Exhibit 10.1
Cover Page to Exhibit 10.1
All of the Purchase Agreements are identical to the form of Series N Stock
Purchase Agreement, dated April 28, 2005 attached hereto, except as to the name
of the Investor, the number of shares of Series N Convertible Preferred Stock
purchased and the purchase price of those shares, all of which is specified in
the chart below:
Investor No. of Shares Purchased Purchase Price
----------------------------- ----------------------- --------------
Xxxxxx Xxxxxxxxx, Xx. 100,408 $ 370,000
Scorpion Capital Partners, LP 203,528 $ 750,000
Crestview Capital Master, LLC 949,796 $3,500,000
Cordillera Fund, LP 189,959 $ 700,000
SF Capital Partners Ltd. 542,741 $2,000,000
Xxxx Xxxxxxx 271,370 $1,000,000
Gryphon Partners, LP 162,822 $ 600,000
GSSF Master Fund, LP 81,411 $ 300,000
Bristol Investment Fund Ltd. 42,062 $ 155,000
--------- ----------
Total 2,544,097 $9,375,000
Exhibit 10.1
Stock Purchase Agreement
Velocity Express Corporation
Xxx Xxxxxxxxxxx Xxxxx Xxxxx, Xxxx. X, Xxxxx 000
Xxxxxxxx, XX 00000
The undersigned (the "Investor"), hereby confirms its agreement with you as
follows:
1. This Stock Purchase Agreement (the "Agreement") is made as of the date set
forth below among Velocity Express Corporation, a Delaware corporation (the
"Company"), and the Investor.
2. The Company has authorized the sale and issuance of 2,544,098 shares (the
"Shares") of Series N Preferred Stock of the Company, $0.004 par value per share
(the "Series N Preferred Stock"), to certain investors in a private placement
(the "Offering"). The Shares are initially convertible into 2,544,098 shares
(the "Conversion Shares") of Common Stock, $0.004 par value (the "Common
Stock"), subject to adjustment in accordance with the terms of the Series N
Preferred Stock.
3. The Company and the Investor agree that the Investor will purchase from the
Company and the Company will issue and sell to the Investor Shares at a
-------
purchase price of $3.685 per Share, or an aggregate purchase price of $ ,
--------
pursuant to the Terms and Conditions for Purchase of Shares attached hereto as
Annex I and incorporated herein by this reference as if fully set forth herein.
Unless otherwise requested by the Investor in Exhibit A, certificates
representing the Shares purchased by the Investor will be registered in the
Investor's name and address as set forth below.
4. The Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years with
the Company or its affiliates, (b) neither it, nor any group of which it is a
member or to which it is related, beneficially owns (including the right to
acquire or vote) any securities of the Company and (c) it has no direct or
indirect affiliation or association with any National Association of Securities
Dealers, Inc. ("NASD") member. Exceptions:
--------------------------------------------------------------------------------
(If no exceptions, write "none." If left blank, response will be deemed to
be "none.")
Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.
Dated as of: , 2005
---------------
-----------------------------------
"INVESTOR"
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
Address:
---------------------------
AGREED AND ACCEPTED:
Velocity Express Corporation
By:
---------------------------------------
Title:
------------------------------------
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Annex I
Terms and Conditions for Purchase of Shares
1. Agreement to Sell and Purchase the Shares; Subscription Date.
1.1 Purchase and Sale. At the Closing (as defined in Section 2), the
Company will sell to the Investor, and the Investor will purchase from the
Company, upon the terms and conditions hereinafter set forth, the number of
Shares set forth in paragraph 3 of the Stock Purchase Agreement to which these
Terms and Conditions for Purchase of Shares are attached as Annex I and at the
purchase price set forth in such paragraph. The Company shall adopt and file
with the Secretary of State of the State of Delaware on or before the Closing
Date the Certificate of Designations, Preferences and Rights of Series N
Convertible Preferred Stock in the form attached hereto as Exhibit C.
1.2 Other Investors. As part of the Offering, the Company proposes to
enter into this same form of Stock Purchase Agreement with certain other
investors (the "Other Investors"), and the Company expects to complete sales of
Shares to them. (The Investor and the Other Investors are hereinafter sometimes
collectively referred to as the "Investors," and this Agreement and the Stock
Purchase Agreements executed by the Other Investors are hereinafter sometimes
collectively referred to as the "Agreements.") The Company will accept executed
Agreements from Investors for the purchase of Shares commencing upon the date on
which the Company provides the Investors with the proposed purchase price per
Share and concluding upon the date (the "Subscription Date") on which the
Company has notified XxxxxXxxx Capital Partners, Inc. (in its capacity as
Placement Agent for the Shares, the "Placement Agent") in writing that it is no
longer accepting Agreements for the purchase of Shares in the Offering.
1.3 Placement Agent Fee. Investor acknowledges that the Company
intends to pay the Placement Agent a fee in respect of the sale of Shares to the
Investor.
The Company shall indemnify and hold harmless the Investor from and against
all fees, commissions or other payments owing by the Company to the Placement
Agent or any other person or firm acting on behalf of the Company hereunder.
2. Delivery of the Shares at Closing. The completion of the purchase and
sale of the Shares (the "Closing") shall occur at a place and time, no later
than April 28, 2005 (the "Closing Date"), to be specified by the Company and the
Placement Agent, and of which the Investors will be notified in advance by the
Placement Agent. At the Closing, the Company shall deliver to the Investor one
or more stock certificates representing the number of Shares set forth on the
signature page hereto, each such certificate to be registered in the name of the
Investor or, if so indicated on the Stock Certificate Questionnaire attached
hereto as Exhibit A, in the name of a nominee designated by the Investor,
provided that, if requested by the Investor, stock certificates representing
such Shares shall be delivered in escrow to such Investor's agent prior to the
Closing, to be held until the completion of the Closing. In addition, on or
prior to the Closing Date, the Company shall cause counsel to the Company to
deliver to the Investors a legal opinion in the form attached hereto as Exhibit
D.
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The Company's obligation to issue and sell the Shares to the Investor shall
be subject to the following conditions, any one or more of which may be waived
by the Company: (a) receipt by the Company of the purchase price for the Shares
being purchased hereunder as set forth on the Signature Page hereto; (b)
completion of purchases and sales under the Agreements with the Other Investors
of no less than 2,544,098 Shares in the aggregate together with the purchase by
the Investor; and (c) the accuracy of the representations and warranties made by
the Investors and the fulfillment of those undertakings of the Investors to be
fulfilled prior to the Closing.
