EXHIBIT 10.15
SOLOPOINT, INC.
COMMON STOCK SUBSCRIPTION AGREEMENT
August 10, 1999
This Common Stock Subscription Agreement (the "Agreement") is entered into
as of this 10th day of August, 1999, among SoloPoint, Inc., a California
corporation (the "Company") and the undersigned purchasers (each a "Purchaser"
and together the "Purchasers").
SECTION 1
SALE OF COMMON STOCK
1.1 Sale of Common Stock. Subject to the terms and conditions hereof, the
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Company will issue and sell to the Purchasers, and the Purchasers will purchase
from the Company, shares of Common Stock of the Company (the "Common Stock")
with an aggregate value of $3,150,000, at a price per share equal to the then
Current Market Price on the date (the "Escrow Opening Date") that the Company
places certificates representing the shares of Common Stock issued and sold to
the Purchasers hereunder in escrow with Chase Manhattan Bank and Trust Company,
National Association (the "Escrow Agent"), it being understood by the parties
that the Company shall not be required to issue shares of Common Stock to any
Purchaser if such issuance would result in the concentration of ownership of
more than 50% of the issued and outstanding Common Stock of the Company in any
one shareholder or group of affiliated shareholders. The certificates
representing the shares of Common Stock to be purchased hereunder shall be
issued to the Purchasers as of the Escrow Opening Date. The number of shares of
Common Stock to be purchased and the purchase price to be paid by Purchasers is
outlined on Exhibit A, which is incorporated herein by this reference.
1.2 The cash consideration (the "Escrowed Funds") to be paid by the
Purchasers to the Company for Common Stock shall be placed in escrow with the
Escrow Agent by wire transfer of immediately available funds to an interest
bearing account to be designated by the Escrow Agent on the Escrow Opening Date.
If any Purchaser intends to pay for shares of Common Stock by means of
conversion of any loan made to the Company, such Purchaser must deliver to the
Escrow Agent on the Escrow Opening Date, the instrument representing such loan,
together with instructions to the Escrow Agent stating that such instrument
shall be released to the party that is recipient of the Ecrowed Funds on the
Escrow Release Date (as defined herein). For the purpose of any computation
pursuant to this Section 1: (i) the "Current Market Price" at any date of one
share of Common Stock of the Company, shall be deemed to be the average of the
closing prices for shares of Common Stock on the preceding ten (10) business
days as furnished by the National Quotation Bureau, Incorporated (or an
equivalent recognized source of quotations), as determined by the Company's
independent accountants, Ernst & Young, and (ii) "Escrowed Funds" shall not
include any portion of the consideration for the shares of Common Stock to be
paid by any Purchaser by means of the conversion of any convertible loan made by
such Purchaser or any of its affiliates to the Company prior to the Escrow
Opening Date.
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1.3 Issuance of Warrants.
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(a) The Company agrees to issue to Purchasers, pro rata based on the
number of shares of Common Stock subscribed for by each Purchaser hereunder,
warrants (individually the "Warrant" and collectively the "Warrants")
exercisable for the purchase of an aggregate 1,300,000 shares of Common Stock
at a price per share of $3.00. The Warrants shall be issued to Purchasers as of
the date (the "Escrow Release Date") that the Escrowed Funds are released to the
Company. The Warrants shall be fully transferable, and shall be exercisable by
means of a cashless exercise at any time during the 18-month period commencing
on the Escrow Release Date; provided that any transferee of Warrants that is not
an affiliate of InveStar Capital, Inc. shall not be entitled to cashless
exercise of the Warrants. The terms of the Warrants are set forth more fully in
the form of Warrant annexed hereto as Exhibit B. For purposes of this Agreement
an "affiliate" of a person or an entity shall mean any natural person or entity
that directly or indirectly, through one or more intermendiaries, controls or is
controlled by or is under common control with such person or entity, any entity
in which such person or entity directly or indirectly, through one or more
intermediaries, is a general partner, principal, managing member, beneficiary or
otherwise a direct or indirect owner of a controlling interest or with which
such person or entity may merge or consolidate.
(b) The common stock issuable upon exercise of the Warrants (the
"Warrant Shares") shall be entitled to the benefits of the registration rights
granted by the Company pursuant to that certain Registration Rights Agreement
(the "Registration Rights Agreement"), dated of even date herewith, by and among
the Company and the Purchasers, a copy of which is annexed hereto as Exhibit E.
(c) The Company and the Purchasers, having adverse interests and as a
result of arm's length bargaining, agree that (i) the Purchasers have not
rendered and have not agreed to render any services to the Company in connection
with the issuance of the Warrants; (ii) the Warrants are not being issued as
compensation; and (iii) the fair market value of each Warrant as of the date of
issuance for income tax and other purposes shall be deemed to be $0.01 per
Warrant Share.
1.4 Release of Escrow. The certificates representing the shares of Common
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Stock being purchased hereunder and the Escrowed Funds shall be released by the
Escrow Agent to the Purchasers and the Company, respectively, upon receipt by
the Company of notice from the Nasdaq Stock Market ("Nasdaq") that the panel
presiding at the Company's August 12, 1999 Nasdaq delisting hearing has not
ordered the delisting of the Company. In the event that the delisting of the
Company is ordered by such panel, the Escrow Agent shall return the certificates
to the Company's Secretary and the Escrowed Funds to the Purchasers. The terms
and conditions of the release of Escrow are set forth more fully in the form of
Escrow Agreement annexed hereto as Exhibit C.
1.5 Legend. The certificate or certificates for the Common Stock shall be
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subject to a legend restricting transfer under the Securities Act of 1933, as
amended (the "Securities Act") and referring to restrictions on transfer herein,
such legend to be substantially as follows:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (A) AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO, OR (B) AN OPINION OF COUNSEL FOR THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR (C) FULL COMPLIANCE WITH THE PROVISIONS OF RULE 144 UNDER THE
ACT."
1.6 Removal of Legends. Any legend endorsed on a certificate pursuant to
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Section 1.5 hereof shall be removed (a) if the shares of the Common Stock
represented by such certificate shall have been effectively registered under the
Securities Act or otherwise lawfully sold in a public transaction, (b) if such
shares may be transferred in compliance with Rule 144(k) promulgated under the
Securities Act, or (c) if the holder of such shares shall have provided the
Company with an opinion of counsel, in form and substance acceptable to the
Company, stating that a public sale, transfer or assignment of such shares may
be made without registration.
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SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers that:
2.1 Organization. The Company is a corporation duly organized and validly
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existing under the laws of the State of California and is in good standing under
such laws. The Company has requisite corporate power and authority to own,
lease and operate its properties and assets, and to carry on its business as
presently conducted and as proposed to be conducted. The Company is qualified
to do business as a foreign corporation in each jurisdiction in which the
ownership of its property or the nature of its business requires such
qualification, except where failure to so qualify would not have a materially
adverse effect on the Company.
2.2 Authorization. The Company has all corporate right, power and
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authority to enter into this Agreement, the Registration Rights Agreement and
the Escrow Agreement and to consummate the transactions contemplated hereby and
thereby. All corporate action on the part of the Company, its directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement, the Registration Rights Agreement and the Escrow
Agreement by the Company, and the authorization, sale, issuance and delivery of
the Common Stock and the performance of the Company's obligations hereunder and
under the Registration Rights Agreement and the Escrow Agreement has been taken.
This Agreement, the Registration Rights Agreement and the Escrow Agreement have
been duly executed and delivered by the Company and constitute legal, valid and
binding obligations of the Company enforceable in accordance with their
respective terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy as they may apply to Section 1.6 of the Registration Rights
Agreement. Upon issuance and delivery pursuant to this Agreement, all of the
Common Stock being sold to the Purchasers hereunder and all of the Common Stock
issuable upon exercise of the Warrants will be duly and validly issued, fully
paid and nonassessable and free and clear of any liens and encumbrances. There
are no statutory, contractual or other preemptive rights or rights of first
refusal with respect to the issuance and sale of such Common Stock.
2.3 Validity of Securities. The Company's securities, when issued, sold
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and delivered by the Company in accordance with the terms of this Agreement,
will be duly and validly issued, fully-paid and nonassessable. The issuance,
sale and delivery of such securities are not subject to preemptive or any
similar rights of the shareholders of the Company or any liens or encumbrances
arising through the Company. Based in part upon the representations of the
Purchasers in this Agreement, the offer, sale and issuance of the Company's
securities hereunder will be made in compliance with all applicable federal and
state securities laws.
2.4 No Conflict. The execution and delivery of this Agreement, the
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Registration Rights Agreement and the Escrow Agreement do not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both), or give rise to a right of termination,
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cancellation or acceleration of any obligation or to a loss of a material
benefit, under, any provision of the Amended and Restated Articles of
Incorporation or Bylaws of the Company or any mortgage, indenture, lease or
other agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company, its properties or assets, which conflict, violation, default or right
would have a material adverse effect on the business, properties, prospects or
financial condition of the Company.
2.5 Accuracy of Reports; Financial Statements. All reports required to be
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filed with the Securities and Exchange Commission (the "SEC") by the Company
from the date of the Company's initial public offering through the date of this
Agreement under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), copies of which have been made available to each Purchaser (the "SEC
Documents"), have been duly and timely filed, were in substantial compliance
with the requirements of their respective forms when filed, were complete and
correct in all material respects as of the dates at which the information was
furnished, and contained (as of such dates) no untrue statement of a material
fact nor omitted to state a material fact necessary in order to make the
statements made therein in light of the circumstances in which made not
misleading. The Company's financial statements included in the SEC Documents
(the "Financial Statements") comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto. The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied
and fairly present the consolidated financial position of the Company and any
subsidiaries at the dates thereof and the consolidated results of operations and
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, recurring adjustments).
2.6 Changes. Since May 14, 1999 (the date on which the Company's Quarterly
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Report on Form 10-QSB for the fiscal quarter ended March 31, 1999 was filed with
the SEC), there has not been (a) any incurrence by the Company of any material
liability, absolute or contingent, or (b) except for the potential delisting of
the Company by the Nasdaq which will be adjudicated at a hearing before a Nasdaq
panel scheduled for August 12, 1999, any event or condition of any character
that has materially and adversely affected or might materially and adversely
affect the business, properties, prospects or financial condition of the Company
(as such business is presently conducted and as it is proposed to be conducted).
There is no material liability or contingency of the Company that is not
disclosed in the SEC Documents.
2.7 Governmental Consents, Etc. No consent, approval or authorization of
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or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement, the Registration Rights Agreement or the Escrow
Agreement, or the consummation of any other transaction contemplated hereby and
thereby, except such filings as may be required to be made with the SEC, the
National Association of Securities Dealers, Inc. ("NASD") and with governmental
authorities for purposes of effecting compliance with the securities and Blue
Sky laws in the states in which Common Stock is offered and/or sold, which
compliance will be effected in accordance with such laws.
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2.8 Litigation. Except as disclosed in the SEC Documents and Schedule 2.8
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hereto, there is no pending or, to the best of the Company's knowledge,
threatened lawsuit, administrative proceeding, arbitration, labor dispute or
governmental investigation ("Litigation") to which the Company is a party or by
which any material portion of its assets, taken as a whole, may be bound, nor is
the Company aware of any basis therefor, which Litigation, if adversely
determined, would have a material adverse effect on the business, properties,
prospects or financial condition of the Company.
2.9 Intellectual Property. To its knowledge, and except as disclosed in
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the SEC Documents, the Company owns or possesses sufficient legal rights to all
patents, trademarks, service marks, tradenames, copyrights, trade secrets,
licenses, information and proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted, without infringement
of any rights of a third party. Except as disclosed in the SEC Documents, the
Company has not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, tradenames, copyrights, trade secrets or
other proprietary rights or processes of any other person or entity, which
violation would have a material adverse effect on the business, properties,
prospects or financial condition of the Company. Except as disclosed in the SEC
Documents, the Company has not granted (nor has the Company licensed from a
third party) any material rights to or licenses to its patents, trademarks,
service marks, tradenames, copyrights, trade secrets or other proprietary rights
or processes.
