FORM OF PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
This Preferred Stock and Warrant Purchase Agreement is made and entered
into as of the _____ day of ___________, 1998, between Global MAINTECH
Corporation, a Minnesota corporation, and those investors who have executed an
Acceptance on Schedule A attached hereto (collectively, the "Investors" and
each, an "Investor"). Except where the context otherwise requires, all
references to the "Company" herein shall be collectively to Global MAINTECH
Corporation and its subsidiaries, including, without limitation, Global
MAINTECH, Inc.
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged by the Company and the Investors, the Company and the
Investors agree as follows:
1. Sale and Purchase of Securities. Subject to the terms and conditions
hereof, the Company agrees to sell to each Investor at the Closing (as defined
herein), and each Investor agrees, severally, to purchase from the Company at
the Closing, the number of Units set forth above such Investor's name on
Schedule A, each Unit consisting of one share of the Company's Series B
Convertible Cumulative Preferred Stock (the "Preferred Stock") with the rights
and preferences provided in the Certificate of Designation for such Preferred
Stock attached hereto as Exhibit A (the "Certificate of Designation") and a
five-year callable Warrant in the form attached hereto as Exhibit B (the
"Warrant") provided, however, the Company shall not be obligated to sell more
than 615,385 Units in the aggregate. Subject to adjustment as set forth in the
Warrant, the Warrant in each Unit will entitle the holder thereof to purchase
the same number of shares of common stock into which the share of Preferred
Stock contained in the same Unit will have been converted. The purchase price
per Unit is $6.50. The Units, the Preferred Stock and the Warrant are sometimes
collectively referred to herein as the "Securities."
2. Closing.
(a) Closing. Provided that Investor acceptances have been received for at
least the Minimum Offering, the closing or closings of the purchase and sale of
the Securities hereunder shall take place at the offices of Xxxxxxx, Street and
Deinard Professional Association, Minneapolis, Minnesota, at 1:00 p.m.,
Minnesota time, on September 23, 1998 or at such other place(s) or different
time(s) or day(s) as the Company in its own discretion shall determine (the
"Closing"). At the Closing, the Company will deliver to each Investor
participating in such closing a Warrant representing the right to purchase that
number of shares of the common stock of the Company to be determined at the time
of conversion of the Preferred Stock, dated such Closing date and will deliver
to each such Investor a certificate representing the number of shares of
Preferred Stock set forth above such Investor's name on Schedule A and each such
Investor shall cause to be delivered to the Company a wire transfer or check
payable to the Company in the amount set forth opposite such Investor's name on
Schedule A.
3. Representations and Warranties by the Company. To induce the Investors
to enter into this Agreement and to purchase the Securities, the Company hereby
represents and warrants to the Investors as follows:
(a) Disclosure. The Company has provided each Investor with all the
information such Investor has requested in deciding whether to purchase the
Securities and all information the Company believes is necessary or appropriate
relating to an investment in the Company, including, without limitation, the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1997,
Quarterly Reports on Form 10-QSB for the quarters ended March 31, 1998 and June
30, 1998, the Company's Proxy Statement for its 1998 Annual Meeting of
Shareholders and its 1997 Annual Report to Shareholders (collectively, the "SEC
Filings") press releases issued by the Company since June 30, 1998 and a Term
Sheet describing the terms of this offering and the Securities (such documents
and the SEC Filings referred to collectively as the "Disclosed Information").
There are no facts known to the Company which individually or in the aggregate
materially adversely affect the business, assets, financial condition or
prospects of the Company, except as set forth in the Disclosed Information. The
Disclosed Information fairly presents all material information regarding the
Company as of the date hereof and, as of the date of the Closing, the Disclosed
Information will (i) fairly present all material information regarding the
Company, and (ii) not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading. The SEC Filings comply in all material
respects with the requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and all applicable rules and regulations of the
Securities Exchange Commission (the "Commission").
(b) Organization, Good Standing, Etc. The Company is duly incorporated and
validly existing as a corporation in good standing under the laws of the State
of Minnesota, with power and authority to own its properties and conduct its
business as now conducted and proposed to be conducted. The Company is duly
qualified to do business as a foreign corporation and is in good standing in all
states or jurisdictions in which the ownership or lease of its property or the
conduct of its business requires such qualification and the failure to be so
qualified would have a material adverse effect on the Company's business. The
Company has one active subsidiary, Global MAINTECH, Inc.
(c) Financial Statements. The financial statements (including all related
schedules and notes) included in the Disclosed Information fairly represent the
financial condition and results of operations of the Company as of the dates and
for the periods indicated; such statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods indicated; and the report of the public accountant included in the
Disclosed Information is issued by an independent public accountant within the
meaning of the Exchange Act, and the rules and regulations thereunder.
(d) Authorization and Enforceability. The Company has full legal power,
right and authority to enter into this Agreement and the Registration Rights
Agreement among the Company and the Investors, the form of which is attached
hereto as Exhibit E (the "Registration Rights Agreement") and to issue the
Securities and to carry out and perform its obligations under this Agreement and
the Registration Rights Agreement. This Agreement, the
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Registration Rights Agreement and the Securities, have been duly authorized,
executed and delivered on behalf of the Company and are the valid and binding
obligations of the Company, enforceable in accordance with their respective
terms and subject, as to enforcement, to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of creditors
generally, to the exercise of judicial discretion as to the availability of
equitable remedies such as specific performance and injunction and, as to
enforcement of the indemnification provisions, to limitations under applicable
securities laws. The Securities when delivered pursuant to the terms of this
Agreement will be validly issued, fully paid and nonassessable.
(e) License and Approvals. The Company has all licenses, certificates,
permits and other approvals from governmental and regulatory authorities
necessary for the conduct of its business as it is currently being conducted and
as proposed to be conducted except those which would not have a material adverse
effect on the Company if not obtained.
(f) Intellectual Property. The Company owns or possesses all assets,
patents, patent applications, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights, licenses, inventions,
trade secrets and rights necessary for the conduct of its business as it is
currently being conducted and as proposed to be conducted and has not received
any notice of conflict with the asserted rights of others in respect thereof. To
the best of the Company's knowledge, no name which the Company uses and no other
aspect of the business of the Company involves or gives rise to any infringement
of, or license or similar fees for, any patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service xxxx
registrations, copyrights, licenses, inventions, trade secrets or other similar
rights of others, except for license fees payable by the Company to Circle X
Corp. of Japan for the Company's use of certain intellectual property rights
used by the Company in its VCC product, which rights are licensed to it by
Circle X Corp. of Japan.
(g) Defaults. The Company is not in breach, default or violation of, and
the execution of this Agreement and the Registration Rights Agreement and the
consummation of the transactions herein and therein contemplated will not
conflict with or result in any breach of, any of the terms or conditions of, or
constitute a default or violation under, (i) the Articles of Incorporation, as
amended, or Bylaws, as amended, of the Company, (ii) any indenture, agreement or
other instrument to which the Company is now a party, or (iii) any law or any
order, rule or regulation applicable to the Company of any court or of any
federal or state regulatory body or administrative agency having jurisdiction
over the Company or its property.
