, will not hereafter provide to the
Purchaser, any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company but which has not
been disclosed. The Purchasers acknowledge that any forward looking statements
regarding the Company are subject to substantial risks and uncertainties,
including those described in the SEC Documents, and that actual events, results
or performance may differ materially.
o. Acknowledgment Regarding the Purchaser's Purchase of the Securities.
-------------------------------------------------------------------
The Company acknowledges and agrees that the 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, and the
relationship between the Company and the Purchaser is "arms length" and that any
statement made by the Purchaser or any of its representatives or
11
agents in connection with this Agreement and the transactions contemplated
hereby is not advice or a recommendation and is merely incidental to the
Purchaser's purchase of Securities and has not been relied upon by the
Company, its officers or directors in any way. The Company further represents
to the Purchaser that the Company's decision to enter into this Agreement has
been based solely on an independent evaluation by the Company and its
representatives.
p. No Brokers. The Company has not engaged any person except Xxxxxxxxx &
----------
Xxxxx, whose fees are being paid exclusively by the Company, to which or to whom
brokerage commissions, finder's fees, financial advisory fees or similar
payments are or will become due in connection with this Agreement or the
transactions contemplated.
q. Tax Status. The Company and each of its subsidiaries has made or filed
----------
(or has sought extensions for) all material federal, state and local income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company or the
applicable subsidiary has set aside on its books provisions adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provisions adequate
for the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. Except with respect to amounts totaling
in the aggregate less than $50,000, there are no unpaid taxes claimed to be due
by the taxing authority of any jurisdiction. The Company has not executed a
waiver with respect to any statute of limitations relating to the assessment or
collection of any federal, state or local tax. Since June 30, 1996, none of the
Company's tax returns has been or is being audited by any taxing authority.
r. No General Solicitation. Neither the Company nor any person
-----------------------
participating on the Company's behalf in the transactions contemplated hereby
has conducted any "general solicitation" or "general advertising" as such terms
are used in Regulation D, with respect to any of the Securities being offered
hereby.
s. No Integrated Offering. Neither the Company, nor any of its
----------------------
affiliates, nor any person acting on its or their behalf, has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration of the
Securities being offered hereby under the Securities Act or cause this offering
of Securities to be integrated with any prior offering of securities of the
Company for purposes of the Securities Act or any applicable stockholder
approval provisions.
t. Year 2000. To the Company's knowledge, after reasonable inquiry,
---------
except as disclosed on Schedule 4(t): (i) All hardware and software products
-------------
used by the Company and its subsidiaries in the administration and the business
operations of the Company and such subsidiaries will be able to process date
data (including, but not limited to, calculating, comparing and sequencing) in a
consistent manner from, into and between the twentieth century (through 1999),
the year 2000 and the twenty-first century, including leap year calculations,
when used in accordance with the product documentation accompanying such
hardware and
12
software products; (ii) all software developed and sold by the Company and any
of its subsidiaries (other than third party software) will be able to process
date data (including, but not limited to, calculating, comparing and
sequencing) in a consistent manner from, into and between the twentieth
century (through 1999), the year 2000 and the twenty-first century, including
leap year calculations, when used in accordance with the product documentation
accompanying such software.
u. Form S-3 Eligibility. The Company is currently eligible to register
--------------------
the resale of its Common Stock on a registration statement on Form S-3 under the
Securities Act. To the Company's knowledge, after reasonable investigation,
there exist no facts or circumstances (including without limitation any required
approvals or waivers of any circumstances that may delay or prevent the
obtaining of accountant's consents) that would prohibit or delay the preparation
and filing of a registration statement on Form S-3 with respect to the
Registrable Securities (as defined in the Registration Rights Agreement).