The Investor's obligation to purchase the Shares shall be subject to the
following conditions, any one or more of which may be waived by the Investor:
(a) the Company's agreement to issue and sell, and the Investors' agreement to
purchase, on the Closing Date, not less than 2,544,098 Shares; (b) the delivery
to the Investor by counsel to the Company of a legal opinion in the form
attached hereto as Exhibit D; (c) the representations and warranties of the
Company contained in Section 3 being true and correct on and as of such Closing
with the same effect as though such representations and warranties had been made
on and as of the date of such Closing (except with respect to representations
and warranties which are made as of a specific date or period, which shall
continue to be true and correct in all material respects as of the respective
dates and for the respective periods covered); (d) the absence of any order,
writ, injunction, judgment or decree that questions the validity of the
Agreements or the right of the Company to enter into such Agreements or to
consummate the transactions contemplated hereby and thereby; (e) the delivery to
the Investor by the Secretary or Assistant Secretary of the Company of a
certificate stating that the condition specified in part (c) of this paragraph
has been fulfilled, (f) delivery to Investors by the Company of executed copies
of a Registration Rights Agreement in the form attached hereto as Exhibit E, and
(g) delivery to Investors by the Company of a certificate evidencing the Shares
purchased by the Investor.
3. Representations, Warranties and Covenants of the Company. In addition to
those terms defined above and elsewhere in this Agreement, for the purposes of
this Section 3, the following terms shall have the meanings set forth below:
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly through one or more intermediaries Controls, is
controlled by, or is under common control with, such Person.
"Company's Knowledge" means the actual knowledge of the executive
officers (as defined in Rule 305 under the 0000 Xxx) of the Company, after due
inquiry.
"Conversion Shares" means the shares of Common Stock issuable upon
conversion of the Shares and the PIK Shares.
"Intellectual Property" means all of the following: (i) patents,
patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing;
(iii) copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; and (v) proprietary computer software
(including but not limited to data, data bases and documentation).
2
"Material Adverse Effect" means a material adverse effect on (i) the
assets, liabilities, results of operations, condition (financial or otherwise),
business, or prospects of the Company and its Subsidiaries taken as a whole, or
(ii) the ability of the Company to perform its obligations under the Transaction
Documents.
"Nasdaq" means The Nasdaq Stock Market, Inc.
"Person" means an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.
"PIK Shares" means shares of Preferred Stock issued as pay-in-kind
dividends on the Shares or any previously issued PIK Shares.
"Subsidiary" of any Person means another Person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
Person.
"Transaction Documents" means the Agreements, the Certificate of
Designations, and the Registration Rights Agreement.
"1933 Act" means the Securities Act of 1933, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute, and the rules and regulations promulgated thereunder.
The Company hereby represents and warrants to the Investors that, except as set
forth in the schedules delivered herewith (collectively, the "Disclosure
Schedules"):
3.1 Organization, Good Standing and Qualification. Each of the Company
and its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to carry on its business as now
conducted and to own its properties. Each of the Company and its Subsidiaries is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property makes such qualification or leasing necessary unless the
failure to so qualify has not and could not reasonably be expected to have a
Material Adverse Effect. The Company's Subsidiaries are listed on Schedule 3.1
hereto.
3.2 Authorization. The Company has full power and authority and has
taken all requisite action on the part of the Company, its officers, directors
and stockholders necessary for (i) the authorization, execution and delivery of
the Transaction Documents, (ii) authorization
3
of the performance of all obligations of the Company hereunder or thereunder,
and (iii) the authorization, issuance (or reservation for issuance) and delivery
of the Securities. The Transaction Documents constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to (i) bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors' rights generally and (ii) laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies.
3.3 Capitalization. Schedule 3.3 sets forth the capitalization of the
Company as of April 26, 2005. All of the issued and outstanding shares of the
Company's capital stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of pre-emptive rights and were issued in full
compliance with applicable state and federal securities law and any rights of
third parties. Except as described on Schedule 3.3, all of the issued and
outstanding shares of capital stock of each Subsidiary have been duly authorized
and validly issued and are fully paid, nonassessable and free of pre-emptive
rights, were issued in full compliance with applicable state and federal
securities law and any rights of third parties and are owned by the Company,
beneficially and of record, subject to no lien, encumbrance or other adverse
claim. Except as described on Schedule 3.3, no Person is entitled to pre-emptive
or similar statutory or contractual rights with respect to any securities of the
Company. Except as described on Schedule 3.3, there are no outstanding warrants,
options, convertible securities or other rights, agreements or arrangements of
any character under which the Company or any of its Subsidiaries is or may be
obligated to issue any equity securities of any kind and except as contemplated
by the Agreements, neither the Company nor any of its Subsidiaries is currently
in negotiations for the issuance of any equity securities of any kind. Except as
described on Schedule 3.3, there are no voting agreements, buy-sell agreements,
option or right of first purchase agreements or other agreements of any kind
among the Company and any of the securityholders of the Company relating to the
securities of the Company held by them. Except as described on Schedule 3.3 and
except as provided in the Registration Rights Agreement, no Person has the right
to require the Company to register any securities of the Company under the 1933
Act, whether on a demand basis or in connection with the registration of
securities of the Company for its own account or for the account of any other
Person.
Except as described on Schedule 3.3, the issuance and sale of the
Securities hereunder will not obligate the Company to issue shares of Common
Stock or other securities to any other Person (other than the Investors) and
will not result in the adjustment of the exercise, conversion, exchange or reset
price of any outstanding security.
Except as described on Schedule 3.3, the Company does not have
outstanding stockholder purchase rights or "poison pill" or any similar
arrangement in effect giving any Person the right to purchase any equity
interest in the Company upon the occurrence of certain events.
3.3 Valid Issuance. The Shares are duly and validly authorized and,
when issued and paid for pursuant to the Agreements, will be validly issued,
fully paid and nonassessable, free and clear of all encumbrances and
restrictions (other than those created by the Investors), except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws, and will be entitled to the relative rights, powers
and
4
preferences set forth in the Certificate of Designations. The PIK Shares are
duly and validly authorized and, when issued pursuant to the terms of the
Certificate of Designations, will be validly issued, fully paid and
nonassessable, free and clear of all encumbrances and restrictions (other than
those created by the Investors), except for restrictions on transfer set forth
in the Transaction Documents or imposed by applicable securities laws, and will
be entitled to the relative rights, powers and preferences set forth in the
Certificate of Designations. Upon the conversion of the Shares and/or the PIK
Shares, the Conversion Shares will be validly issued, fully paid and
non-assessable, free and clear of all encumbrances and restrictions, except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws and except for those created by the Investors. The
Company will have reserved a sufficient number of shares of Common Stock for the
issuance of the Conversion Shares, free and clear of all encumbrances and
restrictions, except for restrictions on transfer set forth in the Transaction
Documents or imposed by applicable securities laws and except for those created
by the Investors.
