Exhibit 99.1
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made as of the 8th day of August,
2001 by and among Artisoft, Inc., a Delaware corporation (the "Company"), and
the Investors set forth on the signature pages affixed hereto (each an
"Investor" and collectively the "Investors").
RECITALS
A. The Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended; and
B. The Investors wish to purchase from the Company, and the Company wishes
to sell and issue to the Investors, upon the terms and conditions stated in this
Agreement, an aggregate of 2,800,0000 shares of the Series B Convertible
Preferred Stock, par value $1.00 per share (the "Preferred Stock"), such
Preferred Stock to have the relative rights, preferences and designations set
forth in the Certificate of Designations, Preferences and Rights set forth in
Exhibit A hereto (the "Certificate of Designations"), and warrants to purchase
an aggregate of 2,800,000 shares of the common stock, par value $.01 per share,
of the Company in the form attached hereto as Exhibit B (the "Warrants"); and
C. On the terms and subject to the conditions set forth herein, Special
Situations Fund III, L.P. ("SSF") and certain of the other Investors (the
"Initial Investors") will purchase on the First Closing Date (as defined below)
an aggregate of 1,560,000 shares of Preferred Stock and Warrants to purchase an
aggregate of 1,560,000 shares of the common stock, par value $.01 per share, of
the Company (collectively, the "Initial Securities") for an aggregate purchase
price of $3,900,000 (the "Initial Purchase Price"); and
D. Upon the satisfaction of the conditions set forth herein, the Initial
Investors and the other Investors (the "Remaining Investors") will purchase on
the Second Closing Date (as defined below) an additional 1,240,000 shares of
Preferred Stock and Warrants to purchase an aggregate of 1,240,000 shares of the
common stock, par value $.01 per share, of the Company (collectively, the
"Remaining Securities") for an aggregate purchase price of $3,100,000 (the
"Remaining Purchase Price" and, collectively with the Initial Purchase Price,
the "Purchase Price"); and
E. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as Exhibit C (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act of 1933, as amended and the rules and regulations
promulgated thereunder, and applicable state securities laws.
In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. In addition to those terms defined above and elsewhere in
this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings here set forth:
"AFFILIATE" means, with respect to any Person, any other Person which
directly or indirectly Controls, is controlled by, or is under common control
with, such Person.
"AGREEMENTS" means this Agreement, the Certificate of Designations, the
Warrants and the Registration Rights Agreement.
"COMMON STOCK" means the common stock, $0.01 par value per share, of the
Company, including the stock into which the Series B Preferred Stock is
convertible, and any capital stock of any class of the Company hereafter
authorized that shall not be entitled to a fixed sum in respect of the rights of
the holders thereof to participate in dividends or in the distribution of assets
upon the voluntary or involuntary liquidation, dissolution or winding up of the
Company.
"CONTROL" means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"COMPANY'S KNOWLEDGE" means the actual knowledge of the "executive
officers" (as such term is defined in Rule 405 promulgated under the 0000 Xxx)
of the Company after due inquiry.
"CONVERSION SHARES" means the shares of Common Stock issuable upon
conversion of the Preferred Stock.
"INTELLECTUAL PROPERTY" means all of the following: (i) patents, patent
applications, patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice); (ii) trademarks, service marks, trade
dress, trade names, corporate names, logos, slogans and Internet domain names,
together with all goodwill associated with each of the foregoing; (iii)
copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; (v) trade secrets, confidential information
and know-how (including but not limited to ideas, formulae, compositions,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, business and marketing plans,
and customer and supplier lists and related information); and (vi) computer
software (including but not limited to data, data bases and documentation).
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"MATERIAL ADVERSE EFFECT" means a material adverse effect on the assets,
liabilities, results of operations, condition (financial or otherwise),
business, or prospects of the Company and its subsidiaries taken as a whole.
"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.
"SEC FILINGS" has the meaning set forth in Section 4.6.
"SECURITIES" means the Shares, the Conversion Shares, the Warrants and the
Warrant Shares.
"SHARES" means the shares of Preferred Stock being purchased by the
Investors hereunder on the First Closing Date and the Second Closing Date.
"SUBSIDIARY" has the meaning set forth in Section 4.1.
"WARRANT SHARES" means the shares of Common Stock issuable upon exercise of
or otherwise pursuant to the Warrants.
"1933 ACT" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"1934 ACT" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
2. PURCHASE AND SALE OF THE SHARES AND WARRANTS. (a) Subject to the terms
and conditions of this Agreement, on the First Closing Date, each of the Initial
Investors hereby severally, and not jointly, agrees to purchase, and the Company
hereby agrees to sell and issue to the Initial Investors, the Initial Securities
in the respective amounts set forth opposite each Investor's name on the
signature pages attached hereto.
(b) Subject to the terms and conditions of this Agreement, on the Second
Closing Date, each of the Investors hereby severally, and not jointly, agrees to
purchase, and the Company hereby agrees to sell and issue to the Investors, the
Remaining Securities in the respective amounts set forth opposite each
Investor's name on the signature pages attached hereto.
3. CLOSING. (a) Promptly upon the execution and delivery of this Agreement
and the Registration Rights Agreement and the delivery of such other documents
as may be required hereunder or as may be reasonably requested by the Investors
or their counsel, the Company shall effect the filing in Delaware of the
Certificate of Designations. Upon confirmation that the Certificate of
Designations has been appropriately filed in Delaware and become effective, the
Company shall deliver to the Initial Investors' counsel, in trust, a certificate
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or certificates, registered in such name or names as the Initial Investors may
designate, representing the Initial Securities, with instructions that such
certificates are to be held for release to the Initial Investors only upon
payment of the Initial Purchase Price to the Company. Upon receipt by counsel to
the Initial Investors of the certificates, each Initial Investor shall promptly
cause a wire transfer in same day funds to be sent to the account of the Company
as instructed in writing by the Company, in an amount representing such Initial
Investor's Initial Purchase Price. On the date (the "First Closing Date") the
Company receives such funds, the certificates evidencing the Initial Securities
shall be released to the Initial Investors (the "First Closing"). The purchase
and sale of the Initial Securities shall take place at the offices of Xxxxxxxxxx
Xxxxxxx P.C., 1330 Avenue of the Americas, 21st Floor, New York, New York, or at
such other location and on such other date as the Company and the Initial
Investors shall mutually agree.
(b) Promptly upon the satisfaction or waiver of the conditions set forth
herein and the delivery of such other documents as may be required hereunder or
as may reasonably be requested by the Investors or their counsel, the Company
shall deliver to Investors' counsel, in trust, a certificate or certificates,
registered in such name or names as the Investors may designate, representing
the Remaining Securities, with instructions that such certificates are to be
held for release to the Investors only upon payment of the Remaining Purchase
Price to the Company. Upon receipt by counsel to the Investors of the
certificates, each Investor shall promptly cause a wire transfer in same day
funds to be sent to the account of the Company as instructed in writing by the
Company, in an amount representing such Investor's Remaining Purchase Price. On
the date (the "second Closing Date") the Company receives such funds, the
certificates evidencing the Remaining Securities shall be released to the
Investors (the "Second Closing"). The purchase and sale of the Remaining
Securities shall take place at the offices of Xxxxxxxxxx Xxxxxxx P.C., 1330
Avenue of the Americas, 21st Floor, New York, New York, or at such other
location and on such other date as the Company and the Investors shall mutually
agree.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investors that, except as set forth in the
Schedules delivered herewith:
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the Company
and its Subsidiaries is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to carry on its business as now
conducted and own its properties. Each of the Company and its Subsidiaries is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property makes such qualification or leasing necessary unless the
failure to so qualify has not and could not reasonably be expected to have a
Material Adverse Effect. The Company's subsidiaries are reflected on SCHEDULE
4.1 hereto (the "Subsidiaries").
4.2 AUTHORIZATION. The Company has full power and authority and has
taken all requisite action on the part of the Company, its officers, directors
and stockholders necessary for (i) the authorization, execution and delivery of
the Agreements, (ii) authorization of the performance of all obligations of the
Company hereunder or thereunder, other than, in the case of the issuance of the
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Remaining Securities, the approval of the Proposal (as defined in Section 7.10)
by the Company's stockholders in accordance with applicable law and stock market
rules and regulations, and (iii) the authorization, issuance (or reservation for
issuance) and delivery of the Securities, other than, in the case of the
Remaining Securities, the approval of the Proposal by the Company's stockholders
in accordance with applicable law and stock market rules and regulations. The
Agreements constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors'
rights generally.