(h) Consents. No consent, authorization, approval, permit or order of or
filing with any governmental or regulatory authority is required under current
laws and regulations in connection with the execution and delivery of this
Agreement or the Registration Rights Agreement or the offer, issuance, sale or
delivery of the Securities, other than the qualification thereof, if required,
under applicable state securities laws, which qualification has been or will be
effected as a condition of the sale of the Securities to the Investors. The
Company has not, directly or through any agent other than Xxxxxx, Xxxxxxx &
Xxxxx Incorporated, offered the Securities or any similar securities for sale
to, or solicited any offers to acquire such securities from, persons other than
the Investors. Under the circumstances contemplated by this
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Agreement, the offer, issuance, sale and delivery of the Securities will not,
under current laws and regulations, require compliance with the prospectus
delivery or registration requirements of the Securities Act of 1933, as amended
(the "Securities Act"). The Company has filed all reports or other documentation
that it is required to file under the Exchange Act, any rules or regulations
promulgated thereunder, the applicable rules and regulations of the National
Association of Securities Dealers ("NASD") and all applicable state securities
laws, and the information contained in such reports or other documents did not
make any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein made, in the light of the
circumstances under which they were made, not misleading.
(i) Valid Issuance of Preferred Stock. The Preferred Stock, when
authorized, issued, sold and delivered in accordance with the terms hereof will
be duly authorized, validly issued, fully paid and nonassessable and after
registration under applicable securities laws as contemplated by this Agreement
will be free of restrictions on transfer and, based in part upon the
representations of the Investors in this Agreement, will be issued in compliance
with applicable securities laws.
(j) Valid Issuance of Common Stock. The shares of the Company's common
stock issuable upon conversion of the Preferred Stock and upon exercise of the
Warrant have been reserved for issuance and, when issued and delivered in
accordance with the terms thereof, will be duly authorized, validly issued,
fully paid and non-assessable, shall be free of any pledges, liens, encumbrances
and restrictions, and will be issued in compliance with all applicable
securities laws.
(k) Litigation/Proceedings. There are no pending, threatened or, to the
Company's knowledge, contemplated actions, suits, proceedings or investigations
before or by any court or governmental agency, authority or body, or any
arbitrator, which are not ordinary, routine and incidental to the business of
the Company or which might result in any material adverse change in the business
condition (financial and other) or properties of the Company.
(l) Capital Stock. The authorized capital stock of the Company consists of
50,000,000 shares, including the following: (a) 48,496,635 shares of common
stock, of which 17,549,758 shares are issued and outstanding; (b) 887,980 shares
of Series A Convertible Preferred Stock, of which 244,113 shares are issued and
outstanding; and (c) 615,385 shares of Series B Convertible Preferred Stock.
Except for an aggregate of 4,944,593 shares of the Company's common stock which
are subject to outstanding options to employees under the Company's various
stock option plans, or reserved for issuance under such plans, 1,773,398 shares
of the Company's common stock which are subject to outstanding warrants and
147,868 shares of the Company's common stock into which the Company's
outstanding Series A Convertible Preferred Stock is convertible, there are no
outstanding rights to acquire from the Company any shares of its capital stock.
All outstanding shares of the Company's capital stock have been duly authorized,
validly issued, fully paid and nonassessable and, to the Company's knowledge,
have been issued pursuant to valid registrations under, or valid exemptions
from, the registration requirements of the Securities Act and appropriate state
blue sky laws. There are no voting agreements, voting trusts, calls, pledges,
transfer restrictions (other than those imposed by federal and state securities
laws and, with respect to outstanding options or warrants, those
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imposed by the Company's stock option plans or by applicable option or warrant
agreements), liens, rights of first refusal, rights of first offer,
anti-dilution provisions or commitments of any kind relating to the issued or
unissued capital stock of the Company.
(m) Title to Properties. The Company has good and marketable title, free
and clear of all liens, encumbrances and equities, and of all charges or claims,
to all of the real and personal property owned by it, except liens, encumbrances
and equities, and charges or claims, which are not material and do not
materially affect the value of such property or interfere with the conduct of
the Company's business. The Company has valid and binding leases to all of the
real and personal property necessary for the conduct of its business with such
exceptions as do not materially interfere with the conduct of its business.
(n) Tax Returns. The Company has filed all necessary federal, state and
foreign income, franchise and other tax returns and has paid all taxes shown as
due thereon, and the Company has received no notice of any tax deficiency which
has been asserted against the Company.
(o) Authority. The Company has all requisite power and authority to issue,
sell and deliver the Preferred Stock and Warrants in accordance with and upon
the terms set forth in this Agreement. The Company has duly taken all required
action for the due and proper authorization, issuance, sale and delivery of the
Preferred Stock and Warrants. No preemptive rights or other rights of
subscription, first refusal or similar rights of security holders of the Company
exist with respect to the issuance and sale of the Preferred Stock and Warrants
by the Company or the shares of the Company's common stock issuable upon
conversion and exercise, respectively, thereof. No security holder of the
Company possesses any registration rights. The issuance of the Securities and
the shares of the Company's common stock underlying the Securities will not
result in the issuance of any additional shares of the Company's common stock or
the triggering of other anti-dilution or similar rights contained in any
options, warrants or other securities issued by, or agreements of, the Company.
(p) Investment Company. In retaining and using the proceeds from the sale
of the Securities, the Company will not be required to register as an
"Investment Company" under the Investment Company Act of 1940, as amended.
(q) Bad Boy Certification. Neither the Company, any of its predecessors,
any affiliated issuer nor any of the Company's directors, officers, beneficial
owners of 10% or more of any class of its equity securities or other affiliates
nor any promoter of the Company is subject to any of the disabilities enumerated
in Exhibit C hereto and the representations and warranties contained therein are
true and correct.
(r) Fees and Commissions. Other than pursuant to agreements with Xxxxxx,
Xxxxxxx & Xxxxx, Incorporated, the Company has not incurred any liability for
any finder's or broker's fee or agent's commission in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
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(s) Changes, Dividends, Etc. Except for the transactions contemplated by
this Agreement, since the date of the most recent financial statements of the
Company provided to Investors, the Company has not: (i) incurred any debts,
obligations or liabilities, absolute, accrued or contingent and whether due or
to become due, except current liabilities incurred in the ordinary course of
business which (individually or in the aggregate) will not materially and
adversely affect the business, properties or prospects of the Company; (ii) paid
any obligation or liability other than, or discharged or satisfied any liens or
encumbrances other than those securing, current liabilities, in each case in the
ordinary course of business; (iii) declared or made any payment to or
distribution to its shareholders as such, or used or redeemed any of its shares
of capital stock, or obligated itself to do so; (iv) mortgaged, pledged or
subjected to lien, charge, security interest or other encumbrance any of its
assets, tangible or intangible, except in the ordinary course of business; (v)
sold, transferred or leased any of its assets except in the ordinary course of
business; (vi) suffered any physical damage, destruction or loss (whether or not
covered by insurance) materially and adversely affecting the tangible
properties, business or prospects of the Company; (vii) encountered any labor
difficulties or labor union organizing activities; (viii) except as set forth on
Schedule 3(n), issued or sold any shares of capital stock or other securities or
granted any options other than to employees, warrants, or other purchase rights
with respect thereto other than pursuant to this Agreement; (ix) made any
acquisition or disposition of any material assets or became involved in any
other material transaction, other than for fair value in the ordinary course of
business; or (x) agreed to do any of the foregoing other than pursuant hereto.