3.5 Consents. The execution, delivery and performance by the Company
of the Transaction Documents and the offer, issuance and sale of the Shares
require no consent of, action by or in respect of, or filing with, any Person,
governmental body, agency, or official other than (i) filings that have been
made pursuant to applicable state securities laws, (ii) post-sale filings
pursuant to applicable state and federal securities laws and (iii) such consents
as have been previously obtained. Subject to the accuracy of the representations
and warranties of each Investor set forth in Section 4 hereof, the Company has
taken all action necessary to exempt (i) the issuance and sale of the Shares,
(ii) the issuance of the PIK Shares in accordance with the Certificate of
Designations, (iii) the issuance of the Conversion Shares upon due conversion of
the Shares and the PIK Shares, and (iv) the other transactions contemplated by
the Transaction Documents, from the provisions of any stockholder rights plan or
other "poison pill" arrangement, any anti-takeover, business combination or
control share law or statute binding on the Company or to which the Company or
any of its assets and properties may be subject and any provision of the
Company's Certificate of Incorporation or By-laws that is or could reasonably be
expected to become applicable to the Investors as a result of the transactions
contemplated hereby, including without limitation, the issuance of the Shares
and the ownership, disposition or voting of the Shares by the Investors or the
exercise of any right granted to the Investors pursuant to the Transaction
Documents.
3.6 Delivery of SEC Filings; Business. The Company has made available
to the Investors through the XXXXX system, true and complete copies of the
Company's Annual Report on Form 10-K for the fiscal year ended July 3, 2004 (and
any amendments thereto filed prior to the date hereof), the Company's Proxy
Statement for its 2003 and 2004 Annual Meeting of Stockholders, or the Company's
Quarterly Reports on Form 10-Q for the quarter ended January 1, 2005 or any of
the Company's Current Reports on Form 8-K filed since January 31, 2005
(collectively, the "SEC Filings"). Except as described on Schedule 3.6, the SEC
Filings are the only filings required of the Company pursuant to the 1933 Act
for such period. The Company and its Subsidiaries are engaged in all material
respects only in the business described in the SEC Filings and the SEC Filings
contain a complete and accurate description in all material respects of the
business of the Company and its Subsidiaries.
5
3.7 Use of Proceeds. The net proceeds of the sale of the Shares
hereunder shall be used by the Company for working capital and general corporate
purposes in accordance with financial budgets approved from time to time by the
Board of Directors of the Company.
3.8 No Material Adverse Change. Since January 1, 2005, except for the
transactions contemplated by the Transaction Documents and except as identified
and described in the SEC Filings or as described on Schedule 3.8, there has not
been:
(i) any change in the consolidated assets, liabilities, financial
condition or operating results of the Company, except for changes in the
ordinary course of business which have not and could not reasonably be expected
to have a Material Adverse Effect, individually or in the aggregate;
(ii) any declaration or payment of any dividend, or any
authorization or payment of any distribution, on any of the capital stock of the
Company, or any redemption or repurchase of any securities of the Company;
(iii) any material damage, destruction or loss, whether or not
covered by insurance to any assets or properties of the Company or its
Subsidiaries;
(iv) any waiver, not in the ordinary course of business, by the
Company or any Subsidiary of a material right or of a material debt owed to it;
(v) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company or a Subsidiary, except
in the ordinary course of business and which is not material to the assets,
properties, financial condition, operating results or business of the Company
and its Subsidiaries taken as a whole (as such business is presently conducted
and as it is proposed to be conducted);
(vi) any change or amendment to the Company's Certificate of
Incorporation or By-laws, or material change to any material contract or
arrangement by which the Company or any Subsidiary is bound or to which any of
their respective assets or properties is subject;
(vii) any material labor difficulties or labor union organizing
activities with respect to employees of the Company or any Subsidiary;
(viii) any material transaction entered into by the Company or a
Subsidiary other than in the ordinary course of business;
(ix) the loss of the services of any key employee, or material
change in the composition or duties of the senior management of the Company or
any Subsidiary;
(x) the loss or threatened loss of any customer which has had or
could reasonably be expected to have a Material Adverse Effect; or
6
(xi) any other event or condition of any character that has had
or could reasonably be expected to have a Material Adverse Effect.
3.9 SEC Filings.
(a) Except as described in Schedule 3.9, at the time of filing
thereof, the SEC Filings complied as to form in all material respects with the
requirements of the 1933 Act and did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each registration statement and any amendment thereto filed
by the Company and which has become effective since January 1, 2001 pursuant to
the 1933 Act and the rules and regulations thereunder, as of the date such
statement or amendment became effective, complied as to form in all material
respects with the 1933 Act and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein not misleading; and
each prospectus filed pursuant to Rule 424(b) under the 1933 Act, as of its
issue date and as of the closing of any sale of securities pursuant thereto did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
3.10 No Conflict, Breach, Violation or Default. The execution,
delivery and performance of the Transaction Documents by the Company and the
issuance and sale of the Shares will not conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default under
(i) the Company's Certificate of Incorporation or the Company's Bylaws, both as
in effect on the date hereof (true and complete copies of which have been made
available to the Investors through the XXXXX system), or (ii)(a) any statute,
rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company, any Subsidiary or any
of their respective assets or properties, or (b) any agreement or instrument to
which the Company or any Subsidiary is a party or by which the Company or a
Subsidiary is bound or to which any of their respective assets or properties is
subject.
3.11 Tax Matters. Except as described in Schedule 3.11, the Company
and each Subsidiary has timely prepared and filed all tax returns required to
have been filed by the Company or such Subsidiary with all appropriate
governmental agencies and timely paid all taxes shown thereon or otherwise owed
by it. The charges, accruals and reserves on the books of the Company in respect
of taxes for all fiscal periods are adequate in all material respects, and there
are no material unpaid assessments against the Company or any Subsidiary nor, to
the Company's Knowledge, any basis for the assessment of any additional taxes,
penalties or interest for any fiscal period or audits by any federal, state or
local taxing authority except for any assessment which is not material to the
Company and its Subsidiaries, taken as a whole. All taxes and other assessments
and levies that the Company or any Subsidiary is required to withhold or to
collect for payment have been duly withheld and collected and paid to the proper
governmental entity or third party when due. There are no tax liens or claims
pending or, to the
7
Company's Knowledge, threatened against the Company or any Subsidiary or any of
their respective assets or property. Except as described on Schedule 3.11, there
are no outstanding tax sharing agreements or other such arrangements between the
Company and any Subsidiary or other corporation or entity.
3.12 Title to Properties. Except as disclosed in the SEC Filings and
except for liens, encumbrances and defects that arise in the ordinary course of
business and do not impair the Company's ownership or use of such properties,
the Company and each Subsidiary has good and marketable title to all real
properties and all other properties and assets owned by it, in each case free
from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or currently planned to be
made thereof by them; and except as disclosed in the SEC Filings, the Company
and each Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.
3.13 Certificates, Authorities and Permits. The Company and each
Subsidiary possess adequate certificates, authorities or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business
now operated by it, and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company or
such Subsidiary, could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.
3.13 Labor Matters.
(a) The Company has complied with the federal Worker Adjustment and
Retraining Notification Act of 1988, as amended, in connection with the
transactions contemplated by this Agreement and the Transaction Documents.
(b) Except as set forth on Schedule 3.13, the Company is not a party
to or bound by any collective bargaining agreements or other agreements with
labor organizations. The Company has not violated in any material respect any
laws, regulations, orders or contract terms, affecting the collective bargaining
rights of employees, labor organizations or any laws, regulations or orders
affecting employment discrimination, equal opportunity employment, or employees'
health, safety, welfare, wages and hours.