2.10 Registration Rights. Except as contemplated herein and in the
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Registration Rights Agreement, the Company has not granted or agreed to grant
any rights to register its securities under the Securities Act, including piggy-
back rights, to any person or entity.
2.11 No Material Default. The Company is not in violation of or default
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under any provision of (a) its Certificate of Incorporation or Bylaws or (b) any
mortgage, indenture, lease or other agreement or instrument, permit, concession,
franchise or license to which it is a party or by which it is bound or (c) any
federal or state judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company, except with respect to clauses (b) and (c)
above, such violations or defaults as would not have a material adverse effect
on the business, properties, prospects or financial condition of the Company.
The Company is not in default with respect to any material debt or liability.
2.12 Disclosure. No representation or warranty of the Company contained in
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this Agreement or the exhibits attached to this Agreement (when read together
and taken as a whole), contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein or therein in light of the circumstances under which they were made not
misleading.
2.14 Rights of Common Stock. The Common Stock shall have the rights,
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preferences, privileges and restrictions provided in the Company's Amended and
Restated Certificate of Incorporation.
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SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company as follows:
3.1 Investment. Purchaser is acquiring the Common Stock for investment for
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its own account, not as a nominee or agent and not with a view to or for resale
in connection with any distribution thereof. Purchaser understands that the
Common Stock purchased by such Purchaser from the Company pursuant to this
Agreement has not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of such Purchaser's
investment intent and the accuracy of such Purchaser's representations as
expressed herein.
3.2 Accredited Investor. Each Purchaser is an "accredited investor" as
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defined by Rule 501(a) under the Securities Act of 1933, as amended (the
"Securities Act"). The SEC documents have been made available to each Purchaser,
and each Purchaser has received all the information it has requested regarding
the Company. Each Purchaser has such business and financial experience as is
required to give it the capacity to protect its own interests in connection with
the purchase of the Common Stock. Each purchaser has completed the information
requested by the Investor Suitability Questionnaire attached as Exhibit D to
this Agreement (the "Questionnaire").
3.3 Authority. This Agreement, the Registration Rights Agreement and the
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Escrow Agreement have been duly executed and delivered by each Purchaser and
constitute legal, valid and binding obligations of the Purchasers, enforceable
in accordance with their respective terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies and to limitations of public policy as they may apply to
Section 1.6 of the Registration Rights Agreement. The execution and delivery of
this Agreement, the Registration Rights Agreement and the Escrow Agreement do
not, and the consummation of the transactions contemplated hereby and thereby
will not, conflict with or result in any violation of any obligation under any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Purchasers.
3.4 Government Consents, Etc. No consent, approval or authorization of or
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designation, declaration or filing with any governmental authority on the part
of the Purchasers is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the Common Stock,
or the consummation of any other transaction contemplated hereby.
3.5 Investigation. Each Purchaser has had a reasonable opportunity to
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discuss the Company's business, management and financial affairs with the
Company's management.
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SECTION 4
CONDITIONS TO OBLIGATIONS OF THE PURCHASERS
The obligations of each Purchaser to the Company under this Agreement are
subject to the fulfillment, on or before the Escrow Opening Date, of each of the
following conditions, unless otherwise waived:
4.1 Representations and Warranties Correct. The representations and
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warranties made by the Company in Section 2 shall be true and correct in all
material respects on the Escrow Opening Date with the same effect as though such
representations and warranties had been made on and as of the Escrow Opening
Date.
4.2 Covenants. All covenants, agreements and conditions contained in this
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Agreement to be performed by the Company on or prior to the Escrow Opening Date
shall have been performed or complied with in all material respects.
4.3 No Order Pending. There shall not then be in effect any order
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enjoining or restraining the transactions contemplated by this Agreement.
4.4 No Law Prohibiting or Restricting Sale. There shall not be in effect
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any law, rule or regulation prohibiting or restricting such sale, or requiring
any consent or approval of any person which shall not have been obtained to
issue the Common Stock (except as otherwise referenced in this Agreement).
4.5 Additional Agreements. On or before the Escrow Opening Date, the
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Company and the Escrow Agent shall have executed and delivered a counterpart of
the Escrow Agreement attached as Exhibit C and the Company shall have executed
and delivered a counterpart of the Registration Rights Agreement attached as
Exhibit E.
4.6 Investor Suitability Questionnaire. On or before the Escrow Opening,
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each Purchaser shall have executed and delivered the Investor Suitability
Questionnaire attached as Exhibit E.
4.7 Current Market Price. The Current Market Price for one share of
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Company Common Stock, determined as of the Escrow Opening Date, shall not exceed
of $1.50.
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SECTION 5
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement are subject to the
fulfillment on or prior to the Escrow Opening Date of each of the following
conditions, unless otherwise waived:
5.1 Representations and Warranties Correct. The representations and
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warranties made by the Purchaser(s) in Section 3 hereof shall be true and
correct in all material respects on and as of the Escrow Opening Date with the
same effect as though such representations and warranties had been made on and
as of the Escrow Opening Date.
5.2 Performance. All covenants, agreements and conditions contained in
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this Agreement to be performed by the Purchasers on or prior to the Escrow
Opening Date shall have been performed or complied with in all material
respects.
5.3 No Order Pending. There shall not then be in effect any order
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enjoining or restraining the transactions contemplated by this Agreement.
5.4 No Law Prohibiting or Restricting Such Sale. There shall not be in
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effect any law, rule or regulation prohibiting or restricting such sale, or
requiring any consent or approval of any person which shall not have been
obtained to issue the Common Stock (except as otherwise provided in this
Agreement).
5.5 Escrowed Funds. The Escrowed Funds shall have been placed in escrow in
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the account designated by the Escrow Agent, and the instrument(s) representing
any convertible loan(s) to be converted into Common Stock as part of the
consideration to be paid by a Purchaser for the Common Stock subscribed for
hereunder shall been delivered to the Escrow Agent at the time and in the manner
proscribed in Section 1.2 hereof.
5.6 Additional Agreements. On or before the Escrow Opening Date, each
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Investor and the Escrow Agent shall have executed and delivered a counterpart of
the Escrow Agreement attached as Exhibit C and each Investor shall have executed
and delivered a counterpart of the Registration Rights Agreement attached as
Exhibit E.
SECTION 6
COVENANTS OF THE COMPANY
6.1 Registration of Common Stock. Subject to the terms and conditions set
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forth herein and in the Registration Rights Agreement, the Company will use
reasonable best efforts to file with the Securities Exchange Commission, within
180 days following the Escrow Release Date, a registration statement sufficient
to register the shares of Company Common Stock purchased by the Purchasers
hereunder, as well as the shares of Company Common Stock issuable upon exercise
of the Warrants.
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6.2 Board of Directors. Effective as of the Escrow Release Date, and so
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long as InveStar Capital, Inc. ("InveStar") and its affiliates hold at least
500,000 shares of Company Common Stock, SoloPoint will nominate InveStar's
designee for one seat on the Company's Board of Directors. Such designee, once
elected to the Board, shall be appointed as a member of the Company's
Compensation Committee. In addition, InveStar and its affiliates shall be
entitled to designate an observer of the Board of Directors, which person shall
have the right to be present at all meetings of the Board of Directors and to
inspect materials presented to the Board of Directors; provided that such person
shall agree in writing (i) to be bound by the same fiduciary duties as those
imposed upon the Company's directors in respect to the receipt of confidential
information and to use reasonable care to protect the Company's confidential
information, and (ii) not to disclose the Company's confidential information to
any person or entity. The Company reserves the right to withhold any
information and to exclude InveStar's non-director representative from any
meeting or portion thereof if the Board of Directors reasonably believes that
access to such information or attendance at such meeting would: (i) involve a
conflict of interest regarding a material issue for the Company, (ii) be
necessary in order to meet or protect any fiduciary obligations of the Board of
Directors or (iii) adversely effect attorney-client privilege between the
Company and its counsel.
6.3 Issuance of Preferred Stock. For so long as InveStar and its
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affiliates own at least 100,000 shares of Common Stock, the Company will not to
issue any shares of Preferred Stock without the prior written consent of
InveStar or one of its affiliates. In addition, the Company hereby agrees that
InveStar and its affiliates shall be entitled to purchase its pro rata portion
(based on its percentage ownership of the Company's issued and outstanding
securities) of any issuance of Company Preferred Stock.
6.4 Issuance of Warrants. As of the Escrow Release Date, the Company will
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issue the Warrants to the Purchasers subject to the terms and conditions set
forth herein and in the form of Warrant annexed hereto as Exhibit B.
SECTION 7
MISCELLANEOUS
7.1 Governing Law. This Agreement and all acts and transactions pursuant
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to this Agreement and the rights and obligations of the parties to this
Agreement shall be governed, construed and interpreted in accordance with the
laws of the State of California, without giving effect to principles of
conflicts of law.
7.2 Survival. Unless otherwise set forth in this Agreement, the
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warranties, representations and covenants of the Company and the Purchasers
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Escrow Opening.
7.3 Successors and Assigns. This Agreement shall be binding upon and shall
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inure to the benefit of the parties to this Agreement and their respective
successors and assigns.
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7.4 Entire Agreement; Amendment. This Agreement, the Registration Rights
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Agreement, the Escrow Agreement and the other documents delivered pursuant to
this Agreement constitute the full and entire understanding and agreement
between the parties with regard to the subject matter hereof and thereof and
supersede all prior agreements and understandings among the parties relating to
the subject matter hereof. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by the party against which enforcement of any such amendment, waiver,
discharge or termination is sought.
7.5 Notices and Dates. Unless otherwise provided in this Agreement, any
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notice required or permitted by this Agreement shall be in writing and shall be
deemed sufficient upon delivery, when delivered personally or by overnight
courier and addressed to the party to be notified at such party's address as set
forth on the signature page to this Agreement or as subsequently modified by
written notice. If any date provided for in this Agreement falls on a Saturday,
Sunday or legal holiday, such date shall be deemed extended to the next business
day.
7.6 Brokers.
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(a) Except as disclosed to the Purchasers, the Company has not engaged,
consented to or authorized any broker, finder or intermediary to act on its
behalf, directly or indirectly, as a broker, finder or intermediary in
connection with the transactions contemplated by this Agreement. The Company
agrees to indemnify and hold harmless the Purchasers from and against all fees,
commissions or other payments owing to any party acting on behalf of the Company
hereunder.
(b) No Purchaser has engaged, consented to or authorized any broker,
finder or intermediary to act on its behalf, directly or indirectly, as a
broker, finder or intermediary in connection with the transactions contemplated
by this Agreement. Each Purchaser hereby agrees to indemnify and hold harmless
the Company from and against all fees, commissions or other payments owing to
any party acting on behalf of such Purchaser hereunder.
7.7 Severability. If any term, provision, covenant or restriction of this
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Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
7.8 Costs and Expenses. Irrespective of whether the Escrow Opening is
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effected, the Company shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery and performance of this
Agreement.
7.9 No Third Party Rights. Nothing in this Agreement shall create or be
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deemed to create any rights in any person or entity not a party to this
Agreement.
7.10 Captions and Headings. The captions and headings used herein are for
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convenience and ease of reference only and are not intended to be a part of or
to affect the meaning or interpretation of this Agreement.
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7.11 Counterparts. This Agreement may be executed in counterparts, and each
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such counterpart shall be deemed an original for all purposes.
IN WITNESS WHEREOF, the parties to this Agreement have executed or caused
their respective authorized officers to execute this Agreement as of the first
date written above.