There has been no material adverse change in the financial condition,
operations, results of operations or business of the Company since the date of
the most recent financial statements of the Company provided to the Investors.
(t) Reporting. The Company is subject to the reporting requirements of the
Securities Act and the Exchange Act and (i) has timely filed all reports and
statements required to be filed thereunder in the 12-month period prior to the
date hereof, and (ii) to the Company's knowledge, each report and statement was
true and complete in all material respects when filed.
4. Representations of the Investors. Each Investor represents for itself
that:
(a) Investment Intent. The Securities being acquired by the Investor are
being purchased for investment for the Investor's own account and not with the
view to, or for resale in connection with, any distribution or public offering
thereof. The Investor understands that the Securities have not been registered
under the Securities Act or any state securities laws by reason of their
contemplated issuance in a transaction exempt from the registration requirements
of the Securities Act and applicable state securities laws, and that the
reliance of the Company upon these exemptions is predicated in part upon this
representation by the Investor. The Investor further understands that the
Securities, and the shares of the Company's common stock issuable upon
conversion or exercise thereof, may not be transferred or resold without (i)
registration under the Securities Act and applicable state securities laws, or
(ii) an exemption from the requirements of the Securities Act and applicable
state securities laws.
(b) Location of Principal Office, Qualification as an Accredited Investor,
Etc. The state in which the Investor's principal office is located is the state
set forth in the Investor's address on Schedule A. The Investor qualifies as an
accredited investor for purposes of Regulation
6
D promulgated under the Securities Act. The Investor acknowledges receipt of the
Disclosed Information and that the Company has made available to the Investor at
a reasonable time prior to the execution of this Agreement the opportunity to
ask questions and receive answers concerning the business and affairs of the
Company and the terms and conditions of the sale of Securities contemplated by
this Agreement and to obtain any additional information (which the Company
possessed or could acquire without unreasonable effort or expense) to verify the
accuracy of information furnished to the Investor. The Investor (i) is able to
bear the loss of the Investor's entire investment in the Securities without any
material adverse effect on such Investor's business, operations or prospects,
and (ii) has such knowledge and experience in financial and business matters
that such Investor is capable of evaluating the merits and risks of the
investment to be made pursuant to this Agreement.
(c) Acts and Proceedings. This Agreement has been duly authorized by all
necessary action on the part of the Investor, has been duly executed and
delivered by the Investor, and is a valid and binding agreement of the Investor.
5. Conditions of the Investors' Obligation. The obligation to purchase and
pay for the Securities at the Closing is subject to the fulfillment prior to or
on the Closing date of the conditions set forth in this Section 5. In the event
that any such condition is not satisfied to the satisfaction of each Investor,
then the Investors shall not be obligated to proceed with the purchase of the
Securities at the Closing.
(a) Representations and Warranties. The representations and warranties of
the Company under this Agreement shall be true on and as of the Closing date
with the same effect as though made on and as of the Closing date.
(b) Compliance with Agreement. The Company shall have performed and
complied with all agreements or conditions required by this Agreement to be
performed and complied with by it prior to or as of the Closing date.
(c) Certificate of Officers. The Company shall have delivered to the
Investors a certificate, dated the Closing date, executed by the Chief Executive
Officer and the Chief Financial Officer of the Company, and certifying to the
satisfaction of the conditions specified in Sections 5(a) and 5(b).
(d) Opinion of the Company's Counsel. The Investors shall have received
from Xxxxxx & Whitney LLP, counsel for the Company, an opinion, dated the
Closing date, in the form attached hereto as Exhibit D.
(e) Supporting Documents. The Investors shall have received the following:
(i) A copy of the resolutions of the Board of Directors of the Company
certified by the Secretary of the Company authorizing and approving the
execution, delivery and performance of this Agreement and issuance of the
Securities;
(ii) A certificate of incumbency executed by the Secretary of the
Company certifying the names, titles and signatures of the officers of the
Company authorized to
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execute this Agreement and further certifying that the Articles of
Incorporation and Bylaws of the Company delivered to the Investors at the
time of the execution of this Agreement have been validly adopted and have
not been amended or modified; and
(iii) A copy of the Articles of Incorporation and Bylaws of the
Company as of such date and such additional supporting documentation and
other information with respect to the transactions contemplated hereby as
the Investors may reasonably request.
(f) Qualification Under State Securities Laws. All registrations,
qualifications, permits and approvals required under applicable state securities
laws for the lawful execution and delivery of this Agreement and the offer,
sale, issuance and delivery of the Securities to the Investors at the Closing
shall have been obtained.
(g) Proceeding and Documents. All corporate and other proceedings and
actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned herein
or incident to any such transaction shall be reasonably satisfactory in form and
substance to the Investors.
(h) File Certificate of Designation. It shall be a condition to the
Investors' obligation to close the transactions contemplated hereby that the
Company have filed the Certificate of Designation with the Secretary of State of
the State of Minnesota and that such certificate be accepted and duly filed by
such Secretary's office.
(i) Execution of Registration Rights Agreement. It shall be a condition to
the Investors' obligation to close the transactions contemplated hereby that the
Company execute and deliver to the Investors the Registration Rights Agreement
attached hereto as Exhibit E.
6. Affirmative Covenants of the Company. The Company covenants and agrees
as follows:
(a) Corporate Existence. The Company will maintain its corporate existence
in good standing.
(b) Books of Accounts. The Company will keep books of record and account in
which correct and complete entries are made of all of its respective dealings,
business and affairs, in accordance with generally accepted accounting
principles. The Company will employ certified public accountants who are
"independent" within the meaning of the accounting regulations of the
Commission.
(c) Patents and Other Intangible Rights. The Company will apply for, or
obtain assignments of, or licenses to use, all patents, trademarks, trade names
and copyrights which in the opinion of a prudent and experienced businessperson
operating in the industry in which the Company is operating are desirable or
necessary for the conduct and protection of the business of the Company.
(d) Fees of Counsel. At the Closing, the Company shall pay all reasonable
fees and expenses of legal counsel to
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the Investors as well as the fees and expenses of counsel to Xxxxxx, Xxxxxxx &
Xxxxx, Incorporated ("MJK") incurred through the date of the Closing. In
addition, at the Closing, the Company shall pay MJK 8% of the Purchase Price and
shall issue MJK a warrant, in the form attached hereto as Exhibit F (the
"Agent's Warrant"), to purchase that number of shares of the Company's common
stock equal to 10% of the number of shares of the Company's common stock
issuable upon conversion of the Preferred Stock sold by the Company to the
Investors at the Closing, assuming the conversion of the Preferred Stock on the
date of Closing. The exercise price of MJK's warrant shall be 110% of the
average closing bid price of the Company's common stock for the 20 trading days
immediately prior to the date of Closing.