4.3 CAPITALIZATION. Set forth on SCHEDULE 4.3 hereto is (a) the
authorized capital stock of the Company on the date hereof; (b) the number of
shares of capital stock issued and outstanding on the last business day
immediately prior to the date hereof; (c) the number of shares of capital stock
issuable pursuant to the Company's stock plans on the last business day
immediately prior to the date hereof; and (d) the number of shares of capital
stock issuable and reserved for issuance pursuant to securities (other than the
Shares and the Warrants) exercisable for, or convertible into or exchangeable
for any shares of capital stock of the Company on the last business day
immediately prior to the date hereof. All of the issued and outstanding shares
of the Company's capital stock have been duly authorized and validly issued and
are fully paid, nonassessable and free of pre-emptive rights and were issued in
full compliance with applicable law. All of the issued and outstanding shares of
capital stock of each Subsidiary have been duly authorized and validly issued
and are fully paid, nonassessable and free of pre-emptive rights, were issued in
full compliance with applicable law and are owned by the Company, beneficially
and of record, subject to no lien, encumbrance or other adverse claim. No Person
is entitled to pre-emptive or similar statutory or contractual rights with
respect to any securities of the Company. There are no outstanding warrants,
options, convertible securities or other rights, agreements or arrangements of
any character under which the Company or any of its Subsidiaries is or may be
obligated to issue any equity securities of any kind and except as contemplated
by this Agreement, neither the Company nor any of its Subsidiaries is currently
in negotiations for the issuance of any equity securities of any kind. Except
for the Registration Rights Agreement, there are no voting agreements, buy-sell
agreements, option or right of first purchase agreements or other agreements of
any kind among the Company and any of the securityholders of the Company
relating to the securities of the Company held by them. The Company has not
granted any Person the right, which is presently in effect or could arise in the
future, 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.
4.4 VALID ISSUANCE. The Preferred Stock has been duly and validly
authorized and, when issued and paid for pursuant to this Agreement, will be
validly issued, fully paid and nonassessable free and clear of all encumbrances
and restrictions, except for restrictions on transfer set forth in this
Agreement or imposed by applicable securities laws. The Warrants have been duly
and validly authorized. Upon the due conversion or exercise of the Preferred
Stock and the Warrants, as applicable, the Conversion Shares or Warrant Shares,
as applicable, issuable upon such conversion or exercise will be validly issued,
fully paid and non-assessable free and clear of all encumbrances and
restrictions, except for restrictions on transfer set forth in this Agreement or
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imposed by applicable securities laws. The Company has reserved a sufficient
number of shares of Common Stock for issuance upon the conversion of the
Preferred Stock and upon exercise of the Warrants, free and clear of all
encumbrances and restrictions, except for restrictions on transfer set forth in
this Agreement or imposed by applicable securities laws.
4.5 CONSENTS. Other than, in the case of the Remaining Securities, the
approval of the Proposal by the stockholders of the Company in accordance with
applicable law and stock market rules and regulations and related filings under
applicable federal securities laws, the execution, delivery and performance by
the Company of the Agreements and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with, any Person,
governmental body, agency, or official other than filings that have been made
pursuant to applicable state securities laws and post-sale filings pursuant to
applicable state and federal securities laws which the Company undertakes to
file within the applicable time periods. The Company has taken all action
necessary to exempt (i) the sale of the Preferred Stock and the Warrants, (ii)
the issuance of the Conversion Shares upon due conversion of the Preferred Stock
and the Warrant Shares upon due exercise of the Warrants, and (iii) the other
transactions contemplated by this Agreement from the provisions of Section 203
of the Delaware General Corporation Law.
4.6 DELIVERY OF SEC FILINGS; BUSINESS. The Company has provided the
Investors with copies of the Company's most recent Annual Report on Form 10-K
for the fiscal year ended June 30, 2000 (the "2000 10-K"), and all other reports
filed by the Company pursuant to the 1934 Act since the filing of the 2000 10-K
and prior to the date hereof (collectively, the "SEC Filings"). The SEC Filings
are the only filings required of the Company pursuant to the 1934 Act for such
period. The Company and its Subsidiaries are engaged only in the business
described in the SEC Filings and the SEC Filings contain a complete and accurate
description in all material respects of the business of the Company and its
Subsidiaries, taken as a whole.
4.7 USE OF PROCEEDS. The proceeds of the sale of the Common Stock and
the Warrants hereunder shall be used by the Company for working capital and
general corporate purposes.
4.8 NO MATERIAL ADVERSE CHANGE. Since June 30, 2000, except as
identified and described in the SEC Filings, there has not been:
(i) any change in the consolidated assets, liabilities, financial
condition or operating results of the Company from that reflected in the
financial statements included in the Company's most recent Quarterly Report on
Form 10-Q, except changes in the ordinary course of business which have not and
could not reasonably be expected to have a Material Adverse Effect;
(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;
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(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);
(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, to the Company's
Knowledge, 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
is reasonably expected to have a Material Adverse Effect; or
(xi) any other event or condition of any character that has had
or is reasonably be expected to have a Material Adverse Effect.
4.9 SEC FILINGS; S-3 ELIGIBILITY.
(a) At the time of filing thereof, the SEC Filings complied as to form
in all material respects with the requirements of the 1934 Act and did not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) During the preceding two years, each registration statement and
any amendment thereto filed by the Company pursuant to the 1933 Act and the
rules and regulations thereunder, as of the date such statement or amendment
became effective, complied as to form in all material respects with the 1933 Act
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
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made, not misleading; and each prospectus filed pursuant to Rule 424(b) under
the 1933 Act, as of its issue date and as of the closing of any sale of
securities pursuant thereto did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(c) The Company meets the registrant requirements for use of Form S-3
set forth in General Instruction I.A. of Form S-3. As of the First Closing or
the Second Closing, as applicable, the sale by the Investors of the Registrable
Securities (as such term is defined in the Registration Rights Agreement)
issuable upon the exercise or conversion of the Initial Securities or the
Remaining Securities, as applicable, meets the transaction requirements for use
of Form S-3 set forth in General Instruction I.B.3. of Form S-3.
4.10 NO CONFLICT, BREACH, VIOLATION OR DEFAULT. The execution,
delivery and performance of the Agreements by the Company and the issuance and
sale of the Securities will not conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a default under (i) the
Company's Certificate of Incorporation or the Company's Bylaws, both as in
effect on the date hereof (copies of which have been provided to the Investors
before the date hereof), or (ii)(a) any statute, rule, regulation or order of
any governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company, any Subsidiary or any of their respective assets
or properties, or (b) any agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or a Subsidiary is bound or to
which any of their respective assets or properties is subject, other than, in
the case of (ii), such conflicts, breaches or violations as, individually or in
the aggregate, have not and could not reasonably be expected to have a Material
Adverse Effect.
4.11 TAX MATTERS. The Company and each Subsidiary has timely prepared
and filed (within all applicable extension periods) all tax returns required to
have been filed by the Company or such Subsidiary with all appropriate
governmental agencies and timely paid all taxes owed by it. The charges,
accruals and reserves on the books of the Company in respect of taxes for all
fiscal periods are adequate in all material respects, and there are no material
unpaid assessments against the Company or any Subsidiary nor, to the Company's
Knowledge, any basis for the assessment of any additional taxes, penalties or
interest for any fiscal period or audits by any federal, state or local taxing
authority except for any assessment which is not material to the Company and its
Subsidiaries, taken as a whole. All taxes and other assessments and levies that
the Company or any Subsidiary is required to withhold or to collect for payment
have been duly withheld and collected and paid to the proper governmental entity
or third party when due. There are no tax liens or claims pending or, to the
Company's Knowledge, threatened against the Company or any Subsidiary or any of
their respective assets or property. There are no outstanding tax sharing
agreements or other such arrangements between the Company and any Subsidiary or
other corporation or entity.
4.12 TITLE TO PROPERTIES. Except as disclosed in the SEC Filings, the
Company and each Subsidiary has good and marketable title to all real properties
and all other properties and assets owned by it, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or currently planned to be made thereof
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by them; and except as disclosed in the SEC Filings, the Company and each
Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.