"COMPANY":
SoloPoint, Inc. Address
000 X Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
By: ____________________________ Facsimile: (000) 000-0000
Xxxxxx X. Xxxxx
President and Chief Executive Officer
PURCHASER(S):
By: ____________________________ Address: _______________________
(Signature) _______________________
____________________________
(Print Name)
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EXHIBIT A
TERMS OF PURCHASE
Name Number of Shares Purchase Price
----- ----------------- --------------
InveStar Burgeon Venture Capital, Inc. 512,316 $1.0844
InveStar Dayspring Venture Capital,
Inc. 768,474 $1.0844
InveStar Excelsus Venture Capital
(Int'l), Inc. LDC 768,474 $1.0844
Forefront Venture Partners, L.P. 256,158 $1.0844
Hui-Xxxxx Xxx 276,650 $1.0844
The Bass Trust 92,217 $1.0844
Carsten 1978 Trust, as Amended,
UTD 7-12-78 46,108 $1.0844
Murali & Mythill Narayanan 13,832 $1.0844
Xxx Xxxxxx 13,832 $1.0844
Xxxxxx X. Xxxxx, Xx. 18,443 $1.0844
Storm Ventures Fund I, LLC 110,660 $1.0844
Tae Hea & Xxxxxxxxx Xxxx 27,665 $1.0844
EXHIBITS
EXHIBIT B
WARRANT
EXHIBITS
Exhibit B
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Warrant No. W-.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION OF SUCH
SECURITIES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT
RELATING THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, (iii)
RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION,
OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF ARTICLE III OF THIS
WARRANT.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
WARRANT
TO PURCHASE SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated August 10, 1999
This certifies that for value received________________________________ or
registered assigns, is entitled, subject to the terms set forth herein, to
purchase from SoloPoint, Inc., a California corporation (the "Company"), up to
-------
_______ fully paid and non-assessable shares of the Company's Common Stock, at
the price of $3.00 per share. The initial purchase price of $3.00 per share,
and the number of shares purchasable hereunder, are subject to adjustment in
certain events, all as more fully set forth under Article IV herein.
ARTICLE I
DEFINITIONS
-----------
"Affiliate" means any natural person or entity that directly, or through
---------
one or more intermendiaries, controls or is controlled by or is under common
control with InveStar Capital, Inc. ("InveStar"), any entity in which InveStar
directly or indirectly through one or more intermediaries, is a general partner,
principal, managing member, beneficiary or otherwise a direct or indirect owner
of a controlling interest or with which InveStar may merge or consolidate.
"Articles of Incorporation" means the Articles of Incorporation of the
-------------------------
Company.
"Closing Date" means August __, 1999.
------------
"Commission" means the Securities and Exchange Commission, or any other
----------
federal agency then administering the Exchange Act or the Securities Act, as
defined herein.
"Common Stock" means the Company's Common Stock, any stock into which such
------------
stock shall have been changed or any stock resulting from any reclassification
of such stock, and any other capital stock of the Company of any class or series
now or hereafter authorized having the right to share in distributions either of
earnings or assets of the Company without limit as to amount or percentage.
"Company" means SoloPoint, Inc., a California corporation, and any
-------
successor corporation.
"Exercise Period" means the period commencing on the Closing Date and
----------------
terminating February __, 2001, unless sooner terminated as provided in Section
2.4 hereof.
"Exercise Price" means the price per share of Common Stock set forth in the
--------------
Preamble to this Warrant, as such price may be adjusted pursuant to Article IV
hereof.
"Fair Market Value" means
-----------------
(i) If shares of Common Stock are being sold pursuant to a
public offering under an effective registration statement under the Securities
Act which has been declared effective by the Commission and Fair Market Value is
being determined as of the closing of the public offering, the "price to public"
specified for such shares in the final prospectus for such public offering;
(ii) If shares of Common Stock are then listed or admitted
to trading on any national securities exchange or traded on any national market
system and Fair Market Value is not being determined as of the date described in
clause (i) of this definition, the average of the daily closing prices for the
ten (10) trading days before such date, excluding any trades which are not bona
fide, arm's length transactions. The closing price for each day shall be the
last sale price on such date or, if no such sale takes place on such date, the
average of the closing bid and asked prices on such date, in each case as
officially reported on the principal national securities exchange or national
market system on which such shares are then listed, admitted to trading or
traded;
(iii) If no shares of Common Stock are then listed or
admitted to trading on any national securities exchange or traded on any
national market system or being offered to the public pursuant to a registration
described in clause (i) of this definition, the average of the reported closing
bid and asked prices thereof on such date in the over-the-counter market as
shown by the National Association of Securities Dealers automated quotation
system or, if such shares are not then quoted in such system, as published by
the National Quotation Bureau, Incorporated or any similar successor
organization, and in either case as reported by any member firm of the New York
Stock Exchange selected by the Holder;
(iv) If no shares of Common Stock are then listed or
admitted to trading on any national exchange or traded on any national market
system, if no closing bid and asked prices thereof are then so quoted or
published in the over-the-counter market and if no such shares are being offered
to the public pursuant to a registration described in clause (i) of this
definition, the fair value of a share of Common Stock shall be as determined in
good faith by the Board of Directors of the Company.
"Holder" means the person in whose name this Warrant is registered on the
------
books of the
Company maintained for such purpose.
"Person" means and includes natural persons, corporations, limited
------
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, limited liability companies, trusts, banks, trust
companies, land trusts, business trusts, government entities and authorities and
other organizations, whether or not legal entities.
"Principal Executive Office" means the Company's office at 130-B Xxxxxxx
--------------------------
Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, or such other office as designated in
writing to the Holder by the Company.
"Register," "Registered" and "Registration" refer to a registration
-------- ---------- ------------
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.
"Rule 144" means Rule 144 as promulgated by the Commission under the
--------
Securities Act, as such Rule may be amended from time to time, or any similar
successor rule that the Commission may promulgate.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Shareholder" means a holder of one or more Warrant Shares or shares of
-----------
Common Stock acquired upon conversion of Warrant Shares.
"Warrant" means the warrant dated as of Closing Date issued to Holder and
-------
all warrants issued upon the partial exercise, transfer or division of or in
substitution for any Warrant.
"Warrant Shares" means the shares of Common Stock issuable upon the
--------------
exercise of this Warrant provided that if under the terms hereof there shall be
a change such that the securities purchasable hereunder shall be issued by an
entity other than the Company or there shall be a change in the type or class of
securities purchasable hereunder, then the term shall mean the securities
issuable upon the exercise of the rights granted hereunder.
ARTICLE II
EXERCISE
--------
II.1 Exercise Right; Manner of Exercise. The purchase rights represented
----------------------------------
by this Warrant may be exercised by the Holder, in whole or in part, at any time
and from time to time during the Exercise Period upon (i) surrender of this
Warrant, together with an executed Notice of Exercise, substantially in the form
of Exhibit "A" attached hereto, at the Principal Executive Office, and (ii)
-----------
payment to the Company of the aggregate Exercise Price for the number of Warrant
Shares specified in the Notice of Exercise (such aggregate Exercise Price the
"Total Exercise Price"). The Total Exercise Price shall be paid by check;
---------------------
provided, however, that if the Warrant Shares are acquired in conjunction with a
-----------------
Registration of such Warrant Shares, then Holder may arrange for the aggregate
Exercise Price for such Warrant Shares to be paid to the Company from the
proceeds of the sale of
-3-
such Warrant Shares pursuant to such Registration. The Person or Person(s) in
whose name(s) any certificate(s) representing the Warrant Shares issuable upon
exercise of this Warrant shall be deemed to become the holder(s) of, and shall
be treated for all purposes as the record holder(s) of, such Warrant Shares, and
such Warrant Shares shall be deemed to have been issued, immediately prior to
the close of business on the date on which this Warrant and Notice of Exercise
are presented and payment made for such Warrant Shares, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates
representing such Warrant Shares shall not then be actually delivered to such
Person or Person(s). Certificates for the Warrant Shares so purchased shall be
delivered to the Holder within a reasonable time, not exceeding fifteen (15)
days after this Warrant is exercised. If this Warrant is exercised in part only,
the Company shall, upon surrender of this Warrant for cancellation, deliver a
new Warrant evidencing the rights of the Holder to purchase the balance of the
Warrant Shares which Holder is entitled to purchase hereunder. The issuance of
Warrant Shares upon exercise of this Warrant shall be made without charge to the
Holder for any issuance tax with respect thereto or any other cost incurred by
the Company in connection with the exercise of this Warrant and the related
issuance of Warrant Shares.
II.2 Conversion of Warrant.
---------------------
(a) Right to Convert. In addition to, and without limiting, the
----------------
other rights of the Holder hereunder, the Holder shall have the right (the
"Conversion Right") to convert this Warrant or any part hereof into Warrant
------------------
Shares at any time and from time to time during the term hereof. Upon exercise
of the Conversion Right, the Company shall deliver to the Holder, without
payment by the Holder of any Exercise Price or any cash or other consideration,
that number of Warrant Shares computed using the following formula:
X = Y(A - B)
--------
A
Where: X = The number of Warrant Shares to be issued to the Holder
Y = The number of Warrant Shares purchasable pursuant to this
Warrant
A = The Fair Market Value of one Warrant Share as of the
Conversion Date
B = The Exercise Price
(b) Method of Exercise. The Conversion Right may be exercised by
------------------
an eligible Holder by the surrender of this Warrant at the Principal Executive
Office, together with a written statement (the "Conversion Statement"),
----------------------
specifying that the Holder intends to exercise the Conversion Right and
indicating the number of Warrant Shares to be acquired upon exercise of the
Conversion Right. Such conversion shall be effective upon the Company's receipt
of this Warrant, together with the Conversion Statement, or on such later date
as is specified in the Conversion Statement (the "Conversion Date") and, at the
---------------
Holder's election, may be made contingent upon the closing of the consummation
of the sale of Common Stock pursuant to a Registration. Certificates for the
Warrant Shares so acquired shall be delivered to the Holder within a reasonable
time, not exceeding fifteen (15) days after the Conversion Date. If applicable,
the Company shall, upon surrender of this Warrant for cancellation, deliver a
new Warrant evidencing the rights of the Holder to purchase the balance of the
Warrant Shares which Holder is entitled to purchase hereunder.
II.3 Fractional Shares. The Company shall not issue fractional shares of
-----------------
Common Stock
-4-
or scrip representing fractional shares of Common Stock upon any exercise or
conversion of this Warrant. As to any fractional share of Common Stock which the
Holder would otherwise be entitled to purchase from the Company upon such
exercise or conversion, the Company shall purchase from the Holder such
fractional share at a price equal to an amount calculated by multiplying such
fractional share (calculated to the nearest 1/100th of a share) by the Fair
Market Value of a share of Common Stock on the date of the Notice of Exercise or
the Conversion Date, as applicable, as determined in good faith by the Company's
Board of Directors. Payment of such amount shall be made in cash or by check
payable to the order of the Holder at the time of delivery of any certificate or
certificates arising upon such exercise or conversion.
ARTICLE III
REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT
------------------------------------------------
III.1 Maintenance of Registration Book. The Company shall keep at the
--------------------------------
Principal Executive Office a register in which, subject to such reasonable
regulations as it may prescribe, it shall provide for the registration, transfer
and exchange of this Warrant. The Company and any Company agent may treat the
Person in whose name this Warrant is registered as the owner of this Warrant for
all purposes whatsoever and neither the Company nor any Company agent shall be
affected by any notice to the contrary.
III.2 Restrictions on Transfers.
-------------------------
(a) Compliance with Securities Act: Representations of Holder.
---------------------------------------------------------
The Holder, by acceptance hereof, represents and warrants to the Company that:
(i) This Warrant and the Common Stock to be issued upon
exercise hereof Stock are being acquired for investment, solely for the Holder's
own account, not as a nominee or agent for any other Person, and not with a view
to the resale or distribution of any part thereof;
(ii) The Holder believes it has received all the
information it considers necessary or appropriate for deciding whether to
acquire the Warrant. The Holder further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Warrant;
(iii) The Holder understands that the Warrant has not
been, and will not be, registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of its representations as expressed herein; and
(iv) The Holder understands that the Warrant and the
Warrant Shares are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, as amended (the "Act"), only in certain limited
circumstances. In this connection, the Holder represents that it is familiar
with SEC Rule 144, as presently in effect, and understands the
-5-
resale limitations imposed thereby and by the Act;
The Holder agrees that the Holder will not offer, sell or otherwise
dispose of this Warrant or any such shares of Common Stock except under
circumstances which will not result in a violation of the Securities Act. Upon
exercise of this Warrant, the Holder shall confirm in writing, by executing the
form attached as Exhibit "B" hereto, that the shares of Common Stock purchased
-----------
thereby are being acquired for investment solely for the Holder's own account
and not as a nominee for any other Person, and not with a view toward
distribution or resale.