(e) Reservation of Shares. The Company will, at all times on and after the
Closing, reserve and keep available (i) authorized and unissued shares of
Preferred Stock sufficient for issuance pursuant to the terms of Section 4(c) of
Exhibit A attached hereto, and (ii) authorized and unissued shares of its common
stock sufficient for issuance upon conversion of the Preferred Stock and
exercise of each Warrant and the Agent's Warrant.
(f) Nasdaq Listing. The Company will use its best efforts to have its
common stock included on the Nasdaq Stock Market (either Nasdaq Small Cap Market
or Nasdaq National Market) on or before December 31, 1998.
7. Restriction on Transfer of Preferred Stock, Warrant and Shares.
(a) Legend. Each share of Preferred Stock, each Warrant, the Agent's
Warrant, and each certificate representing shares of the Company's common stock
issued pursuant to the transactions contemplated hereby shall be endorsed with a
legend in substantially the form which follows:
"The securities represented by this certificate may not be transferred
without (i) the opinion of counsel satisfactory to this corporation that
such transfer may lawfully be made without registration under the
Securities Act of 1933, as amended, and all applicable state securities
laws, or (ii) such registration."
(b) Removal of Legend. Any legend endorsed on a certificate evidencing a
security pursuant to Section 7(a) hereof shall be removed, and the Company
promptly shall issue a certificate without such legend to the holder of such
security, if such security is properly being transferred pursuant to a
registration under the Securities Act or pursuant to Rule 144 or any similar
rule then in effect or if such holder provides the Company with an opinion of
counsel satisfactory to the Company to the effect that a transfer of such
security may be made without registration. In addition, if the holder of such
security delivers to the Company an opinion of counsel satisfactory to the
Company to the effect that no subsequent transfer of such security will require
registration under the Securities Act, the Company will promptly upon such
contemplated transfer deliver new certificates evidencing such security that do
not bear the legend set forth in Section 7(a).
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8. Miscellaneous.
(a) Changes, Waivers, Etc. Neither this Agreement nor any provisions hereof
may be changed, waived, discharged or terminated orally, but only by a statement
in writing, signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
(b) Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be delivered, or
mailed first-class postage prepaid, registered or certified mail or shall be
sent by facsimile transmission followed by mailed copy:
if to the Investors at their respective addresses set forth on
Schedule A, or at such other address or facsimile number as any Investor
may specify in writing to the Company; or
if to the Company at Global MAINTECH Corporation, 0000 Xxxxxx Xxxxx
Xxxxx, Xxxx Xxxxxxx, Xxxxxxxxx 00000, Attention: CEO, facsimile number
(000) 000-0000; or at such other address or facsimile number as the Company
may specify by written notice to the Investors;
and such notices and other communications shall for all purposes of
this Agreement be treated as being effective or having been given if
delivered personally, if sent by mail, when received, or, if sent by
facsimile, upon the sender's receipt of confirmation from its facsimile
machine of transmission.
(c) Survival of Representations and Warranties. All representations and
warranties and agreements contained herein shall survive the execution and
delivery of this Agreement, any investigation at any time made by the Investors
or on their behalf and the sale and purchase of the Securities and payment
therefor. All statements contained in any certificate, instrument or other
writing delivered by or on behalf of the Company pursuant to this Agreement
(other than legal opinions) at the Closing shall constitute representations and
warranties by the Company hereunder.
(d) Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and do not constitute a part of this
Agreement.
(e) Choice of Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Minnesota without regard to
the principles of conflicts of law thereof.
(f) Counterparts. This Agreement may be executed at different times and 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.
(g) Parties in Interest. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and
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assigns of the parties hereto, whether so expressed or not, and, in particular,
shall inure to the benefit of and be enforceable by the holder or holders from
time to time of any of the Securities.
(h) Entire Agreement. This Agreement, including and incorporating all
Exhibits and Schedules hereto, constitutes and contains the entire agreement and
understanding of the parties regarding the subject matter of this Agreement and
supersedes any and all prior negotiations, correspondence, understandings and
agreements, written or oral, among the parties with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed personally or by their duly authorized representatives as of the date
indicated above.
GLOBAL MAINTECH CORPORATION
By:_________________________________
Its:_________________________________
INVESTOR:
[See Attached Acceptance on Schedule A]
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EXHIBIT B TO PREFERRED STOCK
AND WARRANT PURCHASE AGREEMENT
THIS WARRANT REPRESENTS ALL WARRANTS ISSUED AS PART OF UNITS OFFERED TO
INVESTORS PURSUANT TO THE TERMS OF A PREFERRED STOCK AND WARRANT PURCHASE
AGREEMENT DATED ________ __, 1998 (THE "PURCHASE AGREEMENT"). EACH UNIT CONSISTS
OF ONE SHARE OF SERIES B PREFERRED STOCK OF THE COMPANY AND A WARRANT TO
PURCHASE COMMON STOCK. SUCH SERIES B PREFERRED STOCK AND THIS WARRANT CANNOT BE
TRANSFERRED SEPARATELY UNTIL THE DATE ON WHICH THE SERIES B PREFERRED STOCK
INCLUDED IN SUCH UNIT IS CONVERTED INTO COMMON STOCK OF THE COMPANY.
NEITHER THIS WARRANT NOR THE SECURITIES INTO WHICH THIS WARRANT IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.
GLOBAL MAINTECH CORPORATION
FORM OF WARRANT
Warrant No. _____________, 1998
GLOBAL MAINTECH CORPORATION, a Minnesota corporation (the "Company"),
hereby certifies that, for value received, , or his registered assigns
("Holder"), is entitled, subject to the terms set forth below, to purchase from
the Company a number of shares of common stock, no par value per share ("Common
Stock"), of the Company (each such share, a "Warrant Share" and all such shares,
the "Warrant Shares") equal to the number of shares of Common Stock into which
the shares of Series B Preferred Stock issued to the Holder concurrently with
this Warrant are converted, at an exercise price equal to $3.25 per Warrant
Share (as adjusted from time to time as provided in Section 8 hereof, the
"Exercise Price"), at any time and from time to time from and after the date
hereof and through and including , 2003 (the "Expiration Date"). If a Holder
converts less than all of such Holder's Series B Preferred Stock at any given
time, the Conversion Price for the Warrants associated with such
converted shares will have been determined but the Conversion Price for the
remainder of the Warrants will not have been determined. Therefor, in such
event, the Warrants associated with such converted shares must be certificated
separately and, upon surrender of this Warrant by the Holder to the Company, two
new Warrants will be issued to the Holder, one of which will represent the
Warrants for which the Conversion Price has been determined and one of which
will represent the remainder of the Warrants.
1. Registration of Warrant. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
2. Registration of Transfers and Exchanges.
(a) Subject to the provisions of (b) below, the Company shall register the
transfer of any portion of this Warrant in the Warrant Register, upon surrender
of this Warrant, with the Form of Assignment attached hereto duly completed and
signed, to the Company at the office specified in or pursuant to the terms
hereof. Upon any such registration or transfer, a new warrant to purchase Common
Stock, in substantially the form of this Warrant (any such new warrant, a "New
Warrant"), evidencing the portion of this Warrant so transferred shall be issued
to the transferee and a New Warrant evidencing the remaining portion of this
Warrant not so transferred, if any, shall be issued to the transferring Holder.
The acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a Holder
of this Warrant.
(b) This Warrant represents all Warrants issued as part of Units offered to
investors pursuant to the terms of a Preferred Stock and Warrant Purchase
Agreement dated , 1998 (the "Purchase Agreement"). Each Unit consists of one
share of Series B Preferred Stock of the Company and a Warrant to purchase
Common Stock. Such Series B Preferred Stock and this Warrant cannot be
transferred separately until the date on which the Series B Preferred Stock
included in such unit is converted into Common Stock of the Company. In the
event the Holder of this Warrant desires to transfer this Warrant, or any
Warrant Shares issued upon the exercise hereof prior to the registration thereof
pursuant to Section 4, the Holder shall provide the Company with a written
notice describing the manner of such transfer and an opinion of counsel
(reasonably acceptable to the Company) that the proposed transfer may be
effected without registration or qualification (under any applicable federal or
state law), whereupon such Holder shall be entitled to transfer this Warrant or
to dispose of any Warrant Shares in accordance with the notice delivered by such
Holder to the Company; provided, however, that an appropriate legend may be
endorsed on this Warrant or the certificates for such Warrant Shares respecting
restrictions upon transfer thereof necessary or advisable in the opinion of
counsel satisfactory to the Company to prevent further transfers which would be
in violation of Section 5 of the Securities Act or applicable state securities
laws.
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(c) This Warrant is exchangeable, upon the surrender hereof by the Holder
to the office of the Company specified in or pursuant to the terms hereof for
one or more New Warrants, evidencing in the aggregate the right to purchase the
number of Warrant Shares which may then be purchased hereunder. Any such New
Warrants will be dated the date of such exchange.
3. Duration and Exercise of Warrants.
(a) This Warrant (or the applicable portion thereof if the Holder converts
less than all of such Holder's shares of Series B Preferred Stock) shall be
exercisable by the registered Holder on any business day before 5:00 P.M.,
Minneapolis, Minnesota time, at any time and from time to time on or after the
date the Holder converts all (or a portion, as applicable) of such Holder's
Series B Preferred Stock issued in connection with this Warrant, to and
including the Expiration Date. At 5:00 P.M., Minneapolis, Minnesota time on the
Expiration Date, the portion of this Warrant not exercised prior thereto shall
be and become void and of no value. Except as set forth in Section 13 hereof,
this Warrant may not be redeemed by the Company.
(b) Subject to provisions elsewhere contained in this Warrant, upon
surrender of this Warrant, with the Form of Election to Purchase attached hereto
duly completed and signed, to the Company at its address for notice as set forth
in Section 11 hereof, and upon payment of the Exercise Price multiplied by the
number of Warrant Shares that the Holder intends to purchase hereunder, in
lawful money of the United States of America, in cash or by certified or
official bank check or checks, all as specified by the Holder in the Form of
Election to Purchase, the Company shall promptly (but in no event later than
five business days after the Date of Exercise (as defined herein)) issue or
cause to be issued and cause to be delivered to the Holder and in such name or
names as the Holder may designate, a certificate for the Warrant Shares issuable
upon such exercise. Any person so designated by the Holder to receive Warrant
Shares shall be deemed to have become holder of record of such Warrant Shares as
of the Date of Exercise of this Warrant.
A "Date of Exercise" means the date on which the Company shall have
received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New
Warrant) appropriately completed and duly signed, and (ii) payment of the
Exercise Price for the number of Warrant Shares so indicated by the Holder
hereof to be purchased.
(c) This Warrant shall be exercisable either in its entirety or for a
portion of the number of Warrant Shares. If this Warrant is exercised for a
number of Warrant Shares which is less than all of the Warrant Shares which may
be purchased under this Warrant, the Company shall issue or cause to be issued,
at its expense, a New Warrant evidencing the right to purchase the remaining
number of Warrant Shares for which no exercise has been evidenced by this
Warrant.
4. Registration Provisions. The shares of Common Stock underlying this
Warrant shall be registered by the Company under the Securities Act pursuant to
the terms of that
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Registration Rights Agreement, dated ________, 1998, by and between the Company,
Holder and certain other investors.
5. Payment of Taxes. The Company will pay all taxes attributable to the
transfer of this Warrant or the issuance of Warrant Shares upon the exercise of
this Warrant.
6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and indemnity of
the Company by the Holder relating to such lost Warrant as the Company may
reasonably require. Applicants for a New Warrant under such circumstances shall
also comply with such other reasonable regulations and procedures and pay such
other reasonable charges as the Company may reasonably prescribe.
7. Reservation of Warrant Shares. The Company covenants that it will at all
times reserve and keep available out of the aggregate of its authorized but
unissued shares of Common Stock, solely for the purpose of enabling it to issue
Warrant Shares upon exercise of this Warrant as herein provided, the number of
Warrant Shares which are then issuable and deliverable upon the exercise of this
entire Warrant, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Holder (taking into account the
adjustments and restrictions of Section 8). The Company covenants that all
Warrant Shares that shall be so issuable and deliverable shall, upon issuance
and the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly authorized, validly issued, fully paid and nonassessable.
8. Certain Adjustments. Until the Holder converts such Holder's Series B
Preferred Stock issued in connection with this Warrant, the Exercise Price and
the number of Warrant Shares purchasable upon the exercise of this Warrant shall
not be subject to adjustment. Thereafter, the Exercise Price and the number of
Warrant Shares purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the happening of any of the following events:
(a) In case the Company shall at any time hereafter subdivide or combine
its outstanding shares of Common Stock or declare a dividend payable in Common
Stock, the Exercise Price in effect immediately prior to the subdivision,
combination or record date for such dividend shall be proportionately increased,
in the case of a combination, or decreased, in the case of subdivision or
dividend payable in Common Stock. Upon each adjustment of the Exercise Price,
the Holder shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares obtained by multiplying the
Exercise Price immediately prior to such adjustment by the number of shares
purchasable pursuant hereto immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from such adjustment.
(b) No fractional shares of common stock are to be issued upon the exercise
of this Warrant, but the Company shall pay a cash adjustment in respect of any
fraction of a share
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which would otherwise be issuable in an amount equal to the same fraction of the
market price per share of common stock on the day of exercise as determined in
good faith by the Company.
(c) The Company shall provide the Holder with at least ten days prior
written notice of any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of the Company's assets to
another corporation. Further, if any of the foregoing events shall be effected
in such a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, consolidation, merger or
sale, lawful and adequate provision shall be made whereby the Holder hereof
shall thereafter have the right to purchase and receive, upon the basis and upon
the terms and conditions specified in this Warrant and in lieu of the shares of
Common Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby, such stock, securities or
assets as may be issued or payable with respect to or in exchange for a number
of outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby had such reorganization, reclassification,
consolidation, merger or sale not taken place, and in any such case appropriate
provisions shall be made with respect to the rights and interests of the Holder
of this Warrant to the end that the provisions hereof (including provisions for
adjustments of the Warrant purchase price and of the number of shares of Common
Stock purchasable upon the exercise of this Warrant) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise hereof. The Company shall not
effect any such consolidation, merger or sale unless prior to the consummation
thereof the successor corporation (if other than the Company) resulting from
such consolidation or merger, or the corporation purchasing such assets, shall
assume by operation of law or written instrument, the obligation to deliver to
such Holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such Holder may be entitled to purchase. Notice of
such assumption shall be promptly mailed to the registered Holder hereof at the
last address of such holder appearing on the books of the Company.