5. COVENANTS.
---------
a. Best Efforts. The parties shall use their best efforts timely to
------------
satisfy each of the conditions set forth in Section 6 and Section 7 of this
Agreement.
b. Form D. The Company agrees to file a Form D with respect to the
------
Securities as required under Regulation D and to provide a copy thereof to each
Purchaser promptly after such filing. The Company shall take such action as the
Company shall reasonably determine is necessary to qualify the Securities for
sale to the Purchasers pursuant to this Agreement under applicable securities
or "blue sky" laws of the states of the United States or obtain exemption
therefrom, and shall provide evidence of any such action so taken to each
Purchaser on or prior to the Closing Date.
c. Reporting Status. So long as any Purchaser beneficially owns any
----------------
Securities or has the right to acquire any Securities pursuant to this
Agreement, the Company shall timely file all reports required to be filed with
the SEC pursuant to the Exchange Act, and 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, provided,
--------
however, that the obligations of the Company in this subsection 5(c) shall
-------
terminate on the date on which (i) all rights to acquire Securities pursuant to
this Agreement or the Warrants have been exercised in full or have expired, and
(ii) all Securities beneficially owned by all Purchasers and their permitted
assigns may be immediately sold to the public in a single transaction pursuant
to Rule 144(k) under the Securities Act or otherwise without registration or
restriction.
d. Use of Proceeds. The Company shall use the net proceeds from the sale
---------------
of the Shares and the Warrants for general working capital purposes and the
repayment of up to $6.4 million of outstanding indebtedness, but in no event
shall the Company use such net proceeds to repurchase any outstanding securities
of the Company, provided, however, that nothing in the foregoing shall restrict
-------- -------
the Company's ability to repay indebtedness under its existing lines of credit
incurred after the date of this Agreement.
13
e. Expenses. At the Closing, the Company shall reimburse Capital Ventures
--------
International ("CVI") or its designee for the out-of-pocket expenses reasonably
incurred by CVI and its affiliates and advisors in connection with the
negotiation, preparation, execution and delivery of this Agreement, the
Registration Rights Agreement, the Warrants and the other agreements to be
executed in connection herewith, including, without limitation, in conducting
CVI's and its affiliates' and advisors' reasonable due diligence and CVI's and
its affiliates' reasonable attorneys' fees and expenses (collectively, the
"Expenses"). Notwithstanding the foregoing, the Company shall not be obligated
to reimburse CVI for more than $35,000 of Expenses pursuant to this Section
5(e).
f. Press Releases. For a period of two (2) years following the Closing,
--------------
the Company agrees to send to each Purchaser within two business days after
release, copies of all press releases issued by the Company or any of its
subsidiaries, if any.
g. Reservation of Shares. The Company has and shall at all times have
---------------------
authorized and reserved for the purpose of issuance a sufficient number of
shares of Common Stock to provide for the issuance of the Shares as provided in
Section 2 hereof, and the full exercise of the Warrants and the issuance of the
Warrant Shares in connection therewith and as otherwise required hereby and by
the Warrants. The Company shall not reduce the number of shares of Common Stock
reserved for issuance under this Agreement (except as a result of the issuance
of the Shares hereunder) or the Warrants (except as a result of the expiration
of the Warrants or the issuance of the Warrant Shares upon the exercise of the
Warrants), without the consent of the Purchasers.
h. Listing. On the Closing Date, the Company shall have secured the
-------
listing of the Shares and Warrant Shares, in each case, upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed or quoted (subject to official notice of issuance)
and shall maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all Shares from time to time issuable hereunder and all
Warrant Shares from time to time issuable upon exercise of the Warrants. The
Company will use its best efforts to continue the listing and trading of its
Common Stock on the AMEX, the New York Stock Exchange ("NYSE") or the Nasdaq
National Market ("NASDAQ") and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the AMEX.
i. Corporate Existence. The Company shall 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 (A) assumes the Company's obligations hereunder and
under the Warrants and under the agreements and instruments entered into in
connection herewith and (B) is a publicly trading Company whose common stock is
listed and trades on NASDAQ, the NYSE or AMEX, provided, however, that the
-------- -------
obligations in this Section 5(i) shall terminate on the date that each Purchaser
or its assignee no longer has any right to acquire Securities pursuant to this
Agreement or the Warrants, and all Securities beneficially owned by the
Purchasers and their permitted assigns may be immediately sold to the public in
a
14
single transaction pursuant to Rule 144(k) under the Securities Act or
otherwise without registration or restriction.
j. No Integrated Offering. Neither the Company, nor any of its
----------------------
affiliates, nor any person acting on its or their behalf, shall, directly or
indirectly, make any offers or sales of any security or solicit any offers to
buy any security under circumstances that would require registration of the
Securities being offered hereby under the Securities Act or cause this offering
of Securities to be integrated with any prior or future offering of securities
of the Company for purposes of the Securities Act or any applicable stockholder
approval provisions.
k. Additional Equity Capital.