(b) Certificate Legends. This Warrant and all shares of Common
-------------------
Stock issued upon exercise of this Warrant (unless Registered under the
Securities Act) shall be stamped or imprinted with a legend in substantially the
following form (in addition to any legends required by applicable state
securities laws):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION
OF SUCH SECURITIES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE
REGISTRATION STATEMENT RELATING THERETO, (ii) AN OPINION OF COUNSEL
FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED, (iii) RECEIPT OF A NO-ACTION LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION, OR (iv) OTHERWISE COMPLYING
WITH THE PROVISIONS OF ARTICLE III OF THE WARRANT UNDER WHICH THIS
SECURITY WAS ISSUED.
(c) Disposition of Warrant or Shares. With respect to any offer,
--------------------------------
sale or other disposition of this Warrant or any shares of Common Stock issued
upon exercise of this Warrant, the Holder or the Shareholder, as the case may
be, agrees to give written notice to the Company prior thereto, describing
briefly the manner thereof, together with a written opinion of the Holder's or
Shareholder's counsel, if reasonably requested by the Company, to the effect
that such offer, sale or other disposition may be effected without Registration
under the Securities Act or qualification under any applicable state securities
laws of this Warrant or such shares, as the case may be, and indicating whether
or not under the Securities Act certificates for this Warrant or such shares, as
the case may be, to be sold or otherwise disposed of require any restrictive
legend as to applicable restrictions on transferability in order to insure
compliance with the Securities Act. Promptly upon receiving such written notice
and reasonably satisfactory opinion, if so requested, the Company, as promptly
as practicable, shall notify the Holder or the Shareholder, as the case may be,
that it may sell or otherwise dispose of this Warrant or such shares, as the
case may be, all in accordance with the terms of the notice delivered to the
Company. Each certificate representing this Warrant or the shares thus
transferred (except a transfer pursuant to Rule 144) shall bear a legend as to
the applicable restrictions on transferability in order to insure compliance
with the Securities Act, unless in the aforesaid reasonably satisfactory opinion
of counsel for the Holder or the Shareholder, as the case may be, such legend is
not necessary in order to insure compliance with the Securities Act. The Company
may issue stop transfer instructions to its transfer agent in connection with
such restrictions.
(d) Warrant Transfer Procedure. Transfer of this Warrant to a
--------------------------
third party,
-6-
following compliance with the preceding subsections of this Section
3.2, shall be effected by execution of the Assignment Form attached hereto as
Exhibit "C", and surrender for registration of transfer of this Warrant at the
------- ---
Principal Executive Office, together with funds sufficient to pay any applicable
transfer tax. Upon receipt of the duly executed Assignment Form and the
necessary transfer tax funds, if any, the Company, at its expense, shall execute
and deliver, in the name of the designated transferee or transferees, one or
more new Warrants representing the right to purchase a like aggregate number of
shares of Common Stock. Any transferee of this Warrant that is not an Affiliate
shall not be eligible for the cashless exercise of this Warrant provided for in
Section 2 hereof.
(e) Termination of Restrictions. The restrictions imposed under
---------------------------
this Section 3.2 upon the transferability of the Warrant and the shares of
Common Stock acquired upon the exercise of this Warrant shall cease when (i) a
registration statement covering such securities becomes effective under the
Securities Act, (ii) the Company is presented with an opinion of counsel
reasonably satisfactory to the Company that such restrictions are no longer
required in order to insure compliance with the Securities Act or with a
Commission "no-action" letter stating that future transfers of such securities
by the transferor or the contemplated transferee would be exempt from
registration under the Securities Act, or (iii) such securities may be
transferred in accordance with Rule 144(k). When such restrictions terminate,
the Company shall, or shall instruct its transfer agent to, promptly, and
without expense to the Holder or the Shareholder, as the case may be, issue new
securities in the name of the Holder and/or the Shareholder, as the case may be,
not bearing the legends required under subsection (b) of this Section 3.2. In
addition, new securities shall be issued without such legends if such legends
may be properly removed under the terms of Rule 144(k).
III.3 Replacement. Upon receipt of evidence reasonably satisfactory to
-----------
the Company of the loss, theft, destruction or mutilation of this Warrant and
(i) in the case of any such loss theft or destruction, upon delivery of
indemnity reasonably satisfactory to the Company in form and amount, or (ii) in
the case of any such mutilation, upon surrender of such Warrant for cancellation
at the Principal Executive Office, the Company, at its expense, shall execute
and deliver, in lieu thereof, a new Warrant.
ARTICLE IV
ANTIDILUTION PROVISIONS
-----------------------
IV.1 Reorganization, Reclassification or Recapitalization of the Company.
-------------------------------------------------------------------
In case of (1) a capital reorganization, reclassification or recapitalization of
the Company's capital stock (other than in the cases referred to in Section 4.3
hereof), (2) the Company's consolidation or merger with or into another
corporation in which the Company is not the surviving entity, or a reverse
triangular merger in which the Company is the surviving entity but the shares of
the Company's capital stock outstanding immediately prior to the merger are
converted, by virtue of the merger, into other property, whether in the form of
securities, cash or otherwise, or (3) the sale or transfer of the Company's
property as an entirety or substantially as an entirety, then, as part of such
reorganization, reorganization, recapitalization, merger, consolidation, sale or
transfer, lawful provision shall be made so that there shall thereafter be
deliverable upon the exercise of this Warrant or any portion thereof (in lieu of
or in addition to the number of shares of Common Stock theretofore deliverable,
as appropriate), and without payment of any additional consideration, the number
of shares of stock or other securities or property to which the holder of the
number of shares of Common Stock which
-7-
would otherwise have been deliverable upon the exercise of this Warrant or any
portion thereof at the time of such reorganization, reclassification,
recapitalization, consolidation, merger, sale or transfer would have been
entitled to receive in such reorganization, reclassification, recapitalization,
consolidation, merger, sale or transfer. This Section 4.1 shall apply to
successive reorganizations, reclassifications, recapitalizations,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation that are at the time receivable upon the exercise of this
Warrant. If the per-share consideration payable to the Holder for shares of
Common Stock in connection with any transaction described in this Section 4.1 is
in a form other than cash or marketable securities, then the value of such
consideration shall be determined in good faith by the Company's Board of
Directors.
IV.2 Splits and Combinations. If the Company at any time subdivides any
-----------------------
of its outstanding shares of Common Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced, and, conversely if the outstanding shares of Common
Stock are combined into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased. Upon
any adjustment of the Exercise Price under this Section 4.2, the number of
shares of Common Stock issuable upon exercise of this Warrant shall equal the
number of shares determined by dividing (i) the aggregate Exercise Price payable
for the purchase of all shares issuable upon exercise of this Warrant
immediately prior to such adjustment by (ii) the Exercise Price per share in
effect immediately after such adjustment.
IV.3 Reclassification. If the Company changes any of the securities as to
----------------
which purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Exercise
Price therefor shall be appropriately adjusted.
IV.4 Dividends and Distribution. If the Company declares a dividend or
--------------------------
other distribution on the Common Stock or if a dividend or other distribution on
the Common Stock occurs pursuant to the Articles of Incorporation (other than a
cash dividend or distribution), then, as part of such dividend or distribution,
lawful provision shall be made so that there shall thereafter be deliverable
upon the exercise of this Warrant or any portion thereof, in addition to the
number of shares of Common Stock receivable thereupon and without payment of any
additional consideration, the amount of the dividend or other distribution to
which the holder of the number of shares of Common Stock obtained upon exercise
hereof would have been entitled to receive had the exercise occurred as of the
record date for such dividend or distribution.
IV.5 Liquidation; Dissolution. If the Company shall dissolve, liquidate
------------------------
or wind up its affairs, the Holder shall have the right, but not the obligation,
to exercise this Warrant effective as of the date of such dissolution,
liquidation or winding up. If any such dissolution, liquidation or winding up
results in any distribution to the Holder in excess of the aggregate Exercise
Price for the shares of Common Stock for which this Warrant is exercised, then
the Holder may, at its option, exercise this Warrant without making payment of
such aggregate Exercise Price and, in such case, the Company shall, upon
distribution to the Holder, consider such aggregate Exercise Price to have been
paid in full, and in making such settlement to the Holder, shall deduct an
amount equal to such
-8-
aggregate Exercise Price from the amount payable to the Holder.
IV.6 Other Dilutive Events. If any event occurs as to which the other
---------------------
provisions of this Article IV are not strictly applicable but the failure to
make any adjustment would not fairly protect the purchase rights represented by
this Warrant in accordance with the essential intent and principles hereof,
then, in each such case, the Company shall appoint a firm of independent public
accountants of recognized national standing (which may be the Company's regular
auditors) which shall give their opinion upon the adjustment, if any, on a basis
consistent with the essential intent and principles established in this Article
IV, necessary to preserve, without dilution, the purchase rights represented by
this Warrant. Upon receipt of such opinion, the Company shall promptly mail a
copy thereof to the Holder and shall make the adjustments described therein.
IV.7 Certificates and Notices.
------------------------
(a) Adjustment Certificate. Upon any adjustment of the Exercise Price
----------------------
and/or the number of shares of Common Stock purchasable upon exercise of this
Warrant, a certificate, signed by (i) the Company's President and Chief
Financial Officer, or (ii) any independent firm of certified public accountants
of recognized national standing the Company selects at its own expense, setting
forth in reasonable detail the events requiring the adjustment and the method by
which such adjustment was calculated, shall be mailed to the Holder and shall
specify the adjusted Exercise Price and the number of shares of Common Stock
purchasable upon exercise of the Warrant after giving effect to the adjustment.
(b) Extraordinary Corporate Events. If the Company, after the date
------------------------------
hereof, proposes to effect (i) any transaction described in Sections 4.1 or 4.3
hereof, (ii) a liquidation, dissolution or winding up of the Company described
in Section 4.5 hereof, or (iii) any payment of a dividend or distribution with
respect to Common Stock, then, in each such case, the Company shall mail to the
Holder a notice describing such proposed action and specifying the date on which
the Company's books shall close, or a record shall be taken, for determining the
holders of Common Stock, entitled to participate in such action, or the date on
which such reorganization, reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up shall take place or commence,
as the case may be, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to receive securities and/or other
property deliverable upon such action, if any such date is to be fixed. Such
notice shall be mailed to the Holder at least fifteen (15) days prior to the
record date for such action in the case of any action described in clause (i) or
clause (iii) above, and in the case of any action described in clause (ii)
above, at least fifteen (15) days prior to the date on which the action
described is to take place and at least fifteen (15) days prior to the record
date for determining holders of Common Stock entitled to receive securities
and/or other property in connection with such action.
IV.8 No Impairment. The Company shall not, by amendment of the Articles
-------------
of Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company, but shall
at all times in good faith assist in the carrying out of all the provisions of
this Article IV and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against impairment.
-9-
IV.9 Application. Except as otherwise provide herein, all sections of
-----------
this Article IV are intended to operate independently of one another. If an
event occurs that requires the application of more than one section, all
applicable sections shall be given independent effect.
ARTICLE V
COVENANTS OF COMPANY
--------------------
V.1 Covenants. The Company covenants that:
---------
(a) Share Limits. The Company will not take any action which would
------------
result in any adjustment of the Exercise Price if the total number of shares of
Common Stock issuable after such action upon exercise of this Warrant, together
with all shares of Common Stock then outstanding and all shares of Common Stock
issuable upon exercise of options or warrants to acquire such shares and upon
conversion of instruments which are convertible into such shares, would exceed
the total number of shares of Common Stock then authorized under the Articles of
Incorporation;
(b) Authorized Shares. The Company will at all times have authorized,
-----------------
and reserved for the purpose of issue or transfer upon exercise of the rights
evidenced by this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant; and
(c) Fully Paid Shares. The Company will take all actions necessary or
-----------------
appropriate to validly and legally issue fully paid and non-assessable shares of
Common Stock upon exercise of this Warrant. All such shares will be free from
all taxes, liens and charges with respect to the issuance thereof, other than
any stock transfer taxes in respect to any transfer occurring contemporaneously
with such issuance.