4.13 CERTIFICATES, AUTHORITIES AND PERMITS. Except as has not and
could not reasonably be expected to have a Material Adverse Effect, the Company
and each Subsidiary possesses adequate certificates, authorities or permits
issued by appropriate governmental agencies or bodies necessary to conduct the
business now operated by it, and neither the Company nor any Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit that, if determined adversely to the
Company or such Subsidiary, could reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate.
4.14 NO LABOR DISPUTES. No material labor dispute with the employees
of the Company or any Subsidiary exists or, to the Company's Knowledge, is
imminent.
4.15 INTELLECTUAL PROPERTY.
(a) All registered or issued Intellectual Property of the Company and
its Subsidiaries is currently in compliance in all material respects with all
legal requirements (including timely filings, proofs and payments of fees) and
is valid and enforceable. No registered 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, sublicenses, consent, royalty or other
agreements concerning Intellectual Property which is necessary for the conduct
of Company's and each of its Subsidiaries' respective businesses as currently
conducted or as currently proposed to be conducted 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, to the Company's Knowledge, there exists no event or condition which will
result in a material violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default by the Company or any of its
Subsidiaries under any such License Agreement.
(c) The Company and its Subsidiaries own or have the valid right to
use all of the Intellectual Property necessary for the conduct of the Company's
and each of its Subsidiaries' businesses substantially as currently conducted
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and for the ownership, maintenance and operation of the Company's and its
Subsidiaries' properties and assets.
(d) The Company and its Subsidiaries own the Intellectual Property
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 and owned by it free and clear of all liens, encumbrances, adverse
claims or obligations to license all such owned Intellectual Property, other
than licenses entered into in the ordinary course of the Company's and its
Subsidiaries' businesses. The Company and its Subsidiaries have a valid and
enforceable right to use all other Intellectual Property used or held for use in
the respective businesses of the Company and its Subsidiaries. The Company and
its Subsidiaries have the right to use all of the owned and licensed
Intellectual Property which is necessary for the conduct of Company's and each
of its Subsidiaries' respective businesses as currently conducted or as
currently proposed to be conducted in all jurisdictions in which they conduct
their businesses.
(e) The Company and each of its Subsidiaries have taken all reasonable
steps to maintain, police and protect the Intellectual Property which it owns
and which is necessary for the conduct of Company's and each of its
Subsidiaries' respective businesses as currently conducted or as currently
proposed to be conducted, including the execution of appropriate confidentiality
agreements and intellectual property and work product assignments and releases.
The conduct of the Company's and its Subsidiaries' businesses as currently
conducted does not, to the Company's Knowledge, infringe or otherwise impair or
conflict with (collectively, "Infringe") any Intellectual Property rights of any
third party, and, to the Company's Knowledge, the Intellectual Property rights
of the Company and its Subsidiaries which are necessary for the conduct of
Company's and each of its Subsidiaries' respective businesses as currently
conducted or as currently proposed to be conducted are not being Infringed by
any third party. There is no litigation or order pending or outstanding or, to
the Company's Knowledge, threatened or imminent, that seeks to limit or
challenge or that concerns the ownership, use, validity or enforceability of any
Intellectual Property of the Company and its Subsidiaries and the Company's and
its Subsidiaries' use of any Intellectual Property owned by a third party, and,
to the Company's Knowledge, there is no valid basis for the same.
(f) The consummation of the transactions contemplated hereby will not
result in the alteration, loss, impairment of or restriction on the Company's or
any of its Subsidiaries' ownership or right to use any of the Intellectual
Property which is necessary for the conduct of Company's and each of its
Subsidiaries' respective businesses as currently conducted or as currently
proposed to be conducted.
(g) All software owned by the Company or any of its Subsidiaries, and,
to the Company's Knowledge, all software licensed from third parties by the
Company or any of its Subsidiaries, (i) is free from any material defect, bug,
virus, or programming, design or documentation error; (ii) operates and runs in
a reasonable and efficient business manner; and (iii) conforms in all material
respects to the specifications and purposes thereof.
(h) The Company and its Subsidiaries have taken reasonable steps to
protect the Company's and its Subsidiaries' rights in their confidential
information and trade secrets. Each employee, consultant and contractor who has
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had access to proprietary Intellectual Property which is necessary for the
conduct of Company's and each of its Subsidiaries' respective businesses as
currently conducted or as currently proposed to be conducted has executed an
agreement to maintain the confidentiality of such Intellectual Property and has
executed appropriate agreements that are substantially consistent with the
Company's standard forms thereof. Except under confidentiality obligations,
there has been no material disclosure of any of the Company's or its
Subsidiaries' confidential information or trade secrets to any third party.
4.16 ENVIRONMENTAL MATTERS. Neither the Company nor any Subsidiary is
in violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "Environmental Laws"), owns or operates any real
property contaminated with any substance that is subject to any Environmental
Laws, is liable for any off-site disposal or contamination pursuant to any
Environmental Laws, and is subject to any claim relating to any Environmental
Laws, which violation, contamination, liability or claim has had or could
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate; and there is no pending or, to the Company's Knowledge, threatened
investigation that might lead to such a claim.
4.17 LITIGATION. Except as disclosed in the SEC Filings, there are no
pending actions, suits or proceedings against or affecting the Company, its
Subsidiaries or any of its or their properties; and to the Company's Knowledge,
no such actions, suits or proceedings are threatened or contemplated.
4.18 FINANCIAL STATEMENTS. The financial statements included in each
SEC Filing fairly present the consolidated financial position of the Company as
of the dates shown and its consolidated results of operations and cash flows for
the periods shown, and such financial statements have been prepared in
conformity with United States generally accepted accounting principles applied
on a consistent basis (except as may be disclosed therein or in the notes
thereto, and, in the case of quarterly financial statements, as permitted by
Form 10-Q under the 1934 Act). Except as set forth in the financial statements
of the Company included in the SEC Filings filed prior to the date hereof,
neither the Company nor any Subsidiaries has any liabilities, contingent or
otherwise, except those which have not had and could not reasonably be expected
to have a Material Adverse Effect, individually or in the aggregate.
4.19 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.
4.20 COMPLIANCE WITH NASDAQ CONTINUED LISTING REQUIREMENTS. The
Company is in compliance with applicable Nasdaq National Market continued
listing requirements. There are no proceedings pending or, to the Company's
11
Knowledge, threatened against the Company relating to the continued listing of
the Company's Common Stock on the Nasdaq National Market and the Company has not
received any notice of, nor to the Company's Knowledge is there any basis for,
the delisting of the Common Stock from the Nasdaq National Market.
4.21 BROKERS AND FINDERS. No Person will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company.
4.22 NO DIRECTED SELLING EFFORTS OR GENERAL SOLICITATION. Neither the
Company nor any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation D) in
connection with the offer or sale of any of the Securities.
4.23 NO INTEGRATED OFFERING. Neither the Company nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any Company security or solicited any
offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Section 4(2) for the exemption from registration for
the transactions contemplated hereby or would require registration of the
Securities under the 1933 Act.
4.24 QUESTIONABLE PAYMENTS. Neither the Company nor any of its
Subsidiaries nor, to the Company's Knowledge, any of their respective current or
former shareholders, directors, officers, employees, agents or other Persons
acting on behalf of the Company or any Subsidiary, has on behalf of the Company
or any Subsidiary or in connection with their respective businesses: (a) used
any corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; (d) made any false or fictitious entries on
the books and records of the Company or any Subsidiary; or (e) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment of
any nature.
4.25 DISCLOSURES. None of the written materials delivered to the
Investors in connection with the transactions contemplated by the Agreements
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein, in light of
the circumstances under which they were made, not misleading. None of the
following matters disclosed in the Schedules delivered herewith have had, or are
reasonably likely to have, a Material Adverse Effect, individually or in the
aggregate : (i) the matters disclosed in SCHEDULE 4.11 with respect to the State
of California; (ii) the matters disclosed in the third paragraph of SCHEDULE
4.15; and (iii) the matters disclosed in SCHEDULE 4.17.
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. Each of the Investors
hereby severally, and not jointly, represents and warrants to the Company that:
12
5.1 ORGANIZATION AND EXISTENCE. The Investor is a validly existing
corporation, limited partnership or limited liability company and has all
requisite corporate, partnership or limited liability company power and
authority to invest in the Securities pursuant to this Agreement.