Notwithstanding any language to the contrary set forth in this
paragraph 8(c), if an occurrence or event described herein shall take place
in which the shareholders of the Company receive cash for their shares of
Common Stock of the Company and a successor corporation shall survive the
transaction then, at the election of the Holder hereof, such corporation
shall purchase this Warrant (or the unexercised part hereof) from the
Holder without requiring the Holder to exercise all or part of the Warrant.
If such corporation refuses to so purchase this Warrant then the Company
shall purchase the Warrant for cash. In either case the purchase price
shall be the amount per share that shareholders of the outstanding Common
Stock of the Company shall receive as a result of the transaction
multiplied by the number of shares covered by the Warrant, minus the
aggregate Exercise Price of the Warrant. Such purchase shall be closed
within 60 days following the election of the holder to sell this Warrant.
(d) Upon any adjustment of the Exercise Price, then, and in each such case,
the Company shall give written notice thereof, by first class mail, postage
prepaid, addressed to the registered holder of this Warrant at the address of
such holder as shown on the books of the
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Company, which notice shall state the Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
(e) If any event occurs as to which in the good faith determination of the
Board of Directors of the Company the other provisions of this paragraph 8 are
not strictly applicable or if strictly applicable would not fairly protect the
purchase rights of the holder of this Warrant in accordance with the essential
intent and principles of such provisions, then the Board of Directors shall make
an adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such purchase rights as
aforesaid.
9. Payment of Exercise Price. The Holder must pay the Exercise Price in
cash or immediately available funds.
10. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section, (ii) the business day following the date of mailing, if sent by a
nationally recognized overnight courier service, or (iii) upon actual receipt by
the party to whom such notice is required to be given. The addresses for such
communications shall be: (1) if to the Company, to 0000 Xxxxxx Xxxxx Xxxxx, Xxxx
Xxxxxxx, Xxxxxxxxx 00000, Attention: Chief Executive Officer, facsimile number
(000) 000-0000, or (ii) if to the Holder, to the Holder at the address or
facsimile number appearing on the Warrant Register or such other address or
facsimile number as the Holder may provide to the Company in accordance with
this Section 11.
11. Warrant Agent.
(a) The Company shall serve as warrant agent under this Warrant. Upon 30
days' notice to the Holder, Company may appoint a new warrant agent.
(b) Any corporation into which the Company or any new warrant agent may be
merged or any corporation resulting from any consolidation to which the Company
or any new warrant agent shall be a party or any corporation to which the
Company or any new warrant agent transfers substantially all of its corporate
trust or shareholders services business shall be a successor warrant agent under
this Warrant without any further act. Any such successor warrant agent shall
promptly cause notice of its succession as warrant agent to be mailed (by first
class mail, postage prepaid) to the Holder at the Holder's last address as shown
on the Warrant Register.
12. Call of Warrant. Subject to the conditions set forth below, the Company
shall be permitted to call this Warrant from the Holder in the event that the
Company's Common Stock has not traded below $4.375 per share for 20 consecutive
trading days prior to the Expiration Date of this Warrant. Notwithstanding the
foregoing, the Company may only exercise its right to call this Warrant from the
Holder if at the time of such call (i) all Warrant Shares may be sold pursuant
to an effective registration statement under the Securities Act, (ii) the Common
Stock is
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listed and trading on either the Nasdaq Small Cap Market or the Nasdaq National
Market, and (iii) the Company has reserved and available for issuance a number
of shares of its Common Stock sufficient to cover the exercise of this Warrant
in full. The Company must provide the Holder with at least 20 days advance
written notice (the "Warrant Notice") of its intent to call this Warrant
pursuant to the terms hereof and the Holder shall have 20 business days from the
date of receipt of the Warrant Notice to exercise this Warrant (the "Sale
Period"). If the Holder does not exercise this Warrant during the Sale Period,
the Holder shall surrender this Warrant to the Company at the end of the Sale
Period for cancellation by the Company, and the Company shall transfer to the
Holder, via wire transfer of immediately available funds or by Company check, an
amount equal to $.10 multiplied by the number of shares of Common Stock subject
to exercise of this Warrant. Notwithstanding the foregoing, the Sale Period
shall be extended by that number of days during such period for which the
registration, listing and reservation requirements set forth in clauses
(i)-(iii) of this Section 12 shall not be satisfied. In the event that the
Company calls this Warrant pursuant to this Section 12 before the number of
shares of Common Stock subject to this Warrant has been determined (because the
Series B Preferred Stock issued to Holders with this Warrant has not yet been
exercised), this Warrant shall be deemed to represent the right to purchase a
number of shares of Common Stock determined as if the Series B Preferred Stock
had been converted at the "Maximum Price," as defined in the Certificate of
Designation defining the rights and preferences of the Series B Preferred Stock.
13. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only in writing signed by the Company and the Holder.
(b) Subject to Section 13(a), above, nothing in this Warrant shall be
construed to give to any person or corporation other than the Company and the
Holder any legal or equitable right, remedy or cause under this Warrant; this
Warrant shall be for the sole and exclusive benefit of the Company and the
Holder.
(c) This Warrant shall be governed by and construed and enforced in
accordance with the internal laws of the State of Minnesota without regard to
the principles of conflicts of law thereof.
(d) The headings herein are for convenience only, do not constitute a part
of this Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
(e) In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
IN WITNESS WHEREOF, Global MAINTECH Corporation has caused this Warrant to
be executed by its duly authorized officer and this Warrant to be dated as of
________ __, 1998.
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GLOBAL MAINTECH CORPORATION
By ________________________________
Its: ________________________________
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FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To GLOBAL MAINTECH CORPORATION
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase __________
shares of Common Stock, no par value per share, of Global MAINTECH Corporation
and encloses herewith $_________________ in cash or certified or official bank
check or checks, which sum represents the aggregate Exercise Price (as defined
in the Warrant) for the number of shares of Common Stock to which this Form of
Election to Purchase relates, together with any applicable taxes payable by the
undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR TAX
IDENTIFICATION NUMBER
------------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
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If the number of shares of Common Stock issuable upon this exercise shall
not be all of the shares of Common Stock which the undersigned is entitled to
purchase in accordance with the enclosed Warrant, the undersigned requests that
a New Warrant (as defined in the Warrant) evidencing the right to purchase the
shares of Common Stock not issuable pursuant to the exercise evidenced hereby be
issued in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Dated: ______________________ Name of Holder:
(Print)__________________________________
(By:)____________________________________
(Name:)__________________________________
(Title:)_________________________________
(Signature must conform in all respects to name of holder as
specified on the face of the Warrant)
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FORM OF ASSIGNMENT
(To be completed and signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________ the right represented by the within Warrant to
purchase ______ shares of Common Stock of Global MAINTECH Corporation to which
the within Warrant relates and appoints ________________ attorney to transfer
said right on the books of Global MAINTECH Corporation with full power of
substitution in the premises.