ARTICLE VI
MISCELLANEOUS
-------------
VI.1 Holder Not a Shareholder. Prior to the exercise of this Warrant as
------------------------
hereinbefore provided, the Holder shall not be entitled to any of the rights of
a shareholder of the Company including, without limitation, the right as a
shareholder (i) to vote on or consent to any proposed action of the Company or
(ii) except as provided herein, to receive (a) dividends or any other
distributions made to shareholders, (b) notice of or attend any meetings of
shareholders of the Company, or (c) notice of any other proceedings of the
Company.
VI.2 Nonwaiver. No course of dealing or any delay or failure to exercise
---------
any right hereunder shall operate as a waiver of such right. No single or
partial waiver of any provision of this Warrant or of any breach or default
hereunder or of any right or remedy shall operate as a waiver of any other
provision, breach, default right or remedy or of the same provision, breach,
default, right or remedy on a future occasion.
-10-
VI.3 Notices. Any notice, demand or delivery to be made pursuant to this
-------
Warrant will be sufficiently given or made if sent by first class mail, postage
prepaid, addressed to (a) the Holder and the Shareholders at their last known
addresses appearing on the books of the Company maintained for such purpose or
(b) the Company at its Principal Executive Office. The Holder, the Shareholders
and the Company may each designate a different address by notice to the other
pursuant to this Section 6.3. A notice shall be deemed effective upon the
earlier of (i) receipt or (ii) the third day after mailing in accordance with
the terms of this Section 6.3.
VI.4 Successors and Assigns. This Warrant shall be binding upon, the
----------------------
Company and any Person succeeding the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets, and all of the
obligations of the Company with respect to the shares of Common Stock issuable
upon exercise of this Warrant shall survive the exercise, expiration or
termination of this Warrant and all of the covenants and agreements of the
Company shall inure to the benefit of the Holder, each Shareholder and their
respective successors and assigns.
VI.5 Modification; Severability.
--------------------------
(a) If, in any action before any court or agency legally empowered
to enforce any term, any term is found to be unenforceable, then such term shall
be deemed modified to the extent necessary to make it enforceable by such court
or agency.
(b) If any term is not curable as set forth in subsection (a)
above, the unenforceability of such term shall not affect the other provisions
of this Warrant but this Warrant shall be construed as if such unenforceable
term had never been contained herein.
VI.6 Integration. This Warrant replaces all prior and contemporaneous
-----------
agreements and supersedes all prior and contemporaneous negotiations between the
parties with respect to the transactions contemplated herein and constitutes the
entire agreement of the parties with respect to the transactions contemplated
herein.
VI.7 Amendment. This Warrant may not be modified or amended except by
---------
written agreement of the Company, the Holder and the Shareholder(s), if any.
VI.8 Headings. The headings of the Articles and Sections of this Warrant
--------
are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
VI.9 Governing Law. This Warrant shall be governed by, and construed in
-------------
accordance with, the laws of the State of California applicable to contracts
entered into and to be performed wholly within California by California
residents.
-11-
IN WITNESS WHEREOF, each of the Company and the Holder have caused this
Warrant to be executed by its duly authorized representative as of the date
first written above.
THE COMPANY:
SOLOPOINT, INC.
By:
------------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
THE HOLDER:
----------------------------------------
(Signature)
----------------------------------------
(Print Name)
Address:
-------------------------------
-------------------------------
-12-
SCHEDULE OF EXHIBITS
--------------------
EXHIBIT "A" - Notice of Exercise (Section 2.1)
EXHIBIT "B" - Investment Representation Certificate (Section 3.2(a))
EXHIBIT "C" - Assignment Form (Section 3.2(d))
EXHIBIT "A"
-----------
NOTICE OF EXERCISE FORM
-----------------------
(To be executed only upon partial or full exercise of the within Warrant)
The undersigned registered Holder of the within Warrant hereby irrevocably
exercises the within Warrant for and purchases ______ shares of Common Stock of
SoloPoint, Inc. and herewith makes payment therefor in the amount of
$__________, all at the price and on the terms and conditions specified in the
within Warrant and requests that a certificate (or certificates in denominations
of shares) for the shares of Common Stock of SoloPoint, Inc. hereby purchased be
issued in the name of and delivered to the undersigned. and, if such shares of
Common Stock shall not include all the shares of Common Stock issuable as
provided in the within Warrant, that a new Warrant of like tenor for the number
of shares of Common Stock of SoloPoint, Inc. not being purchased hereunder be
issued in the name of and delivered to the undersigned.
Dated: __________, _____
Signature Guaranteed
----------------------------------------
----------------------------------------
By:
-------------------------------------
(Signature of Registered Holder)
Title:
----------------------------------
NOTICE: The signature to this Notice of Exercise must correspond with the name
as written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatever.
The signature to this Notice of Exercise must be guaranteed by a
commercial bank or trust company in the United States or a member firm
of the New York Stock Exchange.
EXHIBIT "B"
-----------
INVESTMENT REPRESENTATION CERTIFICATE
-------------------------------------
Purchaser: ___________________________
Company: SoloPoint, Inc.
Security: Common Stock
Amount: ___________________________
Date: August ___, 1999
In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
follows:
(a) The Purchaser is aware of the Company's business affairs and
financial condition, and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities. The
Purchaser is purchasing the Securities for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Securities Act");
(b) The Purchaser understands that the Securities have not been
registered under the Securities Act in reliance upon a specific exemption
therefor, which exemption depends upon, among other things, the bona fide nature
of the Purchaser's investment intent as expressed herein. In this connection,
the Purchaser understands that, in the view of the Securities and Exchange
Commission ("SEC"), the statutory basis for such exemption may be unavailable if
the Purchaser's representation was predicated solely upon a present intention to
hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future;
(c) The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, the Purchaser
understands that the Company is under no obligation to register the Securities
other than as set forth in that certain Common Stock Subscription Agreement,
dated of even date herewith, by and between the Company and the Purchaser. In
addition, the Purchaser understands that the certificate evidencing the
Securities will be imprinted with the legend referred to in the Warrant under
which the Securities are being purchased;
(d) The Purchaser is aware of the provisions of Rule 144, promulgated
under the Securities Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: (i) the availability of certain public information about the Company;
(ii) the resale occurring not less than two (2) years after the party has
purchased and paid for the securities to be sold; (iii) the sale
being made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934) and the amount of securities being sold during
any three-month period not exceeding the specified limitations stated therein;
(e) The Purchaser further understands that at the time it wishes to sell
the Securities there may be no public market upon which to make such a sale, and
that, even if such a public market upon which to make such a sale then exists,
the Company may not be satisfying the current public information requirements of
Rule 144, and that, in such event, the Purchaser may be precluded from selling
the Securities under Rule 144 even if the two-year minimum holding period had
been satisfied; and
(f) The Purchaser further understands that in the event all of the
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
Date: ____________, _______
PURCHASER:
-------------------------
(Signature)
-------------------------
(Print Name)
- 2 -
EXHIBIT "C"
-----------
ASSIGNMENT FORM
---------------
(To be executed only upon the assignment of the within Warrant)
FOR VALUE RECEIVED, the undersigned registered Holder of the within Warrant
hereby sells, assigns and transfers unto ______________________________, whose
address is _________________________________________ all of the rights of the
undersigned under, with respect to shares of Common Stock of SoloPoint, Inc.
and, if such shares of Common Stock shall not include all the shares of Common
Stock issuable as provided in the within Warrant, that a new Warrant of like
tenor for the number of shares of Common Stock of SoloPoint, Inc. not being
transferred hereunder be issued in the name of and delivered to the undersigned,
and does hereby irrevocably constitute and appoint ____________________ attorney
to register such transfer on the books of SoloPoint, Inc. maintained for the
purpose, with full power of substitution in the premises.
Dated: __________, ________
Signature Guaranteed
---------------------------------------
---------------------------------------
By:
-----------------------------------
(Signature of Registered Holder)
Title:
---------------------------------
NOTICE: The signature to this Agreement must correspond with the name upon the
face of the within Warrant in every particular, without alteration or
enlargement or any change whatever.
The signature to this Notice of Assignment must be guaranteed by a
commercial bank or trust company in the United States or a member firm
of the New York Stock Exchange.
EXHIBIT C
ESCROW AGREEMENT
EXHIBITS
ESCROW AGREEMENT
Escrow Agreement dated as of August 10, 1999 by and among SoloPoint, Inc.
a California corporation ("SoloPoint"), each of the persons listed on Exhibit D
---------
annexed hereto (each an "Investor" and collectively, the "Investors") and Chase
Manhattan Bank and Trust Company, National Association (the "Escrow Agent").
WITNESSETH
WHEREAS, pursuant to a certain Common Stock Subscription Agreement (the
"Subscription Agreement"), dated of even date herewith, by and between SoloPoint
and the Investors (i) SoloPoint is required to deposit in escrow, to be held by
the Escrow Agent subject to the terms and conditions set forth herein, certain
stock certificates representing the shares of SoloPoint Common Stock being
issued and sold to the Investors, and (ii) the Investors are required to deposit
in escrow, to be held by the Escrow Agent subject to the terms and conditions
set forth herein, certain funds and debt instruments, in each case pending the
outcome of SoloPoint's Nasdaq Stock Market ("Nasdaq") delisting hearing (the
"Hearing") scheduled for August 12, 1999.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. Appointment of Escrow Agent. SoloPoint, on the one hand, and the
---------------------------
Investors, on the other hand, do hereby appoint and designate the Escrow Agent
as escrow agent for the purposes set forth herein, and the Escrow Agent does
hereby accept such appointment under the terms and conditions set forth herein.
2. Establishment of Escrow Fund. Simultaneously with the execution of
----------------------------
this Escrow Agreement, (a) the Investors are depositing with the Escrow Agent
(i) cash in the amount of $2,900,000.00 (less the amount of any nominal
transfer and transaction fees and the amount of accrued and unpaid interest on
the debt interests referred to in clause (b)), and (ii) debt instruments in the
aggregate principal amount of $250,000 together with instructions to the Escrow
Agent that such debt instruments be delivered to the party that is the recipient
of the Escrow Fund upon disposition thereof, and (b) SoloPoint is depositing
with the Escrow Agent stock certificates representing an aggregate 2,904,829
shares of its Common Stock, which certificates have been issued to the Investors
in the denominations set forth in Exhibit D. The Escrow Agent shall hold,
---------
subject to the terms and conditions hereof, such cash, debt instruments and
stock certificates and shall make such investments and reinvestments of the
escrowed cash as may be permitted pursuant to Section 2 hereof (which, together
with the income from such investments, are hereinafter referred to as the
"Escrow Fund").
3. Investment of Escrow Fund. During the term of this Escrow Agreement,
-------------------------
the Escrow Fund shall be invested and reinvested by the Escrow Agent, in the
qualified investment indicated below (check one):
[ ] One or more portfolios offered by Vista Fund Distributors, Inc., for
which affiliates of Chase Manhattan Bank and Trust Company, N.A.
provide investment advisory and other services for a fee as
described in the prospectus for such fund which has been provided to
SoloPoint and the Investors;
[ ] Time or Demand deposit;
[ ] Such other investments as the parties may mutually agree upon.
The Escrow Agent shall have the right to liquidate any investments held in
order to provide funds necessary to make required payments under this Escrow
Agreement. The Escrow Agent in its capacity as escrow agent hereunder shall not
have any liability for any loss sustained as a result of any investment prior to
its maturity of for the failure of the parties to give the Escrow Agent
instructions to invest or reinvest the Escrow Fund or any earnings thereon.
4. Disposition and Termination.
---------------------------
(a) If the Hearing shall not result in a decision by the Nasdaq to
immediatedelist SoloPoint, and SoloPoint shall provide the Escrow Agent with
written proof to that effect, then the Escrow Agent shall immediately deliver
(i) the Escrow Fund and the debt instruments to the Company, and (ii) the
escrowed stock certificates to the Investors at their addresses listed in
Exhibit D. Upon such delivery by the Escrow Agent, this Escrow Agreement shall
---------
terminate, subject to the provisions of Paragraph 5(f) hereunder, which
paragraph shall survive such termination.