5.2 AUTHORIZATION. The execution, delivery and performance by the
Investor of the Agreements have been duly authorized and the Agreements will
each constitute the valid and legally binding obligation of the Investor,
enforceable against the Investor in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors'
rights generally.
5.3 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Securities to be received
by the Investor hereunder will be acquired for the Investor's own account, not
as nominee or agent, and not with a view to the resale or distribution of any
part thereof in violation of the 1933 Act, and the Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same in violation of the 1933 Act. The Investor is not a registered broker
dealer or an entity engaged in the business of being a broker dealer.
5.4 INVESTMENT EXPERIENCE. The Investor acknowledges that it can bear
the economic risk and complete loss of its investment in the Securities and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
hereby.
5.5 DISCLOSURE OF INFORMATION. The Investor has had an opportunity to
receive documents related to the Company and to ask questions of and receive
answers from the Company regarding the Company, its business and the terms and
conditions of the offering of the Securities. The Investor acknowledges receipt
of copies of the SEC Filings. Neither such inquiries nor any other due diligence
investigation conducted by the Investor shall modify, amend or affect the
Investor's right to rely on the Company's representations and warranties
contained in this Agreement.
5.6 RESTRICTED SECURITIES. The Investor understands that the
Securities are characterized as "restricted securities" under the U.S. federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.
5.7 LEGENDS. It is understood that, until the earlier of (i) the time
(other than an Allowed Delay (as defined in the Registration Rights Agreement))
the Investor has a present intention to dispose of Securities pursuant to the
Plan of Distribution included in a currently available final Prospectus prepared
by the Company and relating to a Registration Statement effected pursuant to the
Registration Rights Agreement (a "Final Prospectus") applicable to such
Securities or (ii) the time when such Securities may be sold pursuant to Rule
144(k), certificates evidencing such Securities may bear the following or any
similar legend:
13
(a) "The securities represented hereby may not be transferred unless
(i) such securities have been registered for sale pursuant to the Securities Act
of 1933, as amended, (ii) such securities may be sold pursuant to Rule 144(k),
or (iii) the Company has received an opinion of counsel satisfactory to it that
such transfer may lawfully be made without registration under the Securities Act
of 1933 or qualification under applicable state securities laws."
(b) If required by the authorities of any state in connection with the
issuance of sale of the Securities, the legend required by such state authority.
Upon the earlier of (i) registration of any Conversion Shares or
Warrant Shares (collectively, the "Underlying Shares") issuable upon conversion
or exercise, as the case may be, of Shares or Warrants for sale pursuant to the
Registration Rights Agreement or (ii) Rule 144(k) becoming available with
respect to the Preferred Stock and Warrants issued pursuant to this Agreement or
the Underlying Shares, as applicable, the Company shall, upon an Investor's
written request (which in the case of clause (i) shall be accompanied by a
written certification by the Investor that (A) the Investor has a present
intention to dispose of Underlying Shares covered by such registration statement
pursuant to the Plan of Distribution included in a currently available Final
Prospectus related thereto, and (B) the Investor will comply with the prospectus
delivery requirements applicable to such disposition, and which, in the case of
clause (ii), shall be accompanied by such reasonable and appropriate customary
representations as may be reasonably requested by the Company), promptly cause
certificates evidencing such Underlying Shares, Preferred Stock and/or Warrants,
as applicable, to be replaced with certificates which do not bear such
restrictive legends, and (I) all Conversion Shares subsequently issued in
respect of such Preferred Stock shall not bear such restrictive legends, and
(II) all Warrant Shares subsequently issued in respect of such Warrants shall
not bear such restrictive legends provided the provisions of either clause (i)
or clause (ii) above, as applicable, are satisfied with respect to such Warrant
Shares. When the Company is required to cause unlegended certificates to replace
previously issued legended certificates, if unlegended certificates are not
delivered to an Investor within ten (10) business days of submission by that
Investor of legended stock certificate(s) to the Company's transfer agent
together with a representation letter in customary form, the Company shall be
liable to the Investor for a penalty equal to 1% of the aggregate purchase price
of the Shares evidenced by such certificate(s) for each thirty (30) day period
(or portion thereof) beyond such ten (10) days that the unlegended certificates
have not been so delivered.
5.8 ACCREDITED INVESTOR. The Investor is an accredited investor as
defined in Rule 501(a) of Regulation D, as amended, under the 0000 Xxx.
5.9 NO GENERAL SOLICITATION. The Investor did not learn of the
investment in the Securities as a result of any public advertising or general
solicitation.
5.10 BROKERS AND FINDERS. No Person will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Investors.
14
5A. CONDITIONS TO THE CLOSINGS.
5A.1 CONDITIONS TO THE INVESTORS' OBLIGATIONS - FIRST CLOSING.
The obligation of the Initial Investors to purchase the Initial Securities at
the First Closing is subject to the fulfillment to the Initial Investors'
satisfaction, on or prior to the First Closing Date, of the following
conditions, any of which may be waived by the Initial Investors proposing to
purchase a majority of the Initial Securities:
(a) The representations and warranties made by the Company in
Section 4 hereof shall be true and correct when made, and shall be true and
correct on the First Closing Date with the same force and effect as if they had
been made on and as of said date, except to the extent any such representation
or warranty expressly speaks of an earlier date, and, to the extent not already
qualified by materiality, except for changes which, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate. The Company shall have performed in all material respects all
obligations and conditions herein required to be performed or observed by it on
or prior to the First Closing Date.
(b) The Company shall have obtained in a timely fashion any and
all consents, permits and waivers necessary or appropriate for consummation of
the purchase and sale of the Initial Securities.
(c) The Company and the Investors shall have executed and
delivered the Registration Rights Agreement.
(d) No judgment, writ, order, injunction, award or decree of or
by any court, or judge, justice or magistrate, including any bankruptcy court or
judge, or any order of or by any governmental authority, shall have been issued,
and no action or proceeding should have been instituted by any governmental
authority, enjoining or preventing the consummation of the transactions
contemplated hereby or in the other Agreements.
(e) The Company shall have delivered a Certificate, executed on
behalf of the Company by its Secretary, dated as of the First Closing Date,
certifying the resolutions adopted by the Board of Directors of the Company
approving the transactions contemplated by this Agreement and the other
Agreements and the issuance of the Securities, certifying the current versions
of the Certificate of Incorporation and Bylaws of the Company and certifying as
to the signatures and authority of persons signing the Agreements and related
documents on behalf of the Company.
(f) The Initial Investors shall have received an opinion from
Xxxx and Xxxx LLP, the Company's counsel, dated as of the First Closing Date, in
form and substance reasonably acceptable to the Initial Investors, addressing
those legal matters set forth in SCHEDULE 5A hereto.
5A.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY- FIRST CLOSING. The
Company's obligation to sell and issue the Initial Securities at the First
15
Closing is subject to the fulfillment to the satisfaction of the Company on or
prior to the First Closing Date of the following conditions, any of which may be
waived by the Company:
(a) The conditions set forth in subsections (b) and (c) of
Section 5A.1 shall have been fulfilled.
(b) No judgment, writ, order, injunction, award or decree of or
by any court, or judge, justice or magistrate, including any bankruptcy court or
judge, or any order of or by any governmental authority, shall have been issued,
and no action or proceeding should have been instituted by any governmental
authority, enjoining or preventing the consummation of the transactions
contemplated hereby or in the other Agreements.
5A.3 CONDITIONS TO THE INVESTORS' OBLIGATIONS - SECOND CLOSING.
The obligation of the Investors to purchase the Remaining Securities at the
Second Closing is subject to the fulfilment to the Investors' satisfaction, on
or prior to the Second Closing Date, of the following conditions, any of which
may be waived by the mutual consent of (i) the Initial Investors holding a
majority of the Initial Securities (the "Required Initial Investors") and (ii)
the Remaining Investors proposing to purchase a majority of the Remaining
Securities to be purchased by the Remaining Investors (the "Required Remaining
Investors" and, collectively with the Required Initial Investors, the "Required
Investors"):
(a) The representations and warranties made by the Company in
Section 4 hereof shall be true and correct when made, and shall be true and
correct on the Second Closing Date with the same force and effect as if they had
been made on and as of said date, except to the extent any such representation
or warranty expressly speaks of an earlier date, and, to the extent not already
qualified by materiality, except for changes which, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate. The Company shall have performed in all material respects all
obligations and conditions herein required to be performed or observed by it on
or prior to the Second Closing Date.
