SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of April 10, 1997, by and
between DATAWARE TECHNOLOGIES, INC., a Delaware corporation, with headquarters
located at 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (the
"Company"), and GFL ADVANTAGE FUND LIMITED, a British Virgin Islands corporation
(the "Buyer").
W I T N E S S E T H:
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WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, shares of non-voting, convertible preferred
stock of the Company which will be convertible into shares of Common Stock, $.01
par value (the "Common Stock"), of the Company; and
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D as promulgated by the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933
Act");
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(A) SUBSCRIPTION. The Buyer hereby agrees to purchase from the
Company the number of shares (the "Preferred Shares") of Series B Convertible
Preferred Stock, $.01 par value (the "Preferred Stock"), of the Company set
forth on the signature page of this Agreement, having the terms and conditions
as set forth in the form of Certificate of Designations of the Series B
Convertible Preferred Stock attached hereto as ANNEX I (the "Certificate of
Designations") at the price per share and for the aggregate purchase price set
forth on the signature page of this Agreement. The purchase price for the
Preferred Shares shall be payable in United States Dollars. The shares of
Common Stock issuable upon conversion of the Preferred Shares are referred to
herein as the "Common Shares." The Common Shares and the Preferred Shares are
referred to herein collectively as the "Shares."
(B) FORM OF PAYMENT. The Buyer shall pay the purchase price for the
Preferred Shares by delivering good funds in United States Dollars to the escrow
agent (the "Escrow Agent") identified in the Joint Escrow Instructions attached
hereto as ANNEX II (the "Joint Escrow Instructions"). Such delivery of funds
shall be made against delivery by the Company of the certificates for the
Preferred Shares registered in the name of the Buyer. Promptly following
payment by the Buyer to the Escrow Agent of the purchase price of the Preferred
Shares, but in no event later than two Business Days after such payment, the
Company shall deliver certificates for the Preferred Shares, registered in the
name of the Buyer, to the Escrow Agent. The certificates for the Preferred
Shares shall be delivered by the Company to the Escrow Agent on a delivery
against payment basis at the closing. By signing this Agreement, the Buyer and
the Company each agrees to all of the terms and conditions of, and becomes a
party to, the Joint Escrow Instructions, all of the provisions of which are
incorporated
herein by this reference as if set forth in full. As used in this Agreement,
the term "Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in The City of New York are authorized or required by
law to remain closed.
(C) METHOD OF PAYMENT. Payment of the purchase price for the
Preferred Shares shall be made by wire transfer of funds to:
Citibank, N.A.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA#000000000
For credit to A/C#37179446
For credit to the account of Xxxxx X. Xxxxx Attorney Escrow Account
Reference: Advantage/Dataware
Not later than 4:00 p.m., New York City time, on the date which is two Business
Days after the Company shall have accepted this Agreement and returned a signed
counterpart of this Agreement to the Buyer or its legal counsel, the Buyer shall
deposit with the Escrow Agent the aggregate purchase price for the Preferred
Shares.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
(A) PURCHASE FOR INVESTMENT. The Buyer is purchasing the Preferred
Shares for its own account for investment only and not with a view towards the
public sale or distribution thereof;
(B) ACCREDITED INVESTOR. The Buyer is an "accredited investor" as
that term is defined in Rule 501 of the General Rules and Regulations under the
1933 Act by reason of Rule 501(a)(3);
(C) REOFFERS AND RESALES. All subsequent offers and sales of the
Shares by the Buyer shall be made pursuant to registration of the Shares being
offered and sold under the 1933 Act or pursuant to an exemption from
registration;
(D) COMPANY RELIANCE. The Buyer understands that the Preferred
Shares are being offered and sold, and the Common Shares are being offered, to
it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying
upon the truth and accuracy of, and the Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Preferred Shares and
to receive an offer of the Common Shares;
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(E) INFORMATION PROVIDED. The Buyer and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Preferred Shares and the offer of the Common Shares which have been requested by
the Buyer; the Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries; without limiting the generality of
the foregoing, the Buyer has had the opportunity to obtain and to review the
Company's (1) Annual Report on Form 10-K for the fiscal year ended December 31,
1996, and (2) proxy statement for the Company's 1996 Annual Meeting, in each
case as filed with the SEC (collectively, the "SEC Reports"); and the Buyer
understands that its investment in the Shares involves a high degree of risk;
(F) ABSENCE OF APPROVALS. The Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Shares; and
(G) SUBSCRIPTION AGREEMENT. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable in accordance with its terms, subject
as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally.