-------------------------
(i) The Company agrees that during the period beginning on the date
hereof and ending on the date which is 180 days following the Closing Date (the
"Lock-Up Period"), the Company will not, without the prior written consent of
the Purchasers, contract with any party to obtain additional financing in which
any equity or equity-linked securities are issued (including any debt financing
with an equity component) pursuant to any offering exempt from the registration
requirements of the Securities Act which grants any registration rights
exercisable within one year of the Closing Date ("Future Offerings"). The
limitations referred to in this Section 5(k) are collectively referred to as the
"Capital Raising Limitations". The Capital Raising Limitations shall not apply
to securities issued pursuant to (1) any transaction involving issuances of
securities as consideration in a merger, consolidation or acquisition of assets,
or in connection with any strategic partnership or joint venture (the primary
purpose of which is not to raise equity capital), or as consideration for the
acquisition of a business, product or license by the Company, (2) the issuance
of securities pursuant to a syndicated underwritten public offering, (3) the
issuance of securities upon exercise or conversion of the Company's options,
warrants or other convertible securities outstanding as of the date hereof, (4)
the grant of additional options or warrants, or the issuance of additional
securities, under any duly authorized Company stock option, stock purchase or
restricted stock plan for the benefit of the Company's employees, consultants or
directors, or (5) the issuance of securities to a strategic business partner of
the Company, (6) the issuance of securities in connection with a bank or
equipment financing transaction, or (7) the issuance of any securities pursuant
to a transaction made in reliance on Rule 144A under the Securities Act.
(ii) The Company agrees that during the period beginning immediately
upon the termination of the Lock-Up Period and ending on the date which is 180
days following such date (the "Participation Period"), each Purchaser shall have
a right of first refusal to purchase its Pro Rata Percentage of 20% of the total
amount of any issuance of any shares of Common Stock or Preferred Stock of any
kind of the Company, whether now or hereafter authorized, and rights, options,
or warrants to purchase said Common Stock or Preferred Stock, and securities of
any type whatsoever that are, or by their terms may become, convertible into
said Common Stock or Preferred Stock that the Company, from time to time, may
propose to sell and issue (the "Participation Securities"), provided, however,
-------- -------
that the term Participation Securities shall not apply to securities issued
pursuant to (1) any transaction involving issuances of securities as
15
consideration in a merger, consolidation or acquisition of assets, or in
connection with any strategic partnership or joint venture (the primary purpose
of which is not to raise equity capital), or as consideration for the
acquisition of a business, product or license by the Company, (2) the issuance
of securities pursuant to a syndicated public offering, (3) the issuance of
securities upon exercise or conversion of the Company's options, warrants or
other convertible securities outstanding as of the date hereof, (4) the grant of
additional options or warrants, or the issuance of additional securities, under
any duly authorized Company stock option, stock purchase or restricted stock
plan for the benefit of the Company's employees, consultants or directors, or
(5) the issuance of securities to a strategic business partner of the Company
(6) the issuance of securities in connection with a bank or equipment financing
transaction, or (7) the issuance of any securities pursuant to a transaction
made in reliance on Rule 144A under the Securities Act
(iii) If the Company proposes to issue Participation Securities, it
will give each Purchaser written notice (the "Rights Notice") of the Company's
intention to do so, describing the Participation Securities, the price, and the
general terms upon which the Company proposes to issue them. Each such
Purchaser will have 14 days from the date of delivery of the Rights Notice to
agree to purchase up to its Pro Rata Percentage of 20% of the total amount of
such Participation Securities for the price and upon the general terms specified
in the Rights Notice by giving written notice to the Company setting forth the
quantity of Participation Securities to be purchased.