(b) The Company shall have obtained in a timely fashion any and
all consents, permits and waivers necessary or appropriate for consummation of
the purchase and sale of the Remaining Securities.
(c) The First Closing shall have been consummated in accordance
with the terms of this Agreement.
(d) The Company's stockholders shall have approved the Proposal
(as defined in Section 7.10) by the vote and in the manner required by
applicable laws and the applicable Nasdaq Marketplace Rules.
(e) No judgment, writ, order, injunction, award or decree of or
by any court, or judge, justice or magistrate, including any bankruptcy court or
judge, or any order of or by any governmental authority, shall have been issued,
16
and no action or proceeding should have been instituted by any governmental
authority, enjoining or preventing the consummation of the transactions
contemplated hereby or in the other Agreements.
(f) The Company shall have delivered a Certificate, executed on
behalf of the Company by its Chief Executive Officer or its Chief Financial
Officer, dated as of the Second Closing Date, certifying to the fulfilment of
the conditions specified in subsections (a) and (b) of this Section 5A.3.
(g) The Company shall have delivered a Certificate, executed on
behalf of the Company by its Secretary, dated as of the Second Closing Date,
certifying the resolutions adopted by the Board of Directors of the Company
approving the transactions contemplated by this Agreement and the other
Agreements and the issuance of the Securities, certifying the current versions
of the Certificate of Incorporation and Bylaws of the Company and certifying as
to the signatures and authority of persons signing the Agreements and related
documents on behalf of the Company.
(h) The Investors shall have received an opinion from Xxxx and
Xxxx LLP, the Company's counsel, dated as of the Second Closing Date, in form
and substance reasonably acceptable to the Investors, addressing those legal
matters set forth in SCHEDULE 5A hereto.
5A.4 CONDITIONS TO OBLIGATIONS OF THE COMPANY- SECOND CLOSING.
The Company's obligation to sell and issue the Remaining Securities at the
Second Closing is subject to the fulfilment to the satisfaction of the Company
on or prior to the Second Closing Date of the following conditions, any of which
may be waived by the Company:
(a) The conditions set forth in subsections (b) and (d) of
Section 5A.3 shall have been fulfilled.
(b) No judgment, writ, order, injunction, award or decree of or
by any court, or judge, justice or magistrate, including any bankruptcy court or
judge, or any order of or by any governmental authority, shall have been issued,
and no action or proceeding should have been instituted by any governmental
authority, enjoining or preventing the consummation of the transactions
contemplated hereby or in the other Agreements.
(c) The representations and warranties made by the Investors in
Section 5 hereof, other than the representations and warranties contained in
Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 (the "Investment
Representations"), shall be true and correct in all material respects when made,
and shall be true and correct in all material respects on the Second Closing
Date with the same force and effect as if they had been made on and as of said
date. The Investment Representations shall be true and correct in all respects
when made, and shall be true and correct in all respects on the Second Closing
Date with the same force and effect as if they had been made on and as of said
date. The Investors shall have performed in all material respects all
obligations and conditions herein required to be performed or observed by them
on or prior to the Second Closing Date.
17
(d) The Investors shall have delivered one or more Certificates,
executed on behalf of each Investor by an authorized signatory, dated as of the
Second Closing Date, certifying to the fulfilment of the conditions specified in
subsection (c) with respect to such Investor.
5A.5 TERMINATION OF OBLIGATIONS TO EFFECT SECOND CLOSING; EFFECTS.
(a) The obligations of the Company, on the one hand, and the
Investors, on the other hand, to effect the Second Closing shall terminate as
follows:
(i) Upon the mutual written consent of the Company and the
Required Investors;
(ii) By the Company if any of the conditions set forth in
Section 5A.4 shall have become incapable of fulfillment, and shall not have been
waived by the Company;
(iii) By the Required Initial Investors (as to the Initial
Investors only) if any of the conditions set forth in Section 5A.3 shall have
become incapable of fulfillment, and shall not have been waived by the Required
Initial Investors;
(iv) By the Required Remaining Investors (as to the
Remaining Investors only) if any of the conditions set forth in Section 5A.3
shall have become incapable of fulfillment, and shall not have been waived by
the Required Remaining Investors;
(v) By the Company if the Second Closing has not occurred on
or prior to December 31, 2001;
(vi) By the Required Initial Investors (as to the Initial
Investors only) if the Second Closing has not occurred on or prior to December
31, 2001; or
(vii) By the Required Remaining Investors (as to the
Remaining Investors only) if the Second Closing has not occurred on or prior to
December 31, 2001;
provided, however, that, except in the case of clause (i) above, the party
seeking to terminate its obligation to effect the Second Closing shall not then
be in breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Agreements if such breach has resulted
in the circumstances giving rise to such party's seeking to terminate its
obligation to effect the Second Closing.
(b) In the event of termination by the Company or the Investors
of their obligations to effect the Second Closing pursuant to this Section 5A.5,
written notice thereof shall forthwith be given to the other parties hereto and
the obligation of all parties to effect the Second Closing shall be terminated,
without further action by any party; provided, however, that in the event that
either the Initial Investors or the Remaining Investors terminate their
obligation to effect the Second Closing pursuant to the terms hereof, the other
Investors shall have the right, for a period of ten days following receipt of
18
notice by them of such termination to require the Company to consummate the
Second Closing with respect to such Investors only. In the event that the
Initial Investors or the Remaining Investors, as the case may be, do not
exercise such right prior to the end of such ten-day period, the obligation of
such Investors to effect the Second Closing shall automatically terminate
without the necessity of any further act on the part of such Investors. Nothing
in this Section 5A.5 shall be deemed to release any party from any liability for
any breach by such party of the terms and provisions of this Agreement or the
other Agreements or to impair the right of any party to compel specific
performance by any other party of its obligations under this Agreement or the
other Agreements.
(c) A termination of the obligation to effect the Second Closing
pursuant to the terms of this Section 5A.5 shall not affect the Agreement or the
other Agreements which shall otherwise continue in full force and effect.
6. REGISTRATION RIGHTS AGREEMENT. The parties acknowledge and agree that
part of the inducement for the Investors to enter into this Agreement is the
Company's execution and delivery of the Registration Rights Agreement. The
parties acknowledge and agree that simultaneously with the execution hereof, the
Registration Rights Agreement is being duly executed and delivered by the
parties thereto.
7. COVENANTS AND AGREEMENTS OF THE COMPANY.
7.1 RIGHT OF THE INVESTORS TO PARTICIPATE IN FUTURE TRANSACTIONS. So
long as the Investors to whom securities have been issued pursuant to this
Agreement and/or their assignees continue to be the beneficial owners
(determined in accordance with the rules and regulations of the Securities and
Exchange Commission) of at least a majority of the shares of Preferred Stock
issued pursuant to this Agreement (determined on or prior to the Second Closing,
if any, without regard to the Remaining Securities and appropriately adjusted
for any stock split, reverse stock split, stock dividend or other
reclassification or combination of the Preferred Stock occurring after the date
hereof), the Investors shall have the right to participate in future capital
raising transactions on the terms and conditions set forth in this Section 7.1;
provided, however, that the provisions of this Section 7.1 shall not apply to
the issuance and sale of the Remaining Securities. During such period, the
Company shall give ten (10) business days advance written notice to such
Investors and/or assignees prior to any non-public offer or sale of any of the
Company's securities by providing to such Investors and/or their assignees a
term sheet containing all material business terms of the proposed transaction.