(b) If, however, the Hearing shall result in a decision by the Nasdaq to
immediately delist SoloPoint, and the Investors or SoloPoint shall provide the
Escrow Agent with written proof to that effect, then the Escrow Agent shall
immediately deliver (i) the Escrow Fund to the Investors in the dollar amounts
set forth next to their respective names in Exhibit D, (ii) the debt instruments
---------
to InveStar Capital, Inc., and (iii) the escrowed stock certificates to the
Company. Upon such delivery by the Escrow Agent, this Escrow Agreement shall
terminate, subject to the provisions of Paragraph 5(f) hereunder, which
paragraph shall survive such termination.
(c) If no decision with respect to the continued listing of SoloPoint on
Nasdaq shall have been made by Septemebr 15, 1999, then the Escrow Agent shall
be required, without further notice and without the need for further
instructions from any party, to dispose of the Escrow Fund and other property
held by it in escrow in the manner provided in clause (b) of this Section 4.
-2-
5. Miscellaneous.
-------------
(a) The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein.
(b) The Escrow Agent may rely and shall be protected in acting or
refraining from acting upon any written notice, instruction or request furnished
to it hereunder and believed by it to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall be under no
duty to inquire into or investigate the validity, accuracy or content of any
such document. The Escrow Agent shall have no duty to solicit any payments that
may be due it hereunder.
(c) The Escrow Agent shall not be liable for any action taken or omitted
by it in good faith unless a court of competent jurisdiction determines that the
Escrow Agent's willful misconduct was the primary cause of any loss to SoloPoint
or any Investor. The Escrow Agent may consult with counsel of its own choice and
shall have full and complete authorization and protection for any action taken
or omitted by it hereunder in good faith and in accordance with the opinion of
such counsel.
(d) The Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving notice in writing of such resignation specifying
a date when such resignation shall take effect. The Escrow Agent shall have the
right to withhold an amount equal to the amount due and owing to the Escrow
Agent, plus any costs and expenses the Escrow Agent shall reasonably believe may
be incurred by the Escrow Agent in connection with the termination of the Escrow
Agreement.
(e) SoloPoint hereby agrees to (i) pay the Escrow Agent upon execution
of this Agreement its fee as set forth on Exhibit A hereto, for the services to
---------
be rendered hereunder, and (ii) pay or reimburse the Escrow Agent upon request
for all expenses, disbursement, and advances, including reasonable attorney's
fees, incurred or made by it in connection with the preparation, execution,
performance, delivery modification and termination of this agreement.
(f) SoloPoint, on the one hand, and the Investors, on the other hand,
hereby agree to jointly and severally indemnify the Escrow Agent for, and hold
it harmless against any loss, liability or expense arising out of or in
connection with this Agreement and carrying out its duties hereunder, including
the costs and expenses of defending itself against any claim of liability,
except in those cases where the Escrow Agent has been guilty of gross negligence
or willful misconduct. Anything in this agreement to the contrary
notwithstanding, in no event shall the Escrow Agent be liable for special,
indirect or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Escrow Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.
(g) Each party hereto, except the Escrow Agent, shall provide the Escrow
Agent with their Tax Identification Number (TIN) as assigned by the Internal
Revenue Service. All interest or other income earned under the Escrow Agreement
shall be allocated and paid as provided
-3-
herein and reported by the recipient to the Internal Revenue Service as having
been so allocated and paid.
(h) The duties and responsibilities of the Escrow Agent hereunder shall
be determined solely by the express provisions of this Escrow Agreement, and no
other or further duties or responsibilities shall be implied. The Escrow Agent
shall not have any liability under, nor duty to inquire into the terms and
provisions of any agreement or instructions, other than outlined on the
Agreement.
(i) All notices and communications hereunder shall be in writing and
shall be deemed to be duly given if sent by first class mail to the address as
follows:
If to the Escrow Agent, to:
Chase Manhattan Bank and Trust Company, National Association
000 Xxxxxxxxxx Xxxxxx, Xxxxx #0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxx, AVP
Phone: (000) 000-0000
Fax: (000) 000-0000
If to SoloPoint, to:
SoloPoint, Inc.
000X Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the Investors, to:
InveStar Capital, Inc.
12th Floor, 000 Xxxxxxx Xxxx, Xxxxxxx 0, Xxxx 0000, Xxxxxx, Xxxxxx ROC
-4-
With a copy to:
VentureStar, Inc.
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xx
Phone: (000) 000-0000
Fax: (000) 000-0000
Xxx-Xxxxx Xxx
0xx Xxxxx, 0, Xxxx 000, Xxxxx 00, Xxxxxxx 0
Xxxxxx Xxxx Xxxx
Xxxxxx, Xxxxxx X.X.X.
Phone: 000-0-0000-0000
With a copy to:
Xx. Xxx Xxx
0000 Xxxxxxx Xxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Phone: 000-000-0000
Fax: 000 000 0000
-5-
The Bass Trust
XX Xxx 0000
0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxx 00000
Attention: Xxxxxxx Xxxx
Carsten 1978 Trust, as Amended, UTD 7-12-78
Xxxx X. Xxxxxxx TTEE
X.X. Xxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Murali & Mythill Narayanan
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
Xxx Xxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxxx
Xxxxxx X. Xxxxx, Xx.
00000 Xxxxxxx Xxx
Xxx Xxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Xx.
Storm Ventures Fund I, LLC
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000-0000
Tae Hea & Xxxxxxxxx Xxxx
000 X. Xxxxx
Xxx Xxxxx, XX 00000-0000
or at such other address as any of the above may have furnished to the
other parties in writing by registered mail, return receipt requested and any
such notice or communication given in the manner specified in this Paragraph
5(i) shall be deemed to have been given on the date received by the Escrow
Agent. In the event that the Escrow Agent, in its sole discretion, shall
determine that an emergency exists, the Escrow Agent may use such other means of
communications as the Escrow Agent deems advisable.
-6-
(j) In the event funds transfer instructions are given (other than in
writing at the time of execution of the Agreement), whether in writing, by
telecopier or otherwise, the Escrow Agent is authorized to seek confirmation of
such instructions by telephone call-back to the person or persons designated on
Exhibit B hereto, and the Escrow Agent may rely upon the confirmations of anyone
---------
purporting to be the person or persons so designated. The persons and telephone
numbers for callbacks may be changed only in writing actually received and
acknowledged by the Escrow Agent. The parties to this Agreement acknowledge
that such security procedure is commercially reasonable.
(k) It is understood that the Escrow Agent and the beneficiary's bank
in any funds transfer may rely solely upon any account numbers or similar
identifying number provided by either of the other parties hereto to identify
(i) the beneficiary, (ii) the beneficiary's bank, or (iii) an order it executes
using any such identifying number, even where its use may result in a person
other than the beneficiary being paid, or the transfer of funds to a bank other
than the beneficiary's bank, or an intermediary bank designated.
(l) The provisions of this Escrow Agreement may be waived, altered,
amended or supplemented, in whole or in part, only in writing signed by all of
the parties hereto.
(m) Neither this Escrow Agreement nor any right or interest hereunder
may be assigned in whole or in part by any party without the prior consent of
the other parties.
(n) This Escrow Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(o) The Escrow Agent shall not incur any liability for following the
instructions herein contained or expressly provided for, or written instructions
given by the parties hereto.
(p) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or demands from
any party hereto which, in its opinion, conflict with any of the provisions of
this Agreement, it shall be entitled to refrain from taking any action and its
sole obligation shall be to keep safely all property held in escrow until it
shall be directed otherwise in writing by all of the other parties hereto or by
a final order or judgment of a court of competent jurisdiction.
(q) This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to its
principles of conflicts of laws and any action brought hereunder shall be
brought in the courts of the State of California. Each party hereto irrevocably
waives any objection on the grounds of venue, forum non-convenience or any
similar grounds and irrevocably consents to service or process by mail or in any
other manner permitted by applicable law and consents to the jurisdiction of
said courts.
-7-
(r) Any company into which the Escrow Agent may be merged or converted
or with which it may be consolidated or any company resulting from any merger,
conversion or consolidation to which it shall be a party or any company to which
the Escrow Agent may sell or transfer all or substantially all of its
escrow/custody business, provided such company shall be eligible to serve as
Escrow Agent hereunder, shall be the successor hereunder to the Escrow Agent
without the execution or filing of any paper or any further act.
(s) Each of SoloPoint and the Investors shall present an Authorized
Officer's Certificate with specimen signatures to the Escrow Agent upon the
execution hereof (Exhibit C attached).
---------
-8-
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
on the date and year first above written.
SoloPoint, Inc.
By:_________________
Name:
Chase Manhattan Bank and Trust Company, National
Association
By:____________________________________
Investors:
---------
_______________________________________
(Signature)
______________________________
(Printed Name)
-9-
Exhibit A
Fees
----
ESCROW AGENT FEE: $3,000.00
-----------------
Per annum or any part thereof without proration for partial years.
Includes review and negotiation of Escrow Agent Agreement; establishment of
records, procedures and controls, and normal Escrow Agent duties. Payable upon
establishment of Agreement.
LEGAL FEE: (if applicable): AT COST
----------
INVESTMENTS (if applicable):
-----------
Chase makes available many attractive mutual fund alternatives with
competitive performance records, including funds rated "AAA" by Standard &
Poor's and Xxxxx'x. Of particular interest to trust customers are several funds
offered by prospectus only through the Vista Family of Mutual Funds. Chase
receives compensation from the fund manager of these mutual funds in connection
with such investments. Additional information in relation to such compensation
is available upon request.
Cash Escrow-Interest paid on average monthly balance
One month LIBOR less 50 basis points NO CHARGE
ACTIVITY FEES:
-------------------------------------------------------------------
Wire Transfers, each $25.00
Checks, each $10.00
Claims processing, each $25.00
Tax Reporting, per form $10.00
Direct out-of-pocket expenses (legal expenses, travel, and other
professional services) will be charged at the actual cost thereof. Indirect
expenses such as stationery items, checks, envelopes, etc., and disbursements
such as postage and telephone will be charged at 6% of annual administration
fees.
Additional Terms
----------------
. Our proposed fees are based upon our review and acceptance of the appropriate
documentation and standard credit approval by Global Trust Services Credit.
. An incumbency certificate setting forth names, titles and specimen signatures
must be furnished to us with respect to each person signing or giving us
instructions on behalf of each corporate party to the Agreement.
. "Out-of-pocket expenses" includes, but is not limited to legal expense, CUSIP
charges, postage, stationery, travel and delivery expenses. If the Escrow
agent is required to assume duties or responsibilities not included in this
schedule, additional reasonable fees will be assessed based upon the nature
of the service and the responsibility involved.
. Any legal counsel fees incurred will be charged at cost.
. A Funds Transfer Agreement in substantially the same form as previously
provided must be executed. Alternatively, language from this Agreement may be
incorporated in the Governing documents.
THIS FEE PROPOSAL IS CONFIDENTIAL AND MAY NOT BE REVEALED TO
ANY PARTY
OUTSIDE THE WORKING GROUP IN THE TRANSACTION.
-2-
Exhibit B
Telephone Number(s) for Call-Backs and
Person(s) Designated to Confirm Funds Transfer Instructions
-----------------------------------------------------------
If to SoloPoint:
Name: Telephone Number:
---- ----------------
1. Xxxxxx X. Xxxxx (000) 000-0000
2. Xxxxxx X. Xxxxxxxxxxx (000) 000-0000
3. ______________________ _______________________________
If to Investors:
Name: Telephone Number:
---- ----------------
1. ______________________ _______________________________
2. ______________________ _______________________________
3. ______________________ _______________________________
Telephone callbacks shall be made to each of SoloPoint and the Investors if
joint instructions are required pursuant to the Agreement.
-3-
Exhibit C
SoloPoint, Inc.
Date: August __, 1999
Authorized Company Representatives
-----------------------------------
Printed Name Title Signature
----------------------------- ------------------------------ ------------------------------------------
Xxxxxx X. Xxxxx President & CEO
----------------------------- ------------------------------ ------------------------------------------
Xxxxxx X. Xxxxxxxxxxx Chief Financial Officer
----------------------------- ------------------------------ ------------------------------------------
----------------------------- ------------------------------ ------------------------------------------
----------------------------- ------------------------------ ------------------------------------------
----------------------------- ------------------------------ ------------------------------------------
The above designation of an "Authorized Company Representative" on behalf
of the Company may be amended or rescinded at any time hereafter by a
replacement Certificate.