(iv) The Company will have 120 days after the date of delivery of the
Rights Notice to sell the Participation Securities that were not purchased by
the Purchasers, at a price and upon general terms no more favorable to the
purchasers thereof than the price and general terms specified in the Rights
Notice. If the Company does not sell the Participation Securities within said
120-day period as provided in the preceding sentence, the Company will not
thereafter issue or sell any of such Participation Securities during the
Participation Period without complying with the provisions of Section (iii)
above.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
The obligation of the Company hereunder to issue and sell Shares and
Warrants to a Purchaser at the Closing hereunder is subject to the
satisfaction, at or before the Closing Date, of each of the following conditions
thereto; provided, however, that these conditions are for the Company's sole
-------- -------
benefit and may be waived by the Company at any time in its sole discretion.
a. The applicable Purchaser shall have executed the signature page to this
Agreement and the Registration Rights Agreement, and delivered the same to the
Company.
b. The applicable Purchaser shall have delivered to the Company such
Purchaser's Investment Amount in accordance with Section 2(b) above.
c. The representations and warranties of the applicable Purchaser shall be
true and correct as of the date when made and as of the Closing Date as though
made at that time (except
16
for representations and warranties that speak as of a specific date, which
representations and warranties shall be true and correct as of such date), and
the applicable Purchaser shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the applicable
Purchaser at or prior to the Closing Date.
d. 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.
e. The applicable Purchaser shall have completed and provided to the
Company the questionnaire provided by the Company pursuant to Section 4(a) of
the Registration Rights Agreement.
7. CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE SHARES AND WARRANTS.
-------------------------------------------------------------------------
The obligation of each Purchaser hereunder to purchase Shares and Warrants
to be purchased by it hereunder is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
--------
conditions are for such Purchaser's sole benefit and may be waived by such
Purchaser at any time in such Purchaser's sole discretion:
a. The Company shall have executed the signature pages to this Agreement
and the Registration Rights Agreement, and delivered the same to the Purchaser.
b. The Company shall have delivered to the Purchaser duly executed
certificates representing the number of Shares and duly executed Warrants as
provided in Section 2(b) above, and prior to the Closing, the Purchaser's
attorney shall have received, in escrow, share certificate(s) representing the
Shares to be purchased by the Purchaser.
c. The Shares shall be authorized for quotation on AMEX and trading in the
Common Stock (or on AMEX generally) shall not have been suspended or be under
threat of suspension by the SEC or AMEX.
d. The representations and warranties of the Company shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date, which representations and warranties shall be true and correct as of such
date) and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Company at or
prior to the Closing Date. The Purchaser shall have received a certificate,
executed on behalf of the Company by its Chief Financial Officer, dated as of
the Closing Date, to the foregoing effect and attaching true and correct copies
of the resolutions adopted by the Company's Board of
17
Directors authorizing the execution, delivery and performance by the Company
of its obligations under this Agreement, the Warrants and the Registration
Rights Agreement.
e. No statute, rule, regulation, executive order, decree, ruling,
injunction, action, proceeding or interpretation shall have been enacted,
entered, promulgated, endorsed or adopted by any court or governmental authority
of competent jurisdiction or any self-regulatory organization, or the staff of
any thereof, having authority over the matters contemplated hereby which
questions the validity of, or challenges or prohibits the consummation of, any
of the transactions contemplated by this Agreement.
f. The Purchaser shall have received an opinion of the Company's counsel,
dated as of the Closing Date, in substantially the form of Exhibit D attached
---------
hereto.
g. From the date of this Agreement through the Closing Date, there shall
not have occurred any Material Adverse Effect.
h. The Company shall have provided Purchaser a draft of the Registration
Statement (as defined in the Registration Rights Agreement) at least 48 hours
prior to Closing.
i. Ascom USA, Inc. ("Ascom") shall have executed and delivered to the
Company a waiver, pursuant to agreements disclosed to the Purchaser prior to
Closing , of all rights to retain percentage ownership held by Ascom respecting
the issuances of securities contemplated by this Agreement, the Registration
Rights Agreement and the Warrant.
8. GOVERNING LAW; MISCELLANEOUS.
----------------------------
a. Governing Law; Jurisdiction. This Agreement shall be governed by and
---------------------------
construed in accordance with the laws of the State of California applicable to
contracts made and to be performed in the State of California. Each party
hereto irrevocably consents to the jurisdiction of the United States federal
courts and the state courts located in San Francisco, California in any suit or
proceeding based on or arising under this Agreement. Each party hereto
irrevocably waives the defense of an inconvenient forum to the maintenance of
such suit or proceeding. Each party hereto further agrees that service of
process upon the Company mailed by first class mail to the address set forth in
Section 8(f) shall be deemed in every respect effective service of process upon
the Company in any such suit or proceeding. Nothing herein shall affect the
right of any Purchaser to serve process in any other manner permitted by law.