Such Investors and/or their assignees shall have the right (pro rata in
accordance with such Investors' participation in this offering) to purchase such
securities which are the subject of the proposed transaction for the same
consideration and on the same terms and conditions as contemplated for such
third-party sale; provided, however, that if less than all of the Preferred
Stock is outstanding at the time of such proposed transaction, the participation
right of the Investors shall be pro rated based on the percentage of the
original shares of Preferred Stock that are then outstanding (determined on or
prior to the Second Closing, if any, without regard to the Remaining Securities
and appropriately adjusted for any stock split, reverse stock split, stock
dividend or other reclassification or combination of the Preferred Stock
occurring after the date hereof). The Investor(s)' rights hereunder must be
exercised in writing by the Investor(s) within five (5) business days following
19
receipt of the notice from the Company. If, subsequent to the Company giving
notice to an Investor hereunder but prior to the Investor exercising its right
to participate (or the expiration of the five-day period without response from
the Investor), the terms and conditions of the proposed third-party sale are
changed in any material respect from that disclosed in the term sheet provided
to such Investor, the Company shall be required to provide a new notice to the
Investor hereunder and the Investors shall have the right, which must be
exercised within five (5) business days of such new notice, to exercise their
rights to purchase the securities on such changed terms and conditions as
provided hereunder. In the event the Investors do not exercise their rights
hereunder, or affirmatively decline to engage in the proposed transaction with
the Company, then the Company may proceed with such proposed transaction on the
same terms and conditions as noticed to the Investors.
7.2 LIMITATION ON CERTAIN ACTIONS. Commencing on the date hereof and
continuing until the earliest of (i) the Second Closing, (ii) the termination of
the obligations of the parties hereto to effect the Second Closing in accordance
with Section 5A.5 hereof, or (iii) the termination of this Agreement in
accordance with its terms, the Company shall not take or agree to take any
action, including without limitation, effecting or approving any stock split,
reverse stock split, stock dividend or other reclassification or combination of
any class or series of its capital stock or the issuance of any shares of its
capital stock, if such action would result in an adjustment of the Conversion
Price (as defined in the Certificate of Designations), the Warrant Price (as
defined in the Warrants) or the number of shares issuable upon exercise of the
Warrants.
7.3 RESERVATION OF COMMON STOCK. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of providing for the conversion of the Preferred
Stock and the exercise of the Warrants, such number of shares of Common Stock as
shall from time to time equal the number of shares sufficient to permit the
conversion of the Preferred Stock issued pursuant to this Agreement and the
exercise of the Warrants issued pursuant to this Agreement in accordance with
their respective terms.
7.4 REPORTS. So long as the Investors to whom securities have been
issued pursuant to this Agreement and/or their assignees continue to be the
beneficial owners (determined in accordance with the rules and regulations of
the Securities and Exchange Commission) of at least a majority of the shares of
Preferred Stock issued pursuant to this Agreement (determined on or prior to the
Second Closing, if any, without regard to the Remaining Securities and
appropriately adjusted for any stock split, reverse stock split, stock dividend
or other reclassification or combination of the Preferred Stock occurring after
the date hereof), the Company will furnish to such Investors and/or their
assignees such information relating to the Company and its Subsidiaries as from
time to time may reasonably be requested by such Investors and/or their
assignees; provided, however, that such Investors and/or assignees shall hold in
confidence any confidential or proprietary information received from the Company
and identified as such at the time of disclosure such information and shall use
any such confidential or proprietary information solely for the purpose of
monitoring and evaluating their investment in the Company and; provided,
further, that the Company shall not be required to provide any information to
the Investors which, if disclosed to such Investors and/or their assignees
pursuant to the terms of this Section 7.4, would, in the good faith judgment of
20
the Company, cause the Company or any Subsidiary to violate the terms of a
confidentiality undertaking binding on the Company or such Subsidiary. Each
Investor and/or assignee acknowledges that it is aware, and that it will advise
its representatives who are given access to such information, that the United
States securities laws may prohibit a person who has material, non-public
information concerning matters that may be disclosed to it pursuant to this
Section 7.4 from purchasing or selling securities of the Company or a company
which may be, or may be affiliated with, a party to a business arrangement or
proposed business arrangement with the Company or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.
7.5 PRESS RELEASES. Any press release or other publicity concerning
this Agreement or the transactions contemplated by this Agreement shall be
submitted to the Investors for comment a reasonable period of time prior to
issuance, unless the release is required to be issued within a shorter period of
time by law or pursuant to the rules of a national securities exchange.
7.6 NO CONFLICTING AGREEMENTS. The Company will not take any action,
enter into any agreement or make any commitment that would conflict or interfere
in any material respect with the obligations to the Investors under the
Agreements.
7.7 INSURANCE. So long as the Investors to whom securities have been
issued pursuant to this Agreement and/or their assignees continue to be the
beneficial owners (determined in accordance with the rules and regulations of
the Securities and Exchange Commission) of at least a majority of the shares of
Preferred Stock issued pursuant to this Agreement (determined on or prior to the
Second Closing, if any, without regard to the Remaining Securities and
appropriately adjusted for any stock split, reverse stock split, stock dividend
or other reclassification or combination of the Preferred Stock occurring after
the date hereof), the Company shall not materially reduce the insurance
coverages described in Section 4.19.
7.8 COMPLIANCE WITH LAWS. So long as the Investors to whom securities
have been issued pursuant to this Agreement and/or their assignees continue to
be the beneficial owners (determined in accordance with the rules and
regulations of the Securities and Exchange Commission) of at least a majority of
the shares of Preferred Stock issued pursuant to this Agreement (determined on
or prior to the Second Closing, if any, without regard to the Remaining
Securities and appropriately adjusted for any stock split, reverse stock split,
stock dividend or other reclassification or combination of the Preferred Stock
occurring after the date hereof), the Company will use reasonable efforts to
comply with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities, except to the extent non-compliance (in one instance
or in the aggregate) would not have a Material Adverse Effect.
7.9 LISTING OF UNDERLYING SHARES AND RELATED MATTERS. Promptly
following the First Closing, the Company shall take such action as may be
required to cause the Conversion Shares and the Warrant Shares issuable upon the
conversion or exercise of the Initial Securities to be listed on the Nasdaq
National Market as promptly as possible but no later than the effective date of
the registration thereof contemplated by the Registration Rights Agreement.
21
Promptly following the Second Closing, the Company shall take such action as may
be required to cause the Conversion Shares and the Warrant Shares issuable upon
the conversion or exercise of the Remaining Securities to be listed on the
Nasdaq National Market as promptly as possible but no later than the effective
date of the registration thereof contemplated by the Registration Rights
Agreement. Further, if the Company applies to have its Common Stock or other
securities traded on any other principal stock exchange or market, it shall
include in such application the Conversion Shares and the Warrant Shares and
will take such other action as is necessary to cause such Common Stock to be so
listed. So long as the Investors to whom securities have been issued pursuant to
this Agreement and/or their assignees continue to be the beneficial owners
(determined in accordance with the rules and regulations of the Securities and
Exchange Commission) of at least a majority of the shares of Preferred Stock
issued pursuant to this Agreement (determined on or prior to the Second Closing,
if any, without regard to the Remaining Securities and appropriately adjusted
for any stock split, reverse stock split, stock dividend or other
reclassification or combination of the Preferred Stock occurring after the date
hereof), the Company will use commercially reasonable efforts to continue the
listing and trading of its Common Stock on the Nasdaq National Market and, in
accordance, therewith, will use commercially reasonable efforts to comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of such exchange, as applicable.
7.10 PROXY STATEMENT; STOCKHOLDERS MEETING. (a) Promptly following the
execution and delivery of this Agreement. The Company shall take all action
necessary to call a meeting of its stockholders (the "Stockholders Meeting") for
the purpose of seeking approval of the Company's stockholders for the issuance
and sale to the Investors of the Remaining Securities, together with the
Conversion Shares and Warrant Shares related thereto (the "Proposal"). In
connection therewith, the Company will promptly prepare and file with the SEC
proxy materials (including a proxy statement and form of proxy) for use at the
Stockholders Meeting and, after receiving and promptly responding to any
comments of the SEC thereon, shall promptly mail such proxy materials to the
stockholders of the Company. Each Investor shall promptly furnish in writing to
the Company such information relating to such Investor and its investment in the
Company as the Company may reasonably request for inclusion in the Proxy
Statement. The Company will comply with Section 14(a) of the 1934 Act and the
rules promulgated thereunder in relation to any proxy statement (as amended or
supplemented, the "Proxy Statement") and any form of proxy to be sent to the
stockholders of the Company in connection with the Stockholders Meeting, and the
Proxy Statement shall not, on the date of the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to shareholders or at the time of
the Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein not false or misleading, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies or the Stockholders Meeting which has become false or
misleading. If the Company should discover at any time prior to the Second
Closing, any event relating to the Company or any of its Subsidiaries or any of
their respective affiliates, officers or directors that is required to be set
forth in a supplement or amendment to the Proxy Statement, in addition to the
Company's obligations under the 1934 Act, the Company will promptly inform the
Investors thereof.