Dated: ____________________________
By ____________________________
Name: ____________________________
Title: ____________________________
Investors (as a group)
Date: August __, 1999
Authorized Company Representatives
----------------------------------
Printed Name Title Signature
----------------------------- ------------------------------ ------------------------------------------
----------------------------- ------------------------------ ------------------------------------------
----------------------------- ------------------------------ ------------------------------------------
----------------------------- ------------------------------ ------------------------------------------
----------------------------- ------------------------------ ------------------------------------------
----------------------------- ------------------------------ ------------------------------------------
The above designation of an "Authorized Company Representative" on behalf
of the Company may be amended or rescinded at any time hereafter by a
replacement Certificate.
Dated: _______________________________
By ______________________________
Name: ______________________________
Title: ______________________________
-2-
Exhibit D
Schedule of Investors
Name and Address Shares Purchased Purchase Price
------------------------------------------------------ ---------------- --------------
InveStar Burgeon Venture Capital, Inc. 512,316 $1.0844
00X, 000 Xxxxxxx Xxxx, Xxxxxxx 0
Xxxx 0000
Xxxxxx, Xxxxxx R.O.C.
InveStar Dayspring Venture Capital, Inc. 768,474 $1.0844
00X, 000 Xxxxxxx Xxxx, Xxxxxxx 0
Xxxx 0000
Xxxxxx, Xxxxxx R.O.C.
InveStar Excelsus Venture Capital (Int'l), Inc. LDC 768,474 $1.0844
00X, 000 Xxxxxxx Xxxx, Xxxxxxx 0
Xxxx 0000
Xxxxxx, Xxxxxx R.O.C.
Forefront Venture Partners L.P. 256,158 $1.0844
0000 X. Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Hui-Xxxxx Xxx 276,650 $1.0844
0xx Xxxxx, 0, Xxxx 000, Xxxxx 43, Xxxxxxx 0
Xxxxxx Xxxx Xxxx
Xxxxxx, Xxxxxx X.X.X.
The Bass Trust 92,217 $1.0844
XX Xxx 0000
0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxx 00000
-3-
Exhibit D
(Continued)
Schedule of Investors
Name and Address Shares Purchased Purchase Price
---------------------------------------------- ---------------- --------------
Carsten 1978 Trust, as Amended, UTD 7-12-78 46,108 $1.0844
Xxxx X. Xxxxxxx TTEE
X.X. Xxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Murali & Mythill Narayanan 13,832 $1.0844
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Xxx Xxxxxx 13,832 $1.0844
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxxx, Xx. 18,443 $1.0844
00000 Xxxxxxx Xxx
Xxx Xxxxx Xxxxx, XX 00000
Storm Ventures Fund I, LLC 110,660 $1.0844
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000-0000
Tae Hea & Xxxxxxxxx Xxxx 27,665 $1.0844
000 X. Xxxxx
Xxx Xxxxx, XX 00000-0000
-4-
EXHIBIT D
SOLOPOINT, INC.
INVESTOR SUITABILITY QUESTIONNAIRE
______________________
(ALL INFORMATION FURNISHED IN COMPLETING THIS
QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY)
SoloPoint, Inc. (the "Company") will use the responses to this
questionnaire to qualify prospective investors for purposes of federal and state
securities laws.
Please complete, sign, date and return one copy of this questionnaire
-------- ---- ---- ------
as soon as possible to Xxxxxx X. Xxxxxx at Wilson, Sonsini, Xxxxxxxx & Xxxxxx,
000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX 00000-0000.
If the answer to any question below is "none" or "not applicable",
please so indicate.
Your answers will be kept confidential at all times. However, by
signing this questionnaire, you agree that the Company may present this
questionnaire to such parties as it deems appropriate to establish the
availability of exemptions from registration under state and federal security
laws.
I. INDIVIDUAL INVESTORS
--------------------
1. PERSONAL
--------
Name
------------------------------------------------------------------------
(Exact name as it should appear on stock certificate)
Residence Address
-----------------------------------------------------------
Home Telephone
--------------------------------------------------------------
Date of Birth
---------------------------------------------------------------
Social Security Number
------------------------------------------------------
2. BUSINESS
--------
Occupation
------------------------------------------------------------------
Number of Years
-------------------------------------------------------------
EXHIBITS
Present Employer
------------------------------------------------------------
Position/Title
--------------------------------------------------------------
Business Address
------------------------------------------------------------
Business Telephone
----------------------------------------------------------
3. RESIDENCE INFORMATION
---------------------
(a) Set forth in the space provided below the state(s) in which you have
maintained your principal residence during the past three years and the
dates during which you resided in each state.
_____________________________________________________________________
_____________________________________________________________________
(b) Are you registered to vote in, or do you have a driver's license issued
by, or do you maintain a residence in any other state? If yes, in which
state(s)?
_____________________________________________________________________
4. INCOME
------
(a) Do you reasonably expect either your own income from all sources
------
during the current year to exceed $200,000 or the joint income of you
--
and your spouse (if married) from all sources during the current year
to exceed $300,000?
Yes _____ No _____ If not, please specify
amount ______________
(b) What percentage of your income as shown above is anticipated to be
derived from sources other than salary?
_____________________________________________________________________
(c) Was either your yearly income from all sources during each of the last
------
two years in excess of $200,000 or was the joint income of you and
--
your spouse (if married) from all sources during each of such years in
excess of $300,000?
Yes _____ No _____
If no, please specify amount for:
Last Year:___________
Year Before Last:___________
EXHIBITS
5. NET WORTH
---------
Will your net worth as of the date you purchase the securities offered,
together with the net worth of your spouse, be in excess of $1,000,000?
Yes _____ No _____ If not, please specify
amount _______________
6. EDUCATION
---------
Please describe your educational background and degrees obtained, if any.
___________________________________________________________________________
___________________________________________________________________________
7. AFFILIATION
-----------
If you have any pre-existing personal or business relationship with the
Company or any of its officers, directors or controlling persons, please
describe the nature and duration of such relationship.
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
8. BUSINESS AND FINANCIAL EXPERIENCE
---------------------------------
(a) Please describe in reasonable detail the nature and extent of your
business, financial and investment experience which you believe gives
you the capacity to evaluate the merits and risks of the proposed
investment and the capacity to protect your interests.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
EXHIBITS
(b) Are you purchasing the securities offered for your own account and for
investment purposes only?
Yes _____ No _____
If no, please state for whom you are investing and/or the reason for
investing.
______________________________________________________________________
______________________________________________________________________
9. FINANCIAL ADVISORS
------------------
In evaluating this investment, will you use the services of any of the
following advisors? (If so, please identify, providing address and
telephone number.)
Accountant: ________________________________
________________________________
________________________________
Attorney: ________________________________
________________________________
________________________________
Other: ________________________________
________________________________
________________________________
PLEASE TURN TO PAGE 8 AND SIGN AND DATE THIS QUESTIONNAIRE
EXHIBITS
II. NON-INDIVIDUAL INVESTORS
------------------------
(Please answer Part II only if the purchase is proposed to be undertaken by a
corporation, partnership or other entity.)
IF INVESTMENT WILL BE MADE BY MORE THAN ONE AFFILIATED ENTITY, PLEASE COMPLETE A
COPY OF THIS QUESTIONNAIRE FOR EACH ENTITY.
----
1. IDENTIFICATION
--------------
Name ________________________________________________________
(Exact name as it will appear on stock certificate)
Address of Principal
Place of Business _________________________________________
Jurisdiction of Formation
or Incorporation __________________________________________
Contact Person ______________________________________________
Telephone Number (____)
Type of Entity
(corporation, partner-
ship, trust, etc.) _________________________________________
Was entity formed for the purpose of this investment?
Yes _____ No _____
If the answer is yes, all shareholders, partners or other equity owners
must answer Part I of this Questionnaire. If the above answer is no,
please continue completing this form.
2. PROPOSED INVESTMENT
-------------------
Please indicate the amount of your proposed investment: $____________
Please state the investing entity's net worth at the time the securities
will be purchased: $_______________
3. BUSINESS
--------
Please check the appropriate box to indicate which of the following
accurately describes the nature of the business conducted by the investing
entity:
EXHIBITS
[ ] a corporation, organization described in Section 501(c)(3) of the
Internal Revenue Code, a Massachusetts or similar business trust or a
partnership, in each case, not formed for the purpose of this
investment, with total assets in excess of $5,000,000;
[ ] private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940 [a U.S. venture
capital fund which invests primarily through private placements in
non-publicly traded securities and makes available (either directly or
through co-investors) to the portfolio companies significant guidance
concerning management, operations or business objectives];
[ ] a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958;
[ ] an investment company registered under the Investment Company Act
of 1940 or a business development company as defined in Section
2(a)(48) of that Act;
[ ] a bank as defined in Section 3(a)(2) or a savings and loan
association or other institution defined in Section 3(a)(5)(A) of the
Securities Act of 1933 acting in either an individual or fiduciary
capacity;
[ ] an insurance company as defined in Section 2(13) of the
Securities Act of 1933;
[ ] an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974 whose investment
decision is made by a fiduciary which is either a bank, savings and
loan association, insurance company, or registered investment advisor,
or whose total assets exceed $5,000,000, or, if a self-directed plan,
--
a plan whose investment decisions are made solely by persons who are
accredited investors;
[ ] an entity not located in the U.S. and whose equity owners are
neither U.S. citizens nor U.S. residents;
[ ] a trust with total assets in excess of $5,000,000 whose purchase
is directed by a sophisticated person as described in Rule
506(b)(2)(ii) of the Securities Act of 1933.
[ ] Other. Describe: ______________________________________
________________________________________________________
________________________________________________________
4. INVESTMENT EXPERIENCE
---------------------
Please provide information detailing the business, financial and
investment experience of the entity and investment manager of such entity.
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
EXHIBITS
III. SIGNATURE
---------
The above information is true and correct in all material respects and
the undersigned recognizes that the Company and its counsel are relying on the
truth and accuracy of such information in reliance on the exemption contained in
Subsection 4(2) of the Securities Act of 1933, as amended, and Regulation D
promulgated thereunder. The undersigned agrees to notify the Company promptly
of any changes in the foregoing information which may occur prior to the
investment.
Executed at ___________________, on _________________, 19__.
_______________________________
(Signature)
________________________________
(Title if for Entity)
EXHIBITS
EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
EXHIBITS
SOLOPOINT, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made as of the 10th
day of August, 1999, by and among SoloPoint, Inc., a California corporation (the
"Company") and each of the undersigned investors (each an "Investor" and
together the "Investors").
R E C I T A L S
---------------
A. Effective as of the same date as this Agreement, the Company and the
Investors have entered into a Common Stock Subscription Agreement (the
"Subscription Agreement") pursuant to which the Company has agreed to sell to
the Investors and the Investors have agreed to purchase from the Company shares
of the Company's common stock (all terms not otherwise defined herein shall have
the meanings ascribed in the Subscription Agreement).
B. A condition to the Investors' obligations under the Subscription
Agreement is that the Company and the Investors enter into this Agreement in
order to provide the Investors with certain rights to register the Common Stock
acquired by the Investors pursuant to the Subscription Agreement. The Company
desires to induce the Investors to purchase the Common Stock pursuant to the
Subscription Agreement by agreeing to the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
AGREEMENT
1. Registration Rights. The Company and the Investors covenant and agree
-------------------
as follows:
1.1 Definitions. For purposes of this Section 1:
-----------
(a) The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration or ordering of effectiveness of such
registration statement or document;
(b) The term "Registrable Securities" means (i) the shares of the
Company's common stock issued or sold in connection with the Subscription
Agreement (such shares of common stock are collectively referred to herein as
the "Shares" or "Stock"), (ii) the shares of the Company's common stock issuable
upon the conversion of any of the Warrants (such shares of the Company's common
stock are collectively referred to herein as the "Warrant Shares"), and (iii)
any other shares of the Company's common stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, the Stock; provided, that the foregoing definition shall exclude
in all cases any Registrable Securities sold by a person
Page 1
in a transaction in which his or her rights under this Agreement are not
assigned. Notwithstanding the foregoing, shares of common stock shall only be
treated as Registrable Securities if and so long as they have not been (x) sold
to or through a broker or dealer or underwriter in a public distribution or a
public securities transaction, or (y) sold in a transaction exempt from the
registration and prospectus delivery requirements under Section 4(1) of the
Securities Act so that all transfer restrictions, and restrictive legends with
respect thereto, if any, are removed upon the consummation of such sale;
(c) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock then outstanding
which are Registrable Securities, plus the number of shares of common stock
issuable pursuant to then exercisable or convertible securities which are
Registrable Securities;
(d) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with this
Agreement;
(e) The term "Form S-3" means such form under the Securities Act as in
effect on the date hereof or any successor form under the Securities Act; and
(f) The term "SEC" means the Securities and Exchange Commission.