Each party hereto agrees 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.
b. Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
In
18
the event any signature is delivered by facsimile transmission, the party
using such means of delivery shall cause the manually executed Execution
Page(s) hereof to be physically delivered to the other party within five (5)
days of the execution hereof.
c. Headings. The headings of this Agreement are for convenience of
--------
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid or
------------
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments; Waiver. This Agreement and the
------------------------------------
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Purchasers
make any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the Company and by the Purchasers as
provided in Section 8(o) hereof. Any waiver by the Purchasers, on the one hand,
or the Company, on the other hand, of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision of or any breach of any other provision of this
Agreement. The failure of the Purchasers, on the one hand, or the Company, on
the other hand to insist upon strict adherence to any term of this Agreement on
one or more occasions shall not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that term or any other
term of this Agreement.
f. Notices. Any notices required or permitted to be given under the terms
-------
of this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five (5) days after being placed in the mail, if mailed, one
(1) business day after being deposited with a nationally recognized overnight
delivery service, or immediately if delivered personally, by same-day courier or
by confirmed telecopy (such confirmation being conclusive proof of receipt or
delivery), in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Identix Incorporated
000 X. Xxxxxxxx Xxx.
Xxxxxxxxx, XX 00000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
Attention: President
With a copy to:
19
Xxxxxxx X. Peers
Xxxxxx Xxxxxx White & XxXxxxxxx
000 Xxxxxxxxxx Xxx.
Xxxx Xxxx, XX 00000-0000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
If to the Purchaser, to the address set forth under the Purchaser's name on the
Execution Page hereto executed by such Purchaser.
Each party shall provide notice to the other parties of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon and inure
----------------------
to the benefit of the parties and their successors and permitted assigns. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers, except in connection with
a merger, consolidation or sale of all or substantially all of the Company's
assets in which the surviving or successor entity in such transaction (A)
assumes the Company's obligations hereunder and under the Warrants and under the
agreements and instruments entered into in connection herewith and (B) is a
publicly trading Company whose common stock is listed and trades on NASDAQ, the
NYSE or AMEX. Without the prior written consent of the Company, no Purchaser
shall assign this Agreement or any of its rights or obligations hereunder except
to a assignee who is acquiring from the Purchaser either (A) that number of
Warrants and/or Shares such that the assignee would beneficially own or have the
right to acquire at least 500,000 Warrant Shares and/or Shares at the close of
such transaction, or (B) all of the Warrants and/or Shares held by such
Purchaser (a "Permitted Transferee").
h. Third Party Beneficiaries. This Agreement is intended for the benefit
-------------------------
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by any other
person.
i. Survival. The agreements and covenants set forth in Section 5 shall
--------
survive the closing. The representations and warranties of the Purchasers set
forth in Section 3 and of the Company set forth in Section 4 shall survive three
--------- ---------
years following the Closing Date, notwithstanding any due diligence
investigation conducted by or on behalf of the Company or the Purchasers,
respectively. Moreover, none of the representations and warranties made by the
Company herein shall act as a waiver of any rights or remedies a Purchaser may
have under applicable federal or state securities laws.
j. Publicity. The Company and each Purchaser shall have the right to
---------
review and comment upon the issuance of any press releases, or the filing of any
SEC, AMEX or NASD filings, or any other public statements with respect to the
transactions contemplated hereby, other than the initial listing application for
the Shares and the Warrant Shares, which has been submitted to AMEX by the
Company prior to the date hereof. Each Purchaser shall be provided documents to
review at least 48 hours prior to the filing or other issuance thereof except
that draft press releases shall be provided to each Purchaser at least 24 hours
prior to issuance.
20
Within five business days after the Closing Date, the Company shall file a
Current Report on Form 8-K or other appropriate form with the SEC disclosing
the transactions contemplated hereby.
k. Further Assurances. Each party shall do and perform, or cause to be
------------------
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that the Closing Date shall not have
-----------
occurred on or before July 1, 1999, unless the parties agree otherwise, this
Agreement shall terminate at the close of business on such date.