22
(b) Subject to their fiduciary obligations under applicable law (as
determined in good faith by the Company's Board of Directors after consultation
with the Company's outside counsel), the Company's Board of Directors shall
recommend to the Company's stockholders (and not revoke or amend such
recommendation) that the stockholders vote in favor of the Proposal and shall
cause the Company to take all commercially reasonable action (including, without
limitation, the hiring of a proxy solicitation firm of nationally recognized
standing) to solicit the approval of the stockholders for the Proposal. Whether
or not the Company's Board of Directors determines at any time after the date
hereof that, due to its fiduciary duties, it must revoke or amend its
recommendation to the Company's stockholders, the Company is required to, and
will take, in accordance with applicable law and its Certificate of
Incorporation and Bylaws, all action necessary to convene the Stockholders
Meeting as promptly as practicable to consider and vote upon the approval of the
Proposal.
7.11 DESIGNATED DIRECTORS.
(a) Pursuant to the terms of the Preferred Stock, the holders of the
Preferred Stock have the right to elect two directors of the Company (the
"Series B Directors"). Each of the Investors acknowledges that so long as SSF
and/or one of its Affiliates hold shares of Preferred Stock, SSF shall have the
right to designate the Series B Directors (the "SSF Designees") and each of the
Investors shall vote all of the Preferred Stock held by such Investor in favor
of the SSF Designees at each election of directors.
(b) Subject to any limitations imposed by applicable law, the SSF
Designees shall be entitled to the same perquisites, including stock options,
reimbursement of expenses and other similar rights in connection with such
person's membership on the Board of Directors of the Company, as every other
non-executive member of the Board of Directors of the Company.
(c) So long as SSF has the right to designate the Series B Directors,
each Investor shall take all action necessary to remove forthwith the Series B
Directors when (and only when) such removal is requested for any reason, with or
without cause, by SSF.
7.12 RIGHTS PLAN. So long as the Investors to whom securities have
been issued pursuant to this Agreement and/or their assignees continue to be the
beneficial owners (determined in accordance with the rules and regulations of
the Securities and Exchange Commission) of at least a majority of the shares of
Preferred Stock issued pursuant to this Agreement (determined on or prior to the
Second Closing, if any, without regard to the Remaining Securities and
appropriately adjusted for any stock split, reverse stock split, stock dividend
or other reclassification or combination of the Preferred Stock occurring after
the date hereof), the Company shall promptly after the date hereof amend the
preferred stock purchase rights (the "Rights") granted pursuant to the Rights
Agreement, dated as of December 23, 1994, by and between the Company and
BancOne, Arizona, NA, as amended (the "Rights Plan"), so that the Rights expire
on December 31, 2001 and shall not, without the prior written consent of the
Investors holding at least a majority of the outstanding shares of Preferred
Stock issued pursuant to this Agreement (determined on or prior to the Second
Closing, if any, without regard to the Remaining Securities and appropriately
adjusted for any stock split, reverse stock split, stock dividend or other
23
reclassification or combination of the Preferred Stock occurring after the date
hereof), take any other action to modify, extend or amend the Rights or the
Rights Plan. In addition, so long as the Investors to whom securities have been
issued pursuant to this Agreement and/or their assignees continue to be the
beneficial owners (determined in accordance with the rules and regulations of
the Securities and Exchange Commission) of at least a majority of the shares of
Preferred Stock issued pursuant to this Agreement (determined on or prior to the
Second Closing, if any, without regard to the Remaining Securities and
appropriately adjusted for any stock split, reverse stock split, stock dividend
or other reclassification or combination of the Preferred Stock occurring after
the date hereof), the Company shall not, without the prior written consent of
the Investors holding at least a majority of the outstanding shares of Preferred
Stock issued pursuant to this Agreement, adopt any other shareholder rights plan
or "poison pill", enter into any rights agreement or other arrangement with
respect thereto, issue any such rights to stockholders thereunder or take any
other actions with respect thereto. Prior to the date hereof, the Company shall
have taken all necessary action to exclude the Investors from the definition of
"Acquiring Person" under the Rights Plan solely by reason of their acquisition
of Securities pursuant to the terms of this Agreement.
7.13 TERMINATION OF COVENANTS. The provisions of Section 7, other than
Section 7.10 hereof, shall terminate and be of no further force and effect upon
the earlier of (i) the mutual consent of the Company and the holders of a
majority of the Preferred Stock then outstanding; provided, however that no such
termination effected at or prior to the earlier to occur of (I) the Second
Closing or (II) the termination of the obligations of the parties hereto to
effect the Second Closing in accordance with the terms hereof shall
disproportionately affect the Remaining Investors without the consent of the
Required Remaining Investors, (ii) no shares of Preferred Stock shall be
outstanding, or (iii) a Corporate Transaction (as defined in the designations
for the Preferred Stock) shall have occurred and the holders of the Preferred
Stock shall not have waived their right to treat such Corporate Transaction as a
liquidation pursuant to Section 3 of the designations for the Preferred Stock.
8. SURVIVAL AND INDEMNIFICATION.
8.1 SURVIVAL. All representations, warranties, covenants and
agreements contained in this Agreement shall be deemed to be representations,
warranties, covenants and agreements as of the date hereof and shall survive the
execution and delivery of this Agreement for a period of eighteen months from
the date of this Agreement; provided, however, that the provisions contained in
Section 7 hereof shall survive in accordance therewith.
8.2 INDEMNIFICATION. The Company agrees to indemnify and hold
harmless, on an after-tax and after insurance recovery basis, each Investor and
its Affiliates and their respective directors, officers, employees and agents
from and against any and all losses, claims, damages, liabilities and expenses
(including without limitation reasonable attorney fees and disbursements and
other expenses incurred in connection with investigating, preparing or defending
any action, claim or proceeding, pending or threatened and the costs of
enforcement hereof) (collectively, "Losses") to which such Person may become
subject as a result of any breach of representation, warranty, covenant or
agreement made by or to be performed on the part of the Company under the
Agreements or otherwise resulting from any action, claim or proceeding arising
24
out of the matters or transactions contemplated by the Agreements, and will
reimburse any such Person for all such amounts as they are incurred by such
Person.
8.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt by
any Person (the "Indemnified Person") of notice of any demand, claim or
circumstances which would or might give rise to a claim or the commencement of
any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 8.2, such Indemnified Person shall promptly notify
the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; PROVIDED,
HOWEVER, that the failure of any Indemnified Person so to notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
that the Company is materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Company and the Indemnified Person shall
have mutually agreed to the retention of such counsel; or (ii) in the reasonable
judgment of such Indemnified Person representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. The Company shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall not be
unreasonably withheld, but if settled with such consent, or if there be a final
judgment for the plaintiff, the Company shall indemnify and hold harmless such
Indemnified Person from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment. Without the prior written
consent of the Indemnified Person, which consent shall not be unreasonably
withheld, the Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such proceeding.
9. MISCELLANEOUS.
9.1 SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by a
party hereto without the prior written consent of the Company or the Required
Investors, as applicable, except that without the prior written consent of the
Company, but after notice duly given, an Investor may assign its rights and
delegate its duties hereunder in whole or in part to an Affiliate or to a third
party acquiring some portion or all of its Securities in a private transaction.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
9.2 COUNTERPARTS; FAXES. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.
25
9.3 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.4 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or telecopier, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by, then such notice shall
be deemed given upon the earlier of (A) receipt of such notice by the recipient
or (B) three days after such notice is deposited in first class mail, postage
prepaid, and (iv) if given by an internationally recognized overnight air
courier, then such notice shall be deemed given one day after delivery to such
carrier. All notices shall be addressed to the party to be notified at the
address as follows, or at such other address as such party may designate by ten
days' advance written notice to the other party:
If to the Company:
Artisoft, Inc.
0 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: President
Fax: (000) 000-0000
With a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
Fax: (000) 000-0000
If to the Investors, to the addresses set forth on the signature pages
hereto.