(c) (i) There are no labor disputes existing, or to the Company's
Knowledge, threatened, involving strikes, slow-downs, work stoppages, job
actions, disputes, lockouts or any other disruptions of or by the Company's
employees, (ii) there are no unfair labor practices or petitions for election
pending or, to the Company's Knowledge, threatened before the National Labor
Relations Board or any other federal, state or local labor commission relating
to the Company's employees, (iii) no demand for recognition or certification
heretofore made by any labor organization or group of employees is pending with
respect to the Company and (iv) to the Company's Knowledge, the Company enjoys
good labor and employee relations with its employees and labor organizations.
8
(d) The Company is, and at all times has been, in full compliance in
all material respects with all applicable laws respecting employment (including
laws relating to classification of employees and independent contractors) and
employment practices, terms and conditions of employment, wages and hours, and
immigration and naturalization. There no claims are pending against the Company
before the Equal Employment Opportunity Commission or any other administrative
body or in any court asserting any violation of Title VII of the Civil Rights
Act of 1963, the Age Discrimination Act of 1967, 32 U.S.C. (S)(S) 1981 or 1983
or any other federal, state or local Law, statute or ordinance barring
discrimination in employment.
(e) The Company is not a party to, or bound by, any employment or
other contract or agreement that contains any severance, termination pay or
change of control liability or obligation, including, without limitation, any
"excess parachute payment," as defined in Section 2806(b) of the Internal
Revenue Code.
(f) Except as specified in Schedule 3.13, each of the Company's
employees is a Person who is either a United States citizen or a permanent
resident entitled to work in the United States. To the Company's Knowledge, the
Company has no liability for the improper classification by the Company of such
employees as independent contractors or leased employees prior to the Closing.
3.15 Intellectual Property.
(a) All Intellectual Property of the Company and its Subsidiaries
is currently in compliance with all legal requirements (including timely
filings, proofs and payments of fees) and is valid and enforceable, except where
the failure to be in compliance or to be valid and enforceable has not and could
not reasonably be expected to have a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole. No Intellectual Property of the Company or
its Subsidiaries which is necessary for the conduct of Company's and each of its
Subsidiaries' respective businesses as currently conducted or as currently
proposed to be conducted has been or is now involved in any cancellation,
dispute or litigation, and, to the Company's Knowledge, no such action is
threatened. No patent of the Company or its Subsidiaries has been or is now
involved in any interference, reissue, re-examination or opposition proceeding.
(b) All of the licenses and sublicenses and consent, royalty or
other agreements concerning Intellectual Property which are necessary for the
conduct of the Company's and each of its Subsidiaries' respective businesses as
currently conducted or as currently proposed to be conducted to which the
Company or any Subsidiary is a party or by which any of their assets are bound
(other than generally commercially available, non-custom, off-the-shelf software
application programs having a retail acquisition price of less than $10,000 per
license) (collectively, "License Agreements") are valid and binding obligations
of the Company or its Subsidiaries that are parties thereto and, to the
Company's Knowledge, the other parties thereto, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally, and
there exists no event or condition which will result in a material violation or
breach of or
9
constitute (with or without due notice or lapse of time or both) a default by
the Company or any of its Subsidiaries under any such License Agreement.
(c) The Company and its Subsidiaries own or have the valid right
to use all of the Intellectual Property that is necessary for the conduct of the
Company's and each of its Subsidiaries' respective businesses as currently
conducted or as currently proposed to be conducted and for the ownership,
maintenance and operation of the Company's and its Subsidiaries' properties and
assets, free and clear of all liens, encumbrances, adverse claims or obligations
to license all such owned Intellectual Property and Confidential Information,
other than licenses entered into in the ordinary course of the Company's and its
Subsidiaries' businesses. The Company and its Subsidiaries have a valid and
enforceable right to use all third party Intellectual Property and Confidential
Information used or held for use in the respective businesses of the Company and
its Subsidiaries.
(d) The conduct of the Company's and its Subsidiaries' businesses
as currently conducted does not infringe or otherwise impair or conflict with
(collectively, "Infringe") any Intellectual Property rights of any third party
or any confidentiality obligation owed to a third party, and, to the Company's
Knowledge, the Intellectual Property and Confidential Information of the Company
and its Subsidiaries which are necessary for the conduct of Company's and each
of its Subsidiaries' respective businesses as currently conducted or as
currently proposed to be conducted are not being Infringed by any third party.
There is no litigation or order pending or outstanding or, to the Company's
Knowledge, threatened or imminent, that seeks to limit or challenge or that
concerns the ownership, use, validity or enforceability of any Intellectual
Property or Confidential Information of the Company and its Subsidiaries and the
Company's and its Subsidiaries' use of any Intellectual Property or Confidential
Information owned by a third party, and, to the Company's Knowledge, there is no
valid basis for the same.
(e) The consummation of the transactions contemplated hereby and
by the other Transaction Documents will not result in the alteration, loss,
impairment of or restriction on the Company's or any of its Subsidiaries'
ownership or right to use any of the Intellectual Property or Confidential
Information which is necessary for the conduct of Company's and each of its
Subsidiaries' respective businesses as currently conducted or as currently
proposed to be conducted.
(f) The Company and its Subsidiaries have taken reasonable steps
to protect the Company's and its Subsidiaries' rights in their Intellectual
Property and Confidential Information. Each employee, consultant and contractor
who has had access to Confidential Information which is necessary for the
conduct of Company's and each of its Subsidiaries' respective businesses as
currently conducted or as currently proposed to be conducted has executed an
agreement to maintain the confidentiality of such Confidential Information and
has executed appropriate agreements that are substantially consistent with the
Company's standard forms thereof. Except under confidentiality obligations,
there has been no material disclosure of any of the Company's or its
Subsidiaries' Confidential Information to any third party.
3.16 Environmental Matters. Neither the Company nor any Subsidiary is
in violation of any statute, rule, regulation, decision or order of any
governmental agency or body
10
or any court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, "Environmental Laws"), owns or operates any real property
contaminated with any substance that is subject to any Environmental Laws, is
liable for any off-site disposal or contamination pursuant to any Environmental
Laws, and is subject to any claim relating to any Environmental Laws, which
violation, contamination, liability or claim has had or could reasonably be
expected to have a Material Adverse Effect, individually or in the aggregate;
and there is no pending or, to the Company's Knowledge, threatened investigation
that might lead to such a claim.
3.17 Litigation. Except as described on Schedule 3.17, there are no
pending actions, suits or proceedings against or affecting the Company, its
Subsidiaries or any of its or their properties involving an amount in
controversy in excess of $175,000; and to the Company's Knowledge, no such
actions, suits or proceedings are threatened or contemplated.
