SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of September
22, 1998, by and among TREEV, Inc. (formerly, Network Imaging Corporation), a
corporation organized under the laws of the State of Delaware (the "Company"),
with headquarters located at 000 Xxxxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 and
Xxxxxx X. Xxxxxxxx, Xx., Xxxxxxxx Family Partnership, Xxxxx Family Trust, and
the Xxxxxx Family Trust (the "Purchasers").
WHEREAS:
A. The Company and the Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act");
B. Xx. Xxxxxxxx and the Company executed a final term sheet for Series
N Preferred Stock on September 17, 1998, and the parties now wish to enter into
a securities purchase agreement for 1,559,576 shares of the Company's Series N
Convertible Preferred Stock, par value $.0001 per share (the "Series N Stock"),
convertible into its common stock, par value $.0001 per share, of the Company
(the "Common Stock"). The rights, preferences and privileges of the Preferred
Shares, including the terms upon which such Preferred Shares are convertible
into shares of Common Stock are set forth in the form of Certificate of
Designations, Preferences and Rights attached hereto as Exhibit A (the
"Certificate of Designation"). The shares of Common Stock issuable upon
conversion of the Preferred Shares or otherwise pursuant to the Certificate of
Designation are referred to herein as the "Conversion Shares". The Preferred
Shares and the Conversion Shares are collectively referred to herein as the
"Securities."
NOW, THEREFORE, the Company and the Purchasers hereby agree as follows:
1. PURCHASE AND SALE OF THE SERIES N STOCK.
a. Purchase of the Series N Stock. Upon execution of this Agreement,
the Purchasers shall be deemed to have purchased from the Company, at a purchase
price of $10,000,000 (the "Funds"), 1,559,576 shares of the Series N Stock.
Purchasers agree that he shall same-day wire the Funds to the Company on
September 22, 1998.
b. Use of Proceeds. The Company agrees that the proceeds from the sale
and purchase of the Series N Stock shall be used (i) to redeem all of the
outstanding shares of the Series K and Series L Convertible Preferred Stocks and
(ii) for working capital needs.
c. Shareholder Approval of the Issuance of the Series N Stock. The
Company's common stockholders must approve the issuance of the Series N Stock to
Purchasers. The Company agrees to use its best efforts to obtain such
shareholder approval by December 31, 1998.
d. Conversion of the Series N Stock into Common Stock. Upon the
approval of the Company's common stockholders of the issuance of the Series N
Stock to Purchasers, the Series N Stock shall immediately convert to 15,595,760
shares of the Company's Common Stock and shall remain subject to the terms and
conditions contained in this Agreement. The shares of Common Stock shall be
distributed to the Purchasers as follows: 6,238,304 shares to X.X. Xxxxxxxx,
Xx.; 6,238,304 shares to Xxxxxxxx Family Partnership; 1,559,576 shares to the
Xxxxx Family Trust; and 1,559,576 shares to the Xxxxxx Family Trust.
In the event that stockholders' approval is not obtained, the Company
shall endeavor to again pursue the stockholders' approval. After the first
attempt at obtaining stockholders' approval of the issuance of the shares
whereby the stockholders do not approve the issuance of the shares and until
such time as the stockholders do approve of the issuance of the shares to
Purchasers, the Purchasers may convert a number of shares of the Series N Stock;
provided however, that with the Purchasers' current stock ownership in the
Company, that ownership does not exceed 19.99% of the outstanding shares of
Common Stock of the Company.
2. PURCHASERS' REPRESENTATIONS AND WARRANTIES
The Purchasers represent and warrant to the Company that:
a. Investment Purpose. Purchasers are purchasing the Series N Stock for
Purchasers' own accounts for investment only and not with a present view towards
the public sale or distribution thereof, except pursuant to sales that are
exempt from the registration requirements of the Securities Act and/or sales
registered under the Securities Act. Purchasers understand that Purchasers must
bear the economic risk of this investment indefinitely, unless the Securities
are registered pursuant to the Securities Act and any applicable state
securities or blue sky laws or an exemption from such registration is available,
and that the Company has no present intention of registering any such
Securities. Purchasers agree that any and all disposal(s) of the Securities
shall be in accordance with or pursuant to a registration statement or an
exemption under the Securities Act.
b. Accredited Investor. Each Purchaser is an "Accredited Investor" as
that term is defined in Rule 501(a) of Regulation D of the Securities Act of
1993, as amended. Each Purchaser further acknowledges completion of a review of
due diligence and disclosure materials provided by the Company and other
information obtained independently. Purchasers further acknowledge that in
making its decision to enter into this Agreement and purchase the Securities, it
has relied on its own examination of the Company and the terms of, and,
consequences of, holding the Securities.