Dated:
-------------------
-----------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant)
-----------------------------------
Address of Transferee
-----------------------------------
-----------------------------------
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EXHIBIT E TO PREFERRED STOCK AND
WARRANT PURCHASE AGREEMENT
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement is made and entered into as of the ____
day of _________, 1998, by and among Global MAINTECH Corporation, a Minnesota
corporation (the "Company") and the Investors listed on Schedule A attached
hereto (individually, an "Investor" and collectively, the "Investors").
RECITALS
A. The Investors and the Company have entered into that certain Preferred
Stock and Warrant Purchase Agreement, dated _________ __, 1998 (the "Purchase
Agreement").
B. It is a condition to the transactions contemplated in the Purchase
Agreement that the Company provide the registration and other rights provided
herein and the parties hereto desire to provide for such rights on the terms and
conditions contained herein.
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise noted, all capitalized terms used
-------------
herein shall have the meanings afforded them in the Purchase Agreement and the
Exhibits attached thereto.
2. Required Registration. Within 30 days of the date hereof (the "File
---------------------
Date"), the Company shall file a Registration Statement under the Securities Act
of 1933, as amended (the "Securities Act"), in accordance with the provisions of
either Form SB-1, Form SB-2 or Form S-3, as required by the Securities and
Exchange Commission (the "Commission") covering the resale of the shares of the
Company's common stock (i) underlying the Preferred Stock, (ii) underlying the
Warrants issued by the Company to Investors of even date herewith (collectively,
the "Warrants"), and (iii) issuable by the Company in payment of the dividends
on the shares of the Preferred Stock (the "Dividends") and will use its best
efforts to have such Registration Statement become effective with the Commission
as soon as possible thereafter, and in any event, by December 31, 1998. The
shares of the Company's common stock underlying the Preferred Stock and the
Warrants and issuable in payment of the Dividends is referred to herein as the
"Registrable Stock."
3. Registration--General Provisions. In connection with the registration
--------------------------------
of the Registrable Stock under the Securities Act, the Company will:
(a) prepare and file with the Commission a registration statement with
respect to such securities, within 30 days of the date hereof, and use its best
efforts to cause such registration statement to become effective as soon as
possible after the date it is filed and keep
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the prospectus which is a part of such Registration Statement current until the
earlier of the date on which: (i) all such shares have been sold, or (ii) five
years after the date it is declared effective by the Commission (the
"Effectiveness Period");
(b) prepare and file with the Commission such amendments to such
Registration Statement and supplements to the prospectus contained therein as
may be necessary to keep such Registration Statement effective for the
Effectiveness Period referred to in Section 3(a) above;
(c) at the request of an Investor, provide such Investor's counsel
(referred to herein as "Investor's Counsel") with reasonable opportunities to
review and comment on, and otherwise participate in, the preparation of such
Registration Statement;
(d) furnish to the Investors participating in such registration and to
the underwriters of the securities being registered, if any, such reasonable
number of copies of the Registration Statement, preliminary prospectus, final
prospectus and such other documents as the Investors and underwriters may
reasonably request in order to facilitate the public offering of such
securities;
(e) use its diligent, good-faith efforts to register or qualify the
securities covered by such Registration Statement under such state securities or
blue sky laws of such jurisdictions as the Investors may reasonably request in
writing within 30 days following the original filing of such Registration
Statement, except that the Company shall not for any purpose be required to
execute a general consent to service of process (which shall not include a
"Uniform Consent to Service of Process" or other similar consent to service of
process which relates only to actions or proceedings arising out of or in
connection with the sale of securities, or out of a violation of the laws of the
jurisdiction requesting such consent) or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(f) notify the Investors, promptly after it shall receive notice
thereof, of the time when such Registration Statement has become effective or a
supplement to any prospectus forming a part of such Registration Statement has
been filed with the Commission;
(g) notify the Investors promptly of any request by the Commission for
the amending or supplementing of such Registration Statement or prospectus or
for additional information;
(h) prepare and file with the Commission, promptly upon the request of
the Investors, any amendments or supplements to such Registration Statement or
prospectus which, in the opinion of Investor's Counsel, if any (and concurred in
by counsel for the Company), is required under the Securities Act or the rules
and regulations promulgated thereunder in connection with the distribution of
the shares of the Company's common stock by the Investors;
(i) prepare and promptly file with the Commission and promptly notify
the Investors of the filing of such amendment or supplement to such Registration
Statement or
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prospectus as may be necessary to correct any statements or omissions if, at the
time when a prospectus relating to such securities is required to be delivered
under the Securities Act, any event shall have occurred as the result of which
any such prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances in which they
were made, not misleading;
(j) advise the Investors, and the Investor's Counsel, if any,
promptly after it shall receive notice or obtain knowledge thereof, of the
issuance of any stop order by the Commission suspending the effectiveness of
such Registration Statement or the initiation or threatening of any proceeding
for that purpose and promptly use its best efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such stop order should be issued;
(k) not file any amendment or supplement to such Registration
Statement or prospectus to which the Investors shall have reasonably objected on
the grounds that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or the rules and
regulations promulgated thereunder, after having been furnished with a copy
thereof at least five business days prior to the filing thereof, unless in the
opinion of counsel for the Company the filing of such amendment or supplement is
reasonably necessary to protect the Company from any liabilities under any
applicable federal or state law and such filing will not violate applicable law;
and
(l) at the request of the Investors, furnish on the effective date of
the Registration Statement and, if such registration includes an underwritten
public offering, at the closing provided for in the underwriting agreement: (i)
opinions, dated such respective dates, of the counsel representing the Company
for the purposes of such registration, addressed to the underwriters, if any,
and to the Investors making such request, covering such matters as such
underwriters or Investors may reasonably request, and (ii) letters, dated such
respective dates, from the independent certified public accountants of the
Company, addressed to the underwriters, if any, and to the Investors, covering
such matters as such underwriters or Investors may reasonably request.
(m) Notwithstanding the foregoing, following the effectiveness of
such Registration Statement, the Company may, at any time, suspend the
effectiveness of such Registration Statement for up to no longer than ninety
(90) days, as appropriate (a "Suspension Period"), by giving notice to the
Investors, if (i) the Company, with the advice of its counsel, shall have
determined that the Company may be required to disclose any material corporate
development or (ii) the Company shall be involved in an underwritten public
offering of its securities. The Company will use its best efforts to minimize
the length of any Suspension Period. Further, no more than one 90-day Suspension
Period or multiple Suspension Periods which do not exceed 90 days in the
aggregate may occur in any 12-month period and the Effectiveness Period referred
to in Section 3(a) shall be extended by the number of days such registration is
subject to any Suspension Period. Each Investor agrees that, upon receipt of
any notice from the Company of a Suspension Period, it will not sell (subject to
the limitations on the Company set forth above) any Registrable Stock pursuant
to such Registration Statement until (i)
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such Investor is advised in writing by the Company that the use of the
applicable prospectus may be resumed, (ii) such Investor has received copies of
any additional or supplemental or amended prospectus, if applicable, and (iii)
such Investor has received copies of any additional or supplemental filings
which are incorporated or deemed to be incorporated by reference in such
prospectus.