9.5 EXPENSES. The parties hereto shall pay their own costs and
expenses in connection herewith, except that the Company shall pay the
reasonable fees and expenses of counsel to SSF at the First Closing, but not in
excess of $35,000. The Company shall reimburse the Investors upon demand for all
reasonable out-of-pocket expenses incurred by the Investors, including without
limitation reimbursement of attorneys' fees and disbursements, in connection
with any amendment, modification or waiver of this Agreement or the other
Agreements requested by the Company. In the event that legal proceedings are
commenced by any party to this Agreement against another party to this Agreement
in connection with this Agreement or the other Agreements, the party or parties
which do not prevail in such proceedings shall severally, but not jointly, pay
26
their pro rata share of the reasonable attorneys' fees and other reasonable
out-of-pocket costs and expenses incurred by the prevailing party in such
proceedings.
9.6 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of a majority of the
Preferred Stock then outstanding; provided, however that no such amendment or
waiver effected at or prior to the earlier to occur of (i) the Second Closing or
(ii) the termination of the obligations of the parties hereto to effect the
Second Closing in accordance with the terms hereof shall (A) disproportionately
affect the Remaining Investors or (B) alter the form of Warrant prior to the
Second Closing without the consent of the Required Remaining Investors. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any Securities purchased under this Agreement at the time
outstanding, each future holder of all such securities, and the Company.
9.7 Publicity. No public release or announcement concerning the
transactions contemplated hereby shall be issued by the Company or the Investors
without the prior consent of the Company (in the case of a release or
announcement by the Investors) or SSF (in the case of a release or announcement
by the Company) (which consents shall not be unreasonably withheld), except as
such release or announcement may be required by law or the applicable rules or
regulations of any securities exchange or securities market, in which case the
Company or the Investors, as the case may be, shall allow SSF or the Company, as
applicable, reasonable time to comment on such release or announcement in
advance of such issuance.
9.8 SEVERABILITY. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provisions hereof prohibited or
unenforceable in any respect.
9.9 ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules hereto, and the other Agreements constitute the entire agreement among
the parties hereof with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof and thereof.
9.10 FURTHER ASSURANCES. The parties shall execute and deliver all
such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfilment of the agreements herein contained.
27
9.11 APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without regard
to principles of conflicts of laws.
[signature page follows]
28
IN WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the date first
above written.
The Company: ARTISOFT, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and C.E.O.
29
The Investors: SPECIAL SITUATIONS FUND III, L.P.
By: /s/ Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxx
Title: General Partner
INITIAL SECURITIES
Aggregate Initial Purchase Price: $2,119,000
Number of Shares of Preferred Stock: 847,600
Number of Warrants: 847,600
REMAINING SECURITIES
Aggregate Remaining Purchase Price: $731,000
Number of Shares of Preferred Stock: 292,400
Number of Warrants: 292,400
Address for Notice:
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
30
SPECIAL SITUATIONS CAYMAN FUND, L.P.
By: /s/ Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxx
Title: General Partner
INITIAL SECURITIES
Aggregate Initial Purchase Price: $705,000
Number of Shares of Preferred Stock: 282,000
Number of Warrants: 282,000
REMAINING SECURITIES
Aggregate Remaining Purchase Price: $245,000
Number of Shares of Preferred Stock: 98,000
Number of Warrants: 98,000
Address for Notice:
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
31
SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
By: /s/ Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxx
Title: General Partner
INITIAL SECURITIES
Aggregate Initial Purchase Price: $705,000
Number of Shares of Preferred Stock: 282,000
Number of Warrants: 282,000
REMAINING SECURITIES
Aggregate Remaining Purchase Price: $245,000
Number of Shares of Preferred Stock: 98,000
Number of Warrants: 98,000
Address for Notice:
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
32
SPECIAL SITUATIONS TECHNOLOGY FUND, L.P.
By: /s/ Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxx
Title: General Partner
INITIAL SECURITIES
Aggregate Initial Purchase Price: $371,000
Number of Shares of Preferred Stock: 148,400
Number of Warrants: 148,400
REMAINING SECURITIES
Aggregate Remaining Purchase Price: $129,000
Number of Shares of Preferred Stock: 51,600
Number of Warrants: 51,600
Address for Notice:
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
33
LAGUNITAS PARTNERS, LP
By: Xxxxxx & XxXxxxx Capital Management, LLC,
Its General Partner
By: /s/ Xxx X. Xxxxxx
-------------------------------
Name: Xxx X. Xxxxxx
Title: Manager
INITIAL SECURITIES
Aggregate Initial Purchase Price: $0
Number of Shares of Preferred Stock: 0
Number of Warrants: 0
REMAINING SECURITIES
Aggregate Remaining Purchase Price: $1,120,000
Number of Shares of Preferred Stock: 448,000
Number of Warrants: 448,000
Address for Notice:
c/o Gruber & McBaine Capital Management, LLC
00 Xxxxxx Xxxxx, Xxxxxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxx
Telephone: 000.000.0000
Facsimile: 415.981.6434
with a copy to:
Shartsis, Xxxxxx & Xxxxxxxx, LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 415.421.2922
34
XXXXXX & XXXXXXX INTERNATIONAL
By: Xxxxxx & McBaine Capital Management, LLC,
Attorney-in-Fact
By: /s/ Xxx X. Xxxxxx
-------------------------------
Name: Xxx X. Xxxxxx
Title: Manager
INITIAL SECURITIES
Aggregate Initial Purchase Price: $0
Number of Shares of Preferred Stock: 0
Number of Warrants: 0
REMAINING SECURITIES
Aggregate Remaining Purchase Price: $350,000
Number of Shares of Preferred Stock: 140,000
Number of Warrants: 140,000
Address for Notice:
c/o Gruber & XxXxxxx Capital Management, LLC
00 Xxxxxx Xxxxx, Xxxxxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxx
Telephone: 000.000.0000
Facsimile: 415.981.6434
with a copy to:
Shartsis, Xxxxxx & Xxxxxxxx, LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 415.421.2922
35
/s/ Xxx X. Xxxxxx
-------------------------------
Xxx X. Xxxxxx
INITIAL SECURITIES
Aggregate Initial Purchase Price: $0
Number of Shares of Preferred Stock: 0
Number of Warrants: 0
REMAINING SECURITIES
Aggregate Remaining Purchase Price: $200,000
Number of Shares of Preferred Stock: 80,000
Number of Warrants: 80,000
Address for Notice:
c/o Gruber & XxXxxxx Capital Management, LLC
00 Xxxxxx Xxxxx, Xxxxxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxx
Telephone: 000.000.0000
Facsimile: 415.981.6434
with a copy to:
Shartsis, Xxxxxx & Xxxxxxxx, LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 415.421.2922
36
F/B/O/ XXXXXXX XXXXX XXXXXX TRUST
DATED DECEMBER 27, 1976
By: /s/ Xxx X. Xxxxxx
-------------------------------
Name: Xxx X. Xxxxxx
Title: Trustee
INITIAL SECURITIES
Aggregate Initial Purchase Price: $0
Number of Shares of Preferred Stock: 0
Number of Warrants: 0
REMAINING SECURITIES
Aggregate Remaining Purchase Price: $40,000
Number of Shares of Preferred Stock: 16,000
Number of Warrants: 16,000
Address for Notice:
c/o Gruber & McBaine Capital Management, LLC
00 Xxxxxx Xxxxx, Xxxxxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxx
Telephone: 000.000.0000
Facsimile: 415.981.6434
with a copy to:
Shartsis, Xxxxxx & Xxxxxxxx, LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 415.421.2922
37
F/B/O/ XXXXXXXX XXXXX XXXXXX TRUST
DATED DECEMBER 30, 1975
By: /s/ Xxx X. Xxxxxx
-------------------------------
Name: Xxx X. Xxxxxx
Title: Trustee
INITIAL SECURITIES
Aggregate Initial Purchase Price: $0
Number of Shares of Preferred Stock: 0
Number of Warrants: 0
REMAINING SECURITIES
Aggregate Remaining Purchase Price: $40,000
Number of Shares of Preferred Stock: 16,000
Number of Warrants: 16,000
Address for Notice:
c/o Gruber & McBaine Capital Management, LLC
00 Xxxxxx Xxxxx, Xxxxxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxx
Telephone: 000.000.0000
Facsimile: 415.981.6434
with a copy to:
Shartsis, Xxxxxx & Xxxxxxxx, LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 415.421.2922
38