c. Governmental Review. Purchasers understand that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
d. Transfer or Resale. Purchasers understand that the Securities have
not been and are not being registered under the Securities Act or any state
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securities laws, and may not be transferred unless (a) subsequently registered
thereunder, or (b) Purchaser shall have delivered to the Company an opinion of
counsel (which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration or (c) sold pursuant to Rule 144 promulgated
under the Securities Act (or a successor rule) ("Rule 144"); any sale of such
Securities made in reliance on Rule 144 may be made only in accordance with the
terms of said Rule and further, if said Rule is not applicable, any resale of
such Securities under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the Securities Act) may require compliance with some other exemption
under the Securities Act or the rules and regulations of the SEC thereunder; and
(iii) neither the Company nor any other person is under any obligation to
register such Securities under the Securities Act or any state securities laws
or to comply with the terms and conditions of any exemption thereunder except as
otherwise set forth herein.
e. Legends. Purchasers understand that the Series N Stock and, until
such time as the Conversion Shares have been registered under the Securities Act
may be sold by Purchasers pursuant to Rule 144, the certificates for the
Securities may bear a restrictive legend in substantially the following form:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be sold, transferred or assigned in
the absence of an effective registration statement for the securities
under said Act, or an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions, that
registration is not required under said Act or unless sold pursuant to
Rule 144 under said Act.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by state securities laws, (a) the sale of
such Security is registered under the Securities Act, or (b) such holder
provides the Company with an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions, to the effect that
a public sale or transfer of such Security may be made without registration
under the Securities Act or (c) such holder provides the Company with reasonable
assurances that such Security can be sold pursuant to Rule 144. Purchasers agree
to sell all Securities, including those represented by a certificate(s) from
which the legend has been removed, pursuant to an effective registration
statement or in compliance with an exemption from the registration requirements
of the Securities Act. In the event the above legend is removed from any
Security and thereafter the effectiveness of a registration statement covering
such Security is suspended or the Company determines that a supplement or
amendment thereto is required by applicable securities laws, then upon
reasonable advance notice to Purchasers the Company may require that the above
legend be placed on any such Security that cannot then be sold pursuant to an
effective registration statement or Rule 144 and Purchasers shall cooperate in
the prompt replacement of such legend. Such legend shall be removed when such
Security may be sold pursuant to an effective registration statement or Rule
144.
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f. Enforcement. This Agreement has been duly and validly executed and
delivered on behalf of Purchasers and is a valid and binding agreement of
Purchasers enforceable in accordance with their terms.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Purchasers that:
a. Organization and Qualification. The Company is a corporation duly
organized and existing in good standing under the laws of the jurisdiction in
which it is incorporated, and has the requisite corporate power to own its
properties and to carry on its business as now being conducted. The Company is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary.
b. Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and perform this Agreement.
c. Expenses. Except as otherwise provided in this Agreement, each party
hereto shall be responsible for its own expenses incurred in connection with the
negotiation, preparation, execution, delivery and performance of this Agreement
and the other agreements to be executed in connection herewith.
d. Reservation of Shares. The Company shall at all times have
authorized and reserved for the purpose of issuance a sufficient number of
shares of Common Stock to provide for the full conversion of the outstanding
Series N Stock and issuance of the Conversion Shares in connection therewith and
as otherwise required by the Certificate of Designation.
e. Corporate Existence. So long as a Purchaser beneficially owns any of
the Series N Stock, the Company shall maintain its corporate existence, and in
the event of a merger, consolidation or sale of all or substantially all of the
Company's assets, the Corporation shall ensure that the surviving or successor
entity in such transaction assumes the Company's obligations hereunder and under
the agreements and instruments entered into in connection herewith regardless of
whether or not the Company would have had a sufficient number of shares of
Common Stock authorized and available for issuance in order to effect the
conversion of all the Series N Stock as of the date of such transaction.
f. Compliance with Certificate of Designation. The Company shall comply
with all of the provisions contained in the Certificate of Designation.
4. TRANSFER AGENT INSTRUCTIONS.
a. The Company shall instruct its transfer agent to issue certificates,
registered in the name of the Purchasers or its nominees, for the Conversion
Shares in such amounts as specified from time to time by such Purchaser to the
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Company upon conversion of the Series N Stock. To the extent and during the
periods provided in Section 2(c) and 2(d) of this Agreement, all such
certificates shall bear the restrictive legend specified in Section 2(d) of this
Agreement.
b. The Company warrants that no instruction other than such
instructions referred to in this Section 4, and stop transfer instructions to
give effect to Section 2(c) hereof in the case of all of the Securities prior to
registration of the Conversion Shares under the Securities Act, will be given by
the Company to its transfer agent and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement. Nothing in this Section shall affect in any way the
Purchasers' obligations and agreement set forth in Section 2(d) hereof to resell
the Securities pursuant to an effective registration statement or in compliance
with an exemption from the registration requirements of applicable securities
law.
c. If a Purchaser provides the Company with an opinion of counsel,
which opinion of counsel shall be in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from registration, or the Purchaser provides the Company with
reasonable assurances that such Securities may be sold pursuant to Rule 144, the
Company shall permit the transfer, and, in the case of the Conversion Shares
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by the Purchaser.