1.2 Registration. The Company will use reasonable best efforts to
------------
effect a registration to permit the sale of the Registrable Securities as
described below, and pursuant thereto the Company will:
(a) prepare and file within the six month period commencing the date
hereof, and use reasonable efforts to have declared effective by the SEC within
25 days after the date of filing, a registration statement on Form S-3 relating
to resale of all of the shares of the Registrable Securities and use reasonable
efforts to cause such registration statement to remain continuously effective
for a period which will terminate when all Registrable Securities covered by
such registration statement, as amended from time to time, have been sold or
when the Registrable Securities may be sold under Rule 144(k) under the
Securities Act;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the registration statement as may be necessary to keep such
registration statement effective for the period specified in Section 1.2(a) and
to comply with the provisions of the Securities Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act") with respect to the distribution of
all Registrable Securities;
(c) notify each Investor promptly and confirm such notice in writing
(i) when the registration statement or any post-effective amendment has become
effective, (ii) of any request by the SEC for amendments or supplements to the
registration statement or for additional information, (iii) of the issuance by
the SEC of any stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose, and (iv) of the
receipt by the Company of any notification with respect to the suspension of the
Page 2
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;
(d) use reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of the registration statement at the earliest
possible moment;
(e) furnish to each Investor, without charge, at least one copy of the
registration statement and any post-effective amendment thereto, including
financial statements and schedules, and upon an Investor's request, all
documents incorporated therein by reference and all exhibits thereto (including
those incorporated by reference);
(f) deliver to each Investor, without charge, as many copies of the
investor information materials and any amendment or supplement thereto as such
Investor may reasonably request in order to facilitate the disposition of the
Registrable Securities;
(g) cause all Registrable Securities covered by the registration
statement to be listed on each securities exchange or market on which similar
securities issued by the Company are then listed, and if the securities are not
so listed to use its reasonable best efforts promptly to cause all such
securities to be listed on either the New York Stock Exchange, the American
Stock Exchange or the Nasdaq Stock Market;
(h) use reasonable efforts to qualify or register the Registrable
Securities for sale under (or obtain exemptions from the application of) the
Blue Sky laws of such jurisdictions as are applicable. The Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any such jurisdiction where it is not presently qualified
or where it would be subject to general service of process or taxation as a
foreign corporation in any jurisdiction where it is not now so subject;
(i) otherwise use reasonable efforts to comply with all applicable
rules and regulations of the SEC under the Securities Act and the Exchange Act
and take such other actions as may be reasonably necessary to facilitate the
registration of the Registrable Securities hereunder; and
(j) expenses incurred in connection with a registration requested
pursuant to this Section 1.2 shall be borne by the Company, including all
registration, filing, qualification, printers' and accounting fees but excluding
any underwriters' discounts or commissions and any fees and disbursements of any
counsel for the selling Holders (such fees or discounts, if any, to be borne pro
rata by the Holders participating in the registration).
1.3 Restrictions; Procedure For Sales Pursuant To A Registration
------------------------------------------------------------
Statement.
---------
(a) Each Holder agrees to the following restrictions on and procedures
for sales made pursuant to a registration statement:
(i) Notice to Company. If any Holder proposes to sell any Shares or
Warrant Shares, the Holder shall notify the Company of its intent to do so by
telephoning and
Page 3
speaking directly with Xxxxxx X. Xxxxxxxxxxx or the then current Chief Financial
Officer of the Company at (000) 000-0000, and following up by immediately
sending a written Notice of Sale. The Notice of Sale to the Company shall
conclusively be deemed to establish an agreement by such Holder to comply with
the registration provisions herein described, and the Notice of Sale shall be
deemed to constitute a representation that any information previously supplied
by such Holder is accurate as of the date of such Notice of Sale.
(ii) Delay of Sale. The Company may refuse to permit the Holder to
resell any Shares or Warrant Shares for a specified period of time; provided,
however, that (a) in order to exercise this right, the Company must deliver a
certificate in writing to the Holder to the effect that the registration
statement in its then current form contains an untrue statement of material fact
or omits to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading, (b) in no event shall such delay exceed twenty (20) days, (c) in no
event shall this right of delay be exercised on more than two (2) occasions in
any twelve (12) month period, and (d) during any suspension as contemplated by
this Section 1.4 (a)(ii), the Company will not allow any of its officers or
directors to buy or sell any of the Company's securities.
(b) Representations of Holders. Each Holder hereby represents to and
--------------------------
covenants with the Company that, during the period in which a registration
statement effected pursuant to Section 1.2 remains effective, such Holder will:
(i) not engage in any stabilization activity in connection
with any of the Company's securities;
(ii) cause to be furnished to any purchaser of the Shares or
Warrant Shares and to the broker-dealer, if any, through whom Shares may be
offered, a copy of the investor information materials provided by the Company;
and
(iii) not bid for or purchase any securities of the Company or
any rights to acquire the Company's securities, or attempt to induce any person
to purchase any of the Company's securities or any rights to acquire the
Company's securities other than as permitted under the Exchange Act.
(c) Information for Use in Registration Statement. Each Holder
---------------------------------------------
represents and warrants to the Company that such Holder has completed the
information requested by the Selling Holder's Questionnaire attached as Exhibit
A to this Agreement (the "Questionnaire"), and further represents and warrants
to the Company that all information provided by such Holder in the Questionnaire
is true, accurate and complete. Each Holder understands that the written
information in the Questionnaire and all written representations made in this
Agreement are being provided to the Company specifically for use in, or in
connection with, the registration statement, and has executed this Agreement
with such knowledge.
1.4 Furnish Information. It shall be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable
Page 4
Securities of any selling Holder that such Holder shall furnish to the Company
such information regarding itself, the Registrable Securities held by it, and
the intended method of disposition of such securities as shall be required to
effect the registration of such Holder's Registrable Securities.
1.5 Delay of Registration. No Holder shall have any right to obtain or
---------------------
seek an injunction restraining or otherwise delaying any such registration as
the result of any dispute that might arise with respect to the interpretation or
implementation of this Section 1.
1.6 Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will pay to each such Holder, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
subsection 1.6(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
Page 5
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this subsection 1.6(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.6(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; provided, that, in no event shall any indemnity under this subsection
1.6(b) exceed the net proceeds from the offering received by such Holder, except
in the case of willful fraud by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
1.6 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 1.6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.6, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.6.
(d) If the indemnification provided for in this Section 1.6 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations;
provided that, in no event shall any contribution by a Holder under this
Subsection 1.6(d) exceed the net proceeds from the offering received by such
Holder, except in the case of willful fraud by such Holder. The relative fault
of the indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.
Page 6
(e) The obligations of the Company and Holders under this Section 1.6
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1.
1.7 Reports Under Securities Exchange Act Of 1934. With a view to
---------------------------------------------
making available to the Holders the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration or pursuant to a registration on
Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144, so long as the Company remains subject to
the periodic reporting requirements under Sections 13 or 15(d) of the Exchange
Act;
(b) take such action, including the voluntary registration of its
common stock under Section 12 of the Exchange Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(d) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of the Exchange Act and the
rules and regulations promulgated thereunder, or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3, (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form.
2. MISCELLANEOUS.
2.1 Successors and Assigns. Except as otherwise provided in this
----------------------
Agreement, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties
(including transferees of any of the Shares and/or Warrant Shares). Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
2.2 Governing Law. This Agreement and all acts and transactions
-------------
pursuant hereto shall be governed, construed and interpreted in accordance with
the laws of the State of California, without giving effect to principles of
conflicts of laws.
Page 7
2.3 Counterparts. This Agreement may be executed in two (2) or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.4 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
2.5 Notices. Unless otherwise provided herein, any notice required or
-------
permitted by this Agreement shall be in writing and shall be deemed sufficient
upon delivery, when delivered personally or by overnight courier and addressed
to the party to be notified at such party's address as set forth on the
signature page hereto or as subsequently modified by written notice. In the
event that any date provided for in this Agreement falls on a Saturday, Sunday
or legal holiday, such date shall be deemed extended to the next business day.
Notwithstanding the foregoing, any notice delivered pursuant to Section 1.4
hereto must be made by personal delivery or confirmed facsimile transmission.
2.6 Expenses. If any action at law or in equity is necessary to
--------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
2.7 Amendments and Waivers. Any term of this Agreement may be amended
----------------------
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of a majority of the
Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
Registrable Securities then outstanding, each future holder of all such
Registrable Securities, and the Company.
2.8 Severability. If one or more provisions of this Agreement are held
------------
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
2.9 Entire Agreement. This Agreement, and the documents referred to in
----------------
this Agreement (with the exception of the registration statement) constitute the
entire agreement between the parties hereto pertaining to the subject matter
hereof, and any and all other written or oral agreements existing between the
parties hereto are expressly canceled.
Page 8
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.
"COMPANY"
SOLOPOINT, INC. Address:
000-X Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
By: ____________________________ Facsimile: (000) 000-0000
Xxxxxx X. Xxxxx
President and Chief Executive Officer
INVESTORS:
By: ____________________________ Address: ________________________
(Signature)
________________________
____________________________
(Print Name)
Page 9
EXHIBIT A
SOLOPOINT, INC.
SELLING STOCKHOLDER'S QUESTIONNAIRE
In connection with the SoloPoint, Inc. (the "Company") Registration
Statement (File No. _______________) registering certain shares of the Company's
common stock, the undersigned represents and warrants that the information set
forth below is true, accurate and complete:
1. As of the date hereof, the undersigned beneficially owns ______ shares
of the Company's common stock.
2. Except as described below, the undersigned has not had a material
relationship with the Company or any of its predecessors or affiliates within
the last three years.
The term "material relationship" has not been defined by the Securities and
Exchange Commission (the "SEC"). However, the SEC has indicated that it will
probably construe as a "material relationship" any relationship which tends to
prevent arms length bargaining in dealings with a company, whether arising from
a close business connection or family relationship, a relationship of control or
otherwise. It seems prudent, therefore, to consider that the undersigned would
have such a relationship, for example, with any organization of which the
undersigned is an officer, director, trustee or partner or in which the
undersigned owns, directly or indirectly, ten percent (10%) or more of the
outstanding voting stock, or in which the undersigned has some other substantial
interest, and with any person or organization with whom the undersigned has, or
with whom any relative or spouse (or any other person or organization as to
which the undersigned has any of the foregoing other relationships) has, a
contractual relationship.
If applicable, please describe the material relationship with the Company:
Dated: ___________________ By:______________________________________
(Signature)
Name:____________________________________
(Print Name)
Title:___________________________________
(if applicable)
Page 10
SCHEDULE 2.8
Litigation
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A former vendor, The CatchPole Corporation, has sued the Company in
Massachusetts for the collection of certain fees for consulting services
allegedly rendered to the Company. The Company believes that it was overcharged
for such services and has offered to pay a reduced amount. The Settlement
negotiations are underway. Management estimates that the Company's total
exposure with respect to the matter is less than $10,000.00.
A former customer, Hello Direct, Inc., filed suit against the Company
in California for the collection of an amount due for return of product to the
Company. The Company and Hello Direct, Inc. have agreed in principal on the
terms of the settlement. The Company will issue a refund to Hello Direct in the
amount of $16,533.63 upon completion of the financing currently underway in
exchange for Hello Direct's dismissal of its claim and general release of the
Company.
EXHIBITS