4. Registration Expenses. The Company shall pay all Registration
---------------------
Expenses (as defined below) in connection with the inclusion of shares of the
Company's common stock in any Registration Statement, or application to register
or qualify such shares under state securities laws, filed by the Company
hereunder, other than as set forth herein. For purposes of this Agreement, the
term "Registration Expenses" means the filing fees payable to the Commission,
any state agency and the NASD; the fees and expenses of the Company's legal
counsel and independent certified public accountants in connection with the
preparation and filing of the Registration Statement (and all amendments and
supplements thereto) with the Commission; and all expenses relating to the
printing of the Registration Statement, prospectuses and various agreements
executed in connection with the Registration Statement. Notwithstanding the
foregoing, the Investors will pay the fees and expenses of any legal counsel the
Investors may engage, as well as the Investors' proportionate share of any
custodian fees or commission or discounts or transfer taxes which may be payable
to any underwriter and any other expenses incurred by the Investors not
expressly included herein.
5. Penalty Payments. In the event that the Registration Statement
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relating to the resale of the Registrable Stock is not (i) filed with the
Commission by the Company on or before the File Date and/or the Company has not
exercised its best efforts to facilitate the Registration Statement being
declared effective within 90 days of the date hereof, or (ii) declared effective
by the Commission by December 31, 1998, then, the Company shall pay the
Investors the following amounts ("Penalty Payments"): (i) 1% of the purchase
price of the Preferred Stock and Warrants (the "Purchase Price") paid by the
Investors to the Company for the first 30-day period in which the Company is not
in compliance with any of the above provisions; (ii) an additional 1% of the
Purchase Price for the next 30-day period in which the Company is not in
compliance with any of the above provisions; and (iii) 3% of the Purchase Price
for each 30-day period thereafter in which the Registration Statement is not
declared effective by the Commission. Penalties for failure to file and/or to
obtain effectiveness shall be cumulative, but in no event shall the aggregate of
all such Penalty Payments paid hereunder exceed 100% of the Purchase Price . The
Company shall be liable to the Investor for a full 30-day period, determined in
accordance with the above schedule, regardless of by how many days it misses one
of the targeted filing or effective dates set forth above. All such Penalty
Payments shall be immediately payable by the Company to the Investors (on a pro
rata basis based on the number of shares of Preferred Stock purchased by each
under the Purchase Agreement) via wire transfer or Company check by the close of
business on last day of each respective period set forth above.
6. Indemnification. With respect to the registration of the resale of the
---------------
shares of Registrable Stock:
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(a) to the extent permitted by law, the Company will indemnify and
hold harmless each Investor, the trustees, partners, officers and directors of
each Investor, any underwriter (as defined in the Securities Act) for such
Investor and each person, if any, who controls such Investor or underwriter
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively a "Violation") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection with the offering
covered by the Registration Statement; and the Company will reimburse each such
Investor, trustee, partner, officer, director, underwriter or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 6(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished to
it expressly for use in connection with such registration by an Investor,
trustee, partner, officer, director, underwriter or controlling person of an
Investor.
(b) to the extent permitted by law, each Investor will indemnify and
hold harmless the Company, each of its directors, each of its officers, each
person, if any, who controls the Company within the meaning of the Securities
Act, any underwriter and any other Investor selling securities under the
Registration Statement or any of such other Investor's, trustees, partners,
directors or officers or any person who controls such Investor, against any
losses, claims, damages or liabilities (joint or several) to which the Company
or any such director, officer, controlling person, underwriter or other such
Investor, or trustee, partner, director, officer or controlling person of such
other Investor may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Investor and stated to be specifically for use in connection
with such registration; and each such Investor will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Investor, or trustee, partner, officer,
director or controlling person of such other Investor in connection with
investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was such a Violation; provided,
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however, that the indemnity agreement contained in this Section 6(b) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Investor,
which consent shall not be unreasonably withheld; provided further, that in no
event shall any indemnity under this Section 6 exceed the gross proceeds from
the offering received by such Investor unless the Violation is the result of
fraud on the part of such Investor.
(c) promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action (including any governmental action),
such indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain its
own counsel, with the reasonable fees and expenses to be paid by the
indemnifying party; and provided further, that if there is more than one
indemnified party, the indemnifying party shall pay for the reasonable fees and
expenses of one counsel for any and all indemnified parties to be mutually
agreed upon by such indemnified parties, unless representation of an indemnified
party by the counsel retained by the other indemnified parties would be
inappropriate due to actual or potential differing interests between such
indemnified parties. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action, if
materially prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section,
but the omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party other than
under this Section.
(d) if the indemnification provided for in this Section is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall to the extent permitted by applicable law, contribute to the amount paid
or payable by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by a court of law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. No person or entity guilty of fraudulent misrepresentation (within
the meaning of Section 11 of the Securities Act) shall be entitled to
contribution from any person or entity who shall not have been guilty of such
fraudulent misrepresentation.
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(e) the obligation of the Company and the Investors under this
Section shall survive the completion of any offering for resale of shares of the
Registrable Stock in the Registration Statement, and otherwise.
7. Limitation on Subsequent Registration Rights. From and after the date
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of this Agreement and until all the Securities have been registered under the
Securities Act or become eligible for transfer under Rule 144(k) or similar rule
under the Securities Act, the Company shall not, without the prior written
consent of all of the Investors, enter into any agreement with any person or
persons providing for the granting to such holder of registration rights pari
passu or senior to those granted to Investors pursuant to this Agreement, or of
registration rights which might cause a reduction in the number of shares
includable by the Investors in any registration.
8. Miscellaneous.
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(a) The Company shall not hereafter enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Investors in this Agreement.
(b) Except as otherwise provided herein, the provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to or departures from the provisions hereof may not be given or made unless the
Company has obtained the written consent of the Investors.
(c) All notices and other communications provided for or permitted
hereunder shall be made by hand delivery, telex, facsimile, overnight courier or
registered first-class mail:
(i) if to an Investor, at the address set forth on Schedule A
attached hereto;
(ii) if to the Company, at the address set forth in the Purchase
Agreement.
All such notices and communications shall be deemed to have been duly given:
when delivered, if by hand, overnight courier or mail; when the appropriate
answer back is received, if by telex; when transmission is confirmed by the
sending unit, if by facsimile.
(d) This Agreement may be executed in any number of counterparts and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) The headings to this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
(f) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Minnesota without giving effect to the
principles of conflicts of law thereof.
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(g) In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the Investors and the Company
shall be enforceable to the fullest extent permitted by law.
(h) The remedies provided for in this Agreement shall be cumulative
and in addition to all other remedies available, at law or in equity, and
nothing herein shall limit a holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date indicated
above.
GLOBAL MAINTECH CORPORATION
By:______________________________
Its:______________________________
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ENTITY INVESTOR INDIVIDUAL INVESTOR
--------------- -------------------
__________________________ __________________________________
Name of Entity Signature
By _______________________ __________________________________
* Signature Signature of Joint Holder, if any
Its ______________________
Title
__________________________ __________________________________
Name Typed or Printed Name Typed or Printed
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