5. REGISTRATION RIGHTS.
The Company agrees that at any time it registers shares of common stock
for any other party on Form S-3, it shall promptly notify Purchasers of such
pending registration and shall undertake, upon the request of the Purchasers, to
register the Conversion Shares. Purchasers shall notify the Company that it
seeks to have the Conversion Shares registered within ten days of the Company's
notification of a filing to the Purchaser.
Registration expenses shall be borne by the Company.
6. LIQUIDATION PREFERENCE.
The Series N Stock shall hold liquidation preference over the Common
Stock. The Series N Stock shall rank junior to the Series A Convertible
Preferred Stock until such time as the Company has effected the conversion of
the Series A Convertible Preferred Stock, and shall be junior to the Series M
Convertible Preferred Stock and Series M1 Convertible Preferred Stock until such
time as the holder of the Series M and Series M1 Convertible Preferred Stock has
converted to shares of the Company's common stock.
7. WARRANT ISSUANCE.
Upon execution of this Agreement, Purchasers shall receive warrants,
pro rata, for the purchase of 500,000 shares of the Company's common stock at an
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exercise price equal to the closing price for the common stock on September 16,
1998. All terms of the warrant shall be provided for in the Stock Purchase
Warrant.
8. RIGHT OF FIRST OFFER.
The Company agrees that during the period beginning on the date hereof
and ending September 22, 1999, the Company will not, without the prior written
consent of Purchasers, contract with any party to obtain additional equity
financing in any form (a "Future Offering") unless the Company shall have first
delivered to Purchasers at least five (5) business days prior to the closing of
such Future Offering, written notice describing the proposed Future Offering,
including the terms and conditions thereof, and providing the Purchasers, an
option during the five (5) business day period following delivery of such notice
to purchase the shares included in the Future Offering on the same terms as
contemplated by such Future Offering. This right of first offer shall not apply
to any transaction involving issuances of securities as consideration for a
merger, consolidation or acquisition of assets, or in connection with any
strategic partnership or joint venture (the primary purpose of which is not to
raise equity capital), or as consideration for the acquisition of a business,
product or license by the Company or exercise of options by employees or
directors. This right of first refusal also shall not apply to (i) the issuance
of securities pursuant to an underwritten public offering; (ii) the issuance of
securities upon exercise or conversion of the Company's options, warrants or
other convertible securities outstanding as of the date hereof; (iii) the grant
of additional options or warrants, or the issuance of additional securities,
under any Company stock option or restricted stock plan for the benefit of the
Company's employees or directors; or (iv) the issuance of securities to an
investment banking firm retained by the Company to perform business services to
the Company.
9. BOARD REPRESENTATION.
Upon execution of this Agreement, X.X. Xxxxxxxx, Xx., at his election, shall
have either (i) a seat on the Company's Board of Directors or (ii) observation
rights to attend or listen via conference call to the Company's Board of
Directors' quarterly meetings. Such election must be made in writing addressed
to Xxxxx X. Xxxx, Chairman and Chief Executive Officer, TREEV, Inc., 000 Xxxxxxx
Xxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000. If such an election is not made within
thirty (30) days of this Agreement, the Purchaser shall be deemed to have
elected observation rights to attend or listen via conference call to the
Company's Board of Directors' quarterly meetings.
10. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Virginia applicable to
contracts made and to be performed in the State of Virginia. The Company and the
Purchaser irrevocably consent to the exclusive jurisdiction of the United States
federal courts located in the State of Virginia in any suit or proceeding based
on or arising under this Agreement and irrevocably agrees that all claims in
respect of such suit or proceeding may be determined in such courts.
b. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
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delivered to the other party.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Purchasers make any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived other than by an instrument in
writing signed by the party to be charged with enforcement and no provision of
this Agreement may be amended other than by an instrument in writing signed by
the Company and the Purchasers.
f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier or confirmed telecopy, in each case addressed to a party. The addresses
for such communications shall be:
If to the Company:
TREEV, Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: General Counsel's Office
If to the Purchasers, to such address set forth under such Purchasers'
name on the execution page hereto executed by the Purchasers.
Each party shall provide notice to the other parties of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor any Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
h. Survival. The Company agrees to indemnify and hold harmless the
Purchaser for loss or damage arising as a result of or related to any breach or
alleged breach by the Company of any of its representations or covenants set
forth herein, including advancement of expenses as they are incurred.
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IN WITNESS WHEREOF, the undersigned Purchasers and the Company have caused this
Agreement to be duly executed as of the date first above written.
TREEV, Inc.
By:_________________________________
Name:_______________________________
Title:______________________________
PURCHASERS:
_________________________________________
Xxxxxx X. Xxxxxxxx, Xx.
ADDRESS: ________________________________
_________________________________________
Xxxxxxxx Family Partnership
ADDRESS: ________________________________
_________________________________________
Xxxxx Family Trust
ADDRESS: ________________________________
_________________________________________
Xxxxxx Family Trust
ADDRESS: ________________________________