3.18 Financial Statements. Except as described on Schedule 3.18, the
financial statements included in each SEC Filing present fairly, in all material
respects, the consolidated financial position of the Company as of the dates
shown and its consolidated results of operations and cash flows for the periods
shown, and such financial statements have been prepared in conformity with
United States generally accepted accounting principles applied on a consistent
basis ("GAAP") (except as may be disclosed therein or in the notes thereto, and,
in the case of quarterly financial statements, as permitted by Form 10-Q under
the 1933 Act). Except as set forth in the financial statements of the Company
included in the SEC Filings filed prior to the date hereof or as described on
Schedule 3.18, neither the Company nor any of its Subsidiaries has incurred any
liabilities, contingent or otherwise, except those incurred in the ordinary
course of business, consistent (as to amount and nature) with past practices
since the date of such financial statements, none of which, individually or in
the aggregate, have had or could reasonably be expected to have a Material
Adverse Effect.
3.19 Insurance Coverage. The Company and each Subsidiary maintains in
full force and effect insurance coverage that is customary for comparably
situated companies for the business being conducted and properties owned or
leased by the Company and each Subsidiary, and the Company reasonably believes
such insurance coverage to be adequate against all liabilities, claims and risks
against which it is customary for comparably situated companies to insure.
3.20 Compliance with Nasdaq Continued Listing Requirements. Except as
described in Schedule 3.20, the Company is in compliance with applicable Nasdaq
continued listing requirements. Except as described in Schedule 3.20, there are
no proceedings pending or, to the Company's Knowledge, threatened against the
Company relating to the continued listing of the Company's Common Stock on
Nasdaq and the Company has not received any notice of, nor to the Company's
Knowledge is there any basis for, the delisting of the Common Stock from Nasdaq.
Except as described in Schedule 3.20, the Company is in material compliance with
NASD rules and regulations applicable to the Company.
3.21 Brokers and Finders. No Person will have, as a result of the
transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon
11
the Company, any Subsidiary or an Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Company, other than as described in Schedule 3.21.
3.22 No Directed Selling Efforts or General Solicitation. Neither the
Company nor any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation D) in
connection with the offer or sale of any of the Shares.
3.23 No Integrated Offering. Neither the Company nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any Company security or solicited any
offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Section 3(2) for the exemption from registration for
the transactions contemplated hereby or would require registration of the
Securities under the 1933 Act.
3.24 Private Placement. Assuming the truth and accuracy of the
Investors' representations set forth in Section 4 of this Agreement, the offer
and sale of the Securities to the Investors as contemplated hereby is exempt
from the registration requirements of the 1933 Act.
3.25 Questionable Payments. Neither the Company nor any of its
Subsidiaries nor, to the Company's Knowledge, any of their respective current or
former stockholders, directors, officers, employees, agents or other Persons
acting on behalf of the Company or any Subsidiary, has on behalf of the Company
or any Subsidiary or in connection with their respective businesses: (a) used
any corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; (d) made any false or fictitious entries on
the books and records of the Company or any Subsidiary; or (e) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment of
any nature.
3.26 Transactions with Affiliates. Except as disclosed in the SEC
Filings or as disclosed on Schedule 3.26, none of the officers or directors of
the Company and, to the Company's Knowledge, none of the employees of the
Company is presently a party to any transaction with the Company or any
Subsidiary (other than as holders of stock options and/or warrants, and for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
Company's Knowledge, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
3.27 Internal Controls. Except as described in Schedule 3.27, the
Company is in material compliance with the provisions of the Xxxxxxxx-Xxxxx Act
of 2002 currently applicable to the Company. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed
12
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Except as described in Schedule 3.27, the Company has established
disclosure controls and procedures (as defined in 1933 Act Rules 13a-13 and
15d-13) for the Company and designed such disclosure controls and procedures to
ensure that material information relating to the Company, including the
Subsidiaries, is made known to the certifying officers by others within those
entities, particularly during the period in which the Company's most recently
filed period report under the 1933 Act, as the case may be, is being prepared.
Except as described in Schedule 3.27, the Company's certifying officers have
evaluated the effectiveness of the Company's controls and procedures as of the
end of the period covered by the most recently filed periodic report under the
1933 Act (such date, the "Evaluation Date"). Except as described in Schedule
3.27, the Company presented in its most recently filed periodic report under the
1933 Act the conclusions of the certifying officers about the effectiveness of
the disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Except as described in Schedule 3.27, since the Evaluation
Date, there have been no significant changes in the Company's internal controls
(as such term is defined in Item 307(b) of Regulation S-K) or, to the Company's
Knowledge, in other factors that could significantly affect the Company's
internal controls. The Company maintains and will continue to maintain a
standard system of accounting established and administered in accordance with
GAAP and the applicable requirements of the 0000 Xxx.
3.28 Disclosures. Prior to the Effectiveness Deadline, the Company
shall take such actions as may be necessary so that at the Effectiveness
Deadline, neither the Company nor any Person acting on its behalf will have
provided the Investors or their agents or counsel with any information that
continues to constitute or might constitute material, non-public information.
The written materials delivered to the Investors in connection with the
transactions contemplated by the Transaction Documents do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading.
4. Representations, Warranties and Covenants of the Investor.
4.1 Investor Knowledge and Status. The Investor represents and
warrants to, and covenants with, the Company that: (i) the Investor is an
"accredited investor" as defined in Regulation D under the Securities Act and
has requested, received, reviewed and considered all information it deemed
relevant in making an informed decision to purchase the Shares, and has such
business and financial experience as is required to give it the capacity to
utilize the information received, to evaluate the risks involved in purchasing
the Shares, and to protect its own interests in connection with the purchase of
the Shares and is able to bear the risks of an investment in the Shares; (ii)
the Investor understands that the Shares are "restricted securities" and have
not been registered under the Securities Act and is acquiring the number of
Shares set forth on the Signature Page hereto in the ordinary course of its
business and for its own account for investment only, has no present intention
of distributing any of such Shares and has no arrangement or understanding with
any other persons regarding the distribution of such Shares;
13
(iii) the Investor will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act, applicable state securities laws and the respective
rules and regulations promulgated thereunder; (iv) the Investor has answered all
questions on the Signature Page hereto and the Investor Questionnaire attached
hereto as Exhibit B for use in preparation of a registration statement for the
resale of the Conversion Shares (the "Registration Statement") and the answers
thereto are true and correct as of the date hereof and will be true and correct
as of the Closing Date; (v) the Investor will notify the Company promptly of any
change in any of such information until such time as the Investor has sold all
of its Shares or until the Company is no longer required to keep the
Registration Statement effective; and (vi) the Investor has, in connection with
its decision to purchase the number of Shares set forth on the signature page
hereto, relied only upon the representations and warranties of the Company
contained herein. Investor understands that the Shares to be issued to the
Investor have not been registered under the Securities Act, or registered or
qualified under any state securities law in reliance on specific exemptions
therefrom, which exemptions may depend upon, among other things, the bona fide
nature of the Investor's investment intent as expressed herein, and the Investor
is able to bear the economic risk of holding the Shares for an indefinite period
of time and can afford a complete loss of its investment. The Placement Agent is
not authorized to make any representation or use any information in connection
with the placement, purchase and sale of the Shares, and no person is authorized
to provide any representation which is inconsistent or in addition to those in
the SEC Reports. The Investor acknowledges that it has not received or relied on
any such representations.