Notwithstanding any termination of this Agreement, any party not in breach of
this Agreement shall preserve all rights and remedies it may have against
another party hereto for a breach of this Agreement prior to or relating to the
termination hereof.
m. Joint Participation in Drafting. Each party to this Agreement has
-------------------------------
participated in the negotiation and drafting of this Agreement, the Registration
Rights Agreement and the Warrants. As such, the language used herein and therein
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party to this Agreement, the Registration Rights Agreement or the Warrants.
n. Equitable Relief. The Company acknowledges that a breach by it of its
----------------
obligations hereunder will cause irreparable harm to a Purchaser by vitiating
the intent and purpose of the transactions contemplated hereby. Accordingly,
the Company acknowledges that the remedy at law for a breach of its obligations
hereunder will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Agreement, that a 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.
o. Determinations. Except as otherwise expressly provided herein, all
--------------
amendments, consents, approvals and other determinations to be made by the
Purchasers pursuant to this Agreement and all waivers to or of any provisions in
this Agreement prior to the Closing Date shall be made by Purchasers that have
agreed to invest a majority of the aggregate Investment Amounts to be invested
by all Purchasers and except as otherwise expressly provided herein, all
amendments, consents, approvals and other determinations to be made by the
Purchasers pursuant to this Agreement and all waivers to or of any provisions in
this Agreement after the Closing Date shall be made by Purchasers that have
invested a majority of the aggregate Investment Amounts invested by all
Purchasers.
21
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have caused
this Agreement to be duly executed as of the date first above written.
COMPANY:
IDENTIX INCORPORATED
By: /s/ XXXXX X. XXXXXXXX
---------------------------
Name: Xxxxx X. Xxxxxxxx
---------------------
Title: President and CFO
--------------------
The Purchaser:
CAPITAL VENTURES INTERNATIONAL
By: Heights Capital Management, Inc.,
its authorized agent
By: /s/ XXXXXXX XXXXXX
------------------------------------
Name: Xxxxxxx Xxxxxx
------------------------------
Title: Secretary and General Counsel
-----------------------------
Residence: Cayman Islands
Address: c/o Heights Capital Management, Inc.
000 Xxxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
with copies of all notices to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
-------------------------------
Investment Amount $10,000,000
--------------------
22
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have caused
this Agreement to be duly executed as of the date first above written.
COMPANY:
IDENTIX INCORPORATED
By: /s/ XXXXX X. XXXXXXXX
---------------------------
Name: Xxxxx X. Xxxxxxxx
---------------------
Title: President and CFO
--------------------
The Purchaser:
XXXXXXXX CAPITAL MANAGEMENT, INC.
By: /s/ XXXXX XXXXX
---------------------------
Name: Xxxxx Xxxxx
---------------------
Title: President
--------------------
Residence: Credit Suisse First Boston
--------------------------
Address: 000 X. Xxxxxx Xx.
--------------------------
Xxxxxxx, XX 00000
--------------------------
Telephone No.: (000)000-0000
Telecopy No.: (000)000-0000
Attention: Xxxxx Xxxxx
----------------------------
with copies of all notices to:
Solomon, Zauderer, Elenhorn, Xxxxxxxx & Xxxxx
---------------------------------------------
00 Xxxxxxxxxxx Xxxxx
---------------------------------------------
Suite 730
---------------------------------------------
Xxx Xxxx, XX 00000
---------------------------------------------
Telephone No.: (000)000-0000
Telecopy No.: (000)000-0000
Attention: Xxx Xxxxxx
----------------------------------
Investment Amount $5,000,000
--------------------------
23
SCHEDULE 1
Purchaser Investment Shares Series 1 A Series 1 B Series 2
Amount Warrants Warrants Warrants
-------------------------------------------------------------------------------------------------------------------------------
Capital Ventures International $10,000,000 1,207,729 241,546 402,577 603,865
Xxxxxxxx Capital Management, Inc. $ 5,000,000 603,865 120,773 201,288 301,933
TOTAL $15,000,000 1,811,594 362,319 603,865 905,798
24