4.2 International Actions. The Investor acknowledges, represents and
agrees that no action has been or will be taken in any jurisdiction outside the
United States by the Company or the Placement Agent that would permit an
offering of the Shares, or possession or distribution of offering materials in
connection with the issue of the Shares, in any jurisdiction outside the United
States. If the Investor is located outside the United States, it has or will
take all actions necessary for the sale of the Shares to comply with all
applicable laws and regulations in each foreign jurisdiction in which it offers,
sells or delivers Shares or has in its possession or distributes any offering
material, in all cases at its own expense.
4.3 Registration Required. The Investor hereby covenants with the
Company not to make any sale of the Shares without complying with the provisions
of this Agreement and the Registration Rights Agreement, and without effectively
causing the prospectus delivery requirement under the Securities Act to be
satisfied (unless the Investor is selling such Shares in a transaction not
subject to the prospectus delivery requirement), and the Investor acknowledges
that the certificates evidencing the Shares will be imprinted with a legend that
prohibits their transfer except in accordance therewith. The Investor
acknowledges that as set forth in, and subject to the provisions of, the
Registration Rights Agreement, there may occasionally be times when the Company,
based on the advice of its counsel, determines that it must suspend the use of
the prospectus forming a part of the Registration Statement until such time as
an amendment to the Registration Statement has been filed by the Company and
declared effective by the SEC or until the Company has amended or supplemented
such prospectus.
4.4 Power and Authority. The Investor further represents and warrants
to, and covenants with, the Company that (i) if an entity, the Investor is duly
organized and in good
14
standing in the jurisdiction of its organization, (ii) the Investor has full
right, power, authority and capacity to enter into this Agreement and to
consummate the transactions contemplated hereby and has taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and (ii) this Agreement has been duly authorized, executed and delivered, and
constitutes a valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Investors
herein may be legally unenforceable.
4.5 No Dispositions. The Investor will not, prior to the effectiveness
of the Registration Statement, or, if earlier, 90 days from the Closing Date,
directly or indirectly, sell, offer to sell, solicit offers to buy, dispose of,
loan, pledge or grant any right with respect to (collectively, a "Disposition"),
the Common Stock of the Company, nor will Investor engage in any hedging or
other transaction which is designed to or could reasonably be expected to lead
to or result in a Disposition of Common Stock of the Company by the Investor or
any other person or entity or any other derivative security transaction the
purpose or effect of which is to hedge or transfer to a third party all or any
part of the risk of loss associated with the ownership of the Shares by the
Investor. Such prohibited hedging or other transactions would include, without
limitation, effecting any short sale or equity swap transaction or having in
effect any short position (whether or not such sale or position is against the
box and regardless of when such position was entered into) or any purchase, sale
or grant of any right (including, without limitation, any put or call option)
with respect to the Common Stock of the Company.
4.6 No Tax or Legal Advice. The Investor understands that nothing in
this Agreement, or any other materials presented to the Investor in connection
with the purchase and sale of the Shares constitutes legal, tax or investment
advice. The Investor has consulted such legal, tax and investment advisors as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of Shares.
5. Right of First Refusal on Future Financings. From the date hereof until
one year after the Closing Date, upon any financing by the Company of its Common
Stock or Common Stock Equivalents (a "Subsequent Financing"), each Investor
shall have the right to participate in such Subsequent Financing as described
herein. At least five (5) Business Days but not more than ten (10) Business Days
prior to the closing of the Subsequent Financing, the Company shall deliver to
each Investor a written notice of its intention to effect a Subsequent Financing
("Pre-Notice"), which Pre-Notice shall ask such Investor if it wants to review
the details of such financing (such additional notice, a "Subsequent Financing
Notice"). Upon the request of an Investor, and only upon a request by such
Investor, for a Subsequent Financing Notice, the Company shall promptly, but no
later than one Business Day after such request, deliver a Subsequent Financing
Notice to such Investor. The Subsequent Financing Notice shall describe in
reasonable detail the proposed terms of such Subsequent Financing, the amount of
proceeds intended to be raised thereunder, the Person with whom such Subsequent
Financing is proposed to be effected, and attached to which shall be a term
sheet or similar document relating thereto. Each Investor shall notify the
Company by 6:30 p.m. (New York City time) on the fifth
15
(5th) Business Day after their receipt of the Subsequent Financing Notice of its
willingness to provide the Subsequent Financing on the terms described in the
Subsequent Financing Notice, subject to completion of mutually acceptable
documentation. If one or more Investors shall fail to so notify the Company of
their willingness to participate in the Subsequent Financing, the Investors
agreeing to participate in the Subsequent Financing (the "Participating
Investors") shall have the right to provide all of the Subsequent Financing. If
one or more Investors fail to notify the Company of their willingness to provide
all of the Subsequent Financing and the Participating Investors do not agree to
provide all of the Subsequent Financing, the Company may effect the remaining
portion of such Subsequent Financing on the terms and to the Persons set forth
in the Subsequent Financing Notice; provided that the Company must provide the
Investors with a second Subsequent Financing Notice, and the Investors will
again have the right of first refusal set forth above in this Section 5, if the
Subsequent Financing subject to the initial Subsequent Financing Notice is not
consummated for any reason on the terms set forth in such Subsequent Financing
Notice within 30 Business Days after the date of the initial Subsequent
Financing Notice with the Person identified in the Subsequent Financing Notice.
In the event the Company receives responses to Subsequent Financing Notices from
Investors seeking to purchase more than the financing sought by the Company in
the Subsequent Financing such Investors shall have the right to purchase their
Pro Rata Portion (as defined below) of the Common Stock or Common Stock
Equivalents to be issued in such Subsequent Financing. "Pro Rata Portion" is the
ratio of (x) the amount invested by such Investor pursuant to this Agreement
(the "Subscription Amount") and (y) the aggregate sum of all of the Subscription
Amounts. Notwithstanding the foregoing, this Section 5 shall not apply in
respect of the issuance of (a) shares of Common Stock or options to employees,
consultants, officers or directors of the Company pursuant to any stock or
option plan duly adopted by a majority of the non-employee members of the Board
of Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise of or conversion of any convertible securities, options or warrants
issued and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement, (c)
securities to a strategic partner in a transaction, the primary purpose of which
is not the raising of capital, (d) securities to a lender in connection with the
provision of credit to the Company and (e) securities to a Series M investor in
a Subsequent Financing.
6. Filing of Form 8-K. No later than the fourth trading day following the
Closing Date, the Company will file a Current Report on Form 8-K attaching
copies of the Transaction Documents. In addition, the Company will make such
other filings and notices in the manner and time required by the SEC or Nasdaq.
7. Survival of Representations, Warranties and Agreements. Notwithstanding
any investigation made by any party to this Agreement or by the Placement Agent,
all covenants, agreements, representations and warranties made by the Company
and the Investor herein shall survive the execution of this Agreement, the
delivery to the Investor of the Shares being purchased and the payment
therefore.
8. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within domestic United
States by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile, or (B) if delivered
from outside the United States, by International Federal Express (or
16
comparable service) or facsimile, and shall be deemed given (i) if delivered by
first-class registered or certified mail domestic, three business days after so
mailed, (ii) if delivered by nationally recognized overnight carrier, one (1)
business day after so mailed, (iii) if delivered by International Federal
Express (or comparable service), two (2) business days after so mailed, (iv) if
delivered by facsimile, upon electric confirmation of receipt and shall be
delivered as addressed as follows:
(a) if to the Company, to:
Velocity Express Corporation
Xxx Xxxxxxxxxxx Xxxxx Xxxxx
Xxxxxxxx X - Xxxxx 000
Attention: Xxxxxx X. Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: ( )
--- ----------
With a copy to:
Xxxxxx & Whitney LLP
00 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) if to the Investor, at its address on the Signature Page
hereto, or at such other address or addresses as may have been furnished to the
Company in writing.
9. Changes. This Agreement may not be modified or amended except pursuant
to an instrument in writing signed by the Company and the Investor.
10. Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
11. Severability. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
12. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware, without giving
effect to the principles of conflicts of law.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
17
14. Confidential Disclosure Agreement. Notwithstanding any provision of
this Agreement to the contrary, any confidential disclosure agreement previously
executed by the Company and the Investor in connection with the transactions
contemplated by this Agreement shall remain in full force and effect in
accordance with its terms following the execution of this Agreement and the
consummation of the transactions contemplated hereby.
18
Exhibit A
Velocity Express Corporation
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 4 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be
registered in (this is the name that will appear ------------------------
on your stock certificate(s)). You may use a
nominee name if appropriate:
2. The relationship between the Investor and the
registered holder listed in response to item 1 ------------------------
above:
3. The mailing address of the registered holder
listed in response to item 1 above: ------------------------
4. The Social Security Number or Tax Identification
Number of the registered holder listed in the ------------------------
response to item 1 above:
A-1
Exhibit B
Velocity Express Corporation
INVESTOR QUESTIONNAIRE
(all information will be treated confidentially)
To: Velocity Express Corporation:
This Investor Questionnaire ("Questionnaire") must be completed by each
potential investor in connection with the offer and sale of the shares of the
Series N Preferred Stock, par value $0.004 per share (the "Shares"), of Velocity
Express Corporation (the "Company"). The Shares are being offered and sold by
the Company without registration under the Securities Act of 1933, as amended
(the "Securities Act"), and the securities laws of certain states, in reliance
on the exemptions contained in Section 4 of the Securities Act and on Regulation
D promulgated thereunder and in reliance on similar exemptions under applicable
state laws. The Company must determine that a potential investor meets certain
suitability requirements before offering or selling Shares to such investor. The
purpose of this Questionnaire is to assure the Company that each investor will
meet the applicable suitability requirements. The information supplied by you
will be used in determining whether you meet such criteria, and reliance upon
the private offering exemption from registration is based in part on the
information herein supplied.
This Questionnaire does not constitute an offer to sell or a solicitation
of an offer to buy any security. Your answers will be kept strictly
confidential. However, by signing this Questionnaire you will be authorizing the
Company to provide a completed copy of this Questionnaire to such parties as the
Company deems appropriate in order to ensure that the offer and sale of the
Shares will not result in a violation of the Securities Act or the securities
laws of any state and that you otherwise satisfy the suitability standards
applicable to purchasers of the Shares. All potential investors must answer all
applicable questions and complete, date and sign this Questionnaire. Please
print or type your responses and attach additional sheets of paper if necessary
to complete your answers to any item.
A. Background Information
Name:
---------------------------------------------------------------------------
Business Address:
---------------------------------------------------------------
(Number and Street)
--------------------------------------------------------------------------------
(City) (State) (Zip Code)
Telephone Number: ( )
--------------------------------------------------------
Residence Address:
--------------------------------------------------------------
(Number and Street)
--------------------------------------------------------------------------------
(City) (State) (Zip Code)
Telephone Number: ( )
--------------------------------------------------------
If an individual:
Age: Citizenship: Where registered to vote:
------ ---------- -----------------
If a corporation, partnership, limited liability company, trust or other entity:
Type of entity:
-----------------------------------------------------------------
State of formation: Date of formation:
-------------- ------------------------
Social Security or Taxpayer Identification No.
----------------------------------
Send all correspondence to (check one): Residence Address Business Address
--- ---
B-1
B. Status as Accredited Investor
The undersigned is an "accredited investor" as such term is defined in
Regulation D under the Securities Act, as at the time of the sale of the Shares
the undersigned falls within one or more of the following categories (Please
initial one or more, as applicable):
(1) a bank as defined in Section 3(a)(2) of the Securities Act, or a
----
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934; an insurance company as defined in Section 2(13) of the
Securities Act; 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 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; a plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; an employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974 if the investment decision
is made by a plan fiduciary, as defined in Section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with the investment decisions made
solely by persons that are accredited investors;/1/
(2) a private business development company as defined in Section 202(a)(22)
----
of the Investment Adviser Act of 1940;
(3) an organization described in Section 501(c)(3) of the Internal Revenue
----
Code of 1986, as amended, corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of acquiring the Shares
offered, with total assets in excess of $5,000,000;
(4) a natural person whose individual net worth, or joint net worth with
----
that person's spouse, at the time of such person's purchase of the Shares
exceeds $1,000,000;
(5) a natural person who had an individual income in excess of $200,000 in
----
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;
(6) a trust, with total assets in excess of $5,000,000, not formed for the
----
specific purpose of acquiring the Shares offered, whose purchase is directed by
a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D; and
(7) an entity in which all of the equity owners are accredited investors
----
(as defined above).
----------
/1/ As used in this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In computing net worth for the purpose of
subsection (4), the principal residence of the investor must be valued at cost,
including cost of improvements, or at recently appraised value by an
institutional lender making a secured loan, net of encumbrances. In determining
income, the investor should add to the investor's adjusted gross income any
amounts attributable to tax exempt income received, losses claimed as a limited
partner in any limited partnership, deductions claimed for depreciation,
contributions to an XXX or XXXXX retirement plan, alimony payments, and any
amount by which income from long-term capital gains has been reduced in arriving
at adjusted gross income.
B-2
C. Representations
The undersigned hereby represents and warrants to the Company as follows:
1. Any purchase of the Shares would be solely for the account of the
undersigned and not for the account of any other person or with a view to any
resale, fractionalization, division, or distribution thereof.
2. The information contained herein is complete and accurate and may be
relied upon by the Company, and the undersigned will notify the Company
immediately of any material change in any of such information occurring prior to
the closing, if any, with respect to the purchase of Shares by the undersigned
or any co-purchaser.
3. There are no suits, pending litigation, or claims against the
undersigned that could materially affect the net worth of the undersigned as
reported in this Questionnaire.
4. The undersigned acknowledges that there may occasionally be times when
the Company, based on the advice of its counsel, determines that it must suspend
the use of the Prospectus forming a part of the Registration Statement (as such
terms are defined in the Stock Purchase Agreement to which this Questionnaire is
attached) until such time as an amendment to the Registration Statement has been
filed by the Company and declared effective by the Securities and Exchange
Commission or until the Company has amended or supplemented such Prospectus. The
undersigned is aware that, in such event, the Shares will not be subject to
ready liquidation, and that any Shares purchased by the undersigned would have
to be held during such suspension. The overall commitment of the undersigned to
investments which are not readily marketable is not excessive in view of the
undersigned's net worth and financial circumstances, and any purchase of the
Shares will not cause such commitment to become excessive. The undersigned is
able to bear the economic risk of an investment in the Shares.
5. The undersigned has carefully considered the potential risks relating to
the Company and a purchase of the Shares, and fully understands that the Shares
are speculative investments which involve a high degree of risk of loss of the
undersigned's entire investment. Among others, the undersigned has carefully
considered each of the risks described under the headings "Risk Factors" in the
Company's Annual Report on Form 10-K for the year ended July 3, 2004 and the
Company's Quarterly Report on Form 10-Q for the quarter ended January 1, 2005.
B-3
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire this
-----
day of , 2005, and declares under oath that it is truthful and
----------
correct.
Print Name
By:
-------------------------------------
Signature
Title:
----------------------------------
(required for any purchaser that
is a corporation, partnership,
trust or other entity)
B-4
EXHIBIT D
FORM OF LEGAL OPINION
Ladies and Gentlemen:
I am General Counsel to Velocity Express Corporation, a Delaware
corporation (the "Company"), in connection with the preparation, execution and
delivery of certain Stock Purchase Agreements (the "Agreements"), by and between
the Company and certain Investors (the "Investors"). This opinion letter is
provided to the Investors at the request of the Company pursuant to Section 2 of
the Agreements. Except as otherwise indicated herein, capitalized terms used in
this opinion letter are defined as set forth in the Agreements.
I have examined certain corporate records, certificates and documents in
rendering this opinion. In making such examinations, I have made certain
customary assumptions, such as the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the lack of any
undisclosed modifications, waivers or amendments to any agreements reviewed by
me, the conformity to authentic originals of all documents submitted to me as
certified or photostatic copies and the truth and accuracy of factual statements
contained in such documents and certificates. Except as expressly set forth
herein, I have also assumed that the execution, delivery and performance of any
agreements or consents are within the powers of each signatory and have been
duly authorized and validly carried out. The opinions expressed herein are
limited to the Federal laws of the United States of America and the laws of the
State of Delaware and do not address the laws of any other jurisdiction,
including under conflicts of law principles, rules and regulations. In addition,
I express no opinion on any provisions of any Agreement or other documents
delivered in connection therewith relating to indemnification or waivers to the
extent that such indemnification or waivers may be held to be unenforceable
because they are in violation of public policy.
Based upon and subject to the foregoing and the additional qualifications
set forth below, I am of the opinion that:
1. The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct
its business as described in the SEC Reports.
2. The Company is duly qualified to transact business in each
jurisdiction in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify would
have a material adverse effect upon the business condition (financial
or otherwise) or properties of the Company.
3. The Shares have been duly authorized, and when issued and paid for in
accordance with the terms of the Agreements, will be validly issued,
fully paid and nonassessable.
D-1
4. To our knowledge, the sale of the Shares pursuant to the Agreements
does not violate any currently existing preemptive right, co-sale
right, registration right, right of first refusal or other similar
right to purchase any shares of Common Stock from the Company pursuant
to the Company's certificate of incorporation or bylaws or any
agreement to which the Company is a party and which is listed as an
exhibit in the SEC Reports.
5. The Company has the corporate or other applicable power and authority
to enter into the Agreements and the Company has the applicable power
and authority to issue and sell and deliver to each Investor such
Investor's respective portion of the Shares to be sold and delivered
by it pursuant to the Agreements. The Company has the corporate power
and authority to register the Shares under the terms of the
Agreements.
6. The Agreements have been duly authorized by all necessary corporate or
other applicable action on the part of the Company and have been duly
executed and delivered by the Company and are valid and binding
agreements of the Company, enforceable in accordance with their terms.
7. The execution, delivery and performance of the Agreements and the
consummation of the transactions therein contemplated do not and will
not: (i) conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, the certificate of
incorporation or bylaws of the Company, or any agreement or instrument
listed as an exhibit in the SEC Reports; (ii) result in the creation
of a lien on any material portion of the assets of the Company; or
(iii) result in a violation of federal or Delaware law applicable to
the Company.
8. No approval, consent, order, authorization, designation, declaration
or filing by or with any regulatory, administrative or other
governmental body by the Company is necessary in connection with the
execution and delivery of the Agreements and the consummation of the
transactions therein contemplated (other than as may be required by
federal or state securities laws).
9. Assuming that the representations and warranties of the Investors and
the Company set forth in the Agreements and the exhibits thereto are
true and correct, the offer, sale and delivery of the Shares to the
Investors, in the manner contemplated by the Agreements, does not need
to be registered under the Securities Act, it being understood that no
opinion is expressed as to any subsequent resale of any such Shares.
10. To my knowledge, except as disclosed in the SEC Reports or the
Agreements, there is no action, suit, claim, proceeding or
investigation, at law, in equity or otherwise, or by or before any
government instrumentality or other agency, now pending which if
adversely determined would have a material adverse effect on the
business, operation, or operating condition of the Company.
D-2
11. The issuance of the Shares does not require approval of the Company's
stockholders pursuant to the Nasdaq Marketplace Rules.
For purposes of the opinions set forth above in paragraphs 1 and 2 with
respect to the good standing of the Company and its qualification to do business
in identified states, we are relying solely upon relevant certificates from such
States (copies of which are attached hereto as Exhibit A). We express no opinion
with respect to such matters beyond the date of such certificates.
The opinions set forth above in paragraph 7 are subject to and limited by
the following:
(a) the effect of bankruptcy, insolvency, reorganization, moratorium
and other similar laws and legal and equitable principles relating to,
limiting or affecting the enforcement of creditors' and contracting
parties' rights generally including, without limitation, preferences and
fraudulent conveyances and concepts of materiality, reasonableness, good
faith, fair dealing and unconscionability;
(b) the discretion of courts in awarding equitable remedies
(regardless of whether considered in a proceeding in equity or at law),
including, but not limited to, specific performance or injunctive relief;
and
(c) we express no opinion with respect to the enforceability of the
indemnification and contribution provisions of the Agreements.
We assume no obligation to supplement this opinion if any applicable laws
change after the date hereof or if we become aware of any facts that might
change the opinions expressed herein after the date hereof.
This opinion letter is rendered solely for your benefit in connection with
the Agreements, and may not be relied upon for any other purpose, or furnished
to, used, circulated, quoted or referred to by any other person without our
prior written consent.
Sincerely,
D-3