3. COMPANY REPRESENTATIONS, WARRANTIES, ETC.
The Company represents and warrants to, and covenants and agrees with,
the Buyer that:
(A) ORGANIZATION AND AUTHORITY. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to (i) own, lease
and operate its properties and to carry on its business as now being conducted,
and (ii) to execute, deliver and perform its obligations under this Agreement,
the Registration Rights Agreement, the form of which is attached hereto as ANNEX
III (the "Registration Rights Agreement"), the Certificate of Designations, the
Transfer Agent Instructions, the form of which is attached hereto as ANNEX IV
(the "Transfer Agent Instructions"), and the other agreements to be executed and
delivered by the Company in connection herewith, and to consummate the
transactions contemplated hereby and thereby. The Company is duly qualified to
do business as a foreign corporation and is in good standing in all
jurisdictions wherein such qualification is necessary and where failure so to
qualify could have a material adverse effect on the business, properties,
operations, condition (financial or other), results of operations or prospects
of the Company.
(B) CAPITALIZATION. The authorized capital stock of the Company
currently consists of (a) 14,000,000 shares of Common Stock of which 6,676,279
shares were outstanding of April 10, 1997, all of which are fully paid and
nonassessable; and (b) 8,000,000 shares of Preferred Stock, $.01 par value, none
of which are outstanding, of which 300,000 shares are designated as Series A
Junior Participating Preferred Stock, and 3,000 shares will be designated as
Series B Convertible Preferred Stock and issued pursuant to this Agreement; and
on the
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Closing Date (as defined herein) there will be no material increase from April
10, 1997 in the number of shares of Common Stock outstanding. As of April 10,
1997, the Company had outstanding options and warrants entitling the holders to
purchase 1,885,237 shares of Common Stock. Other than as set forth in the
preceding sentence, the Company does not have outstanding any material amount of
securities (or obligations to issue any such securities) convertible into,
exchangeable for or otherwise entitling the holders thereof to acquire shares of
Common Stock, except as disclosed in the SEC Reports. The outstanding shares of
Common Stock and outstanding options, warrants and other securities to purchase
Common Stock have been duly authorized and validly issued. None of such
outstanding shares of Common Stock, options, warrants and other securities has
been issued in violation of the preemptive rights of any securityholder of the
Company. The offers and sales of the outstanding shares of Common Stock and
options, warrants and other rights to acquire Common Stock were at all relevant
times either registered under the 1933 Act and applicable state securities laws
or exempt from such requirements. No holder of any of the Company's securities
has any rights, "demand," "piggy-back" or otherwise, to have such securities
registered by reason of the intention to file, filing or effectiveness of the
Registration Statement (as defined in the Registration Rights Agreement) except
as set forth on SCHEDULE 3(B) attached hereto.
(C) CONCERNING THE SHARES. The Shares have been duly authorized and
the Preferred Shares, when issued and paid for in accordance with this
Agreement, and the Common Shares, when issued upon conversion of the Preferred
Shares or in payment of dividends thereon, as the case may be, will be duly and
validly issued, fully paid and non-assessable and will not subject the holder
thereof to personal liability by reason of being such holder. There are no
preemptive or similar rights of any stockholder of the Company or any other
person to acquire any of the Shares. The Common Stock is listed for trading on
the Nasdaq National Market ("Nasdaq") and (1) the Company and the Common Stock
meet the criteria for continued listing and trading on Nasdaq; (2) the Company
has not been notified since January 1, 1995 by Nasdaq of any failure or
potential failure to meet the criteria for continued listing and trading on
Nasdaq and (3) no suspension of trading in the Common Stock is in effect. The
Company knows of no reason that the Common Shares will not be eligible for
listing on Nasdaq.
(D) SUBSCRIPTION AGREEMENT; REGISTRATION RIGHTS AGREEMENT; TRANSFER
AGENT INSTRUCTIONS. This Agreement, the Registration Rights Agreement and the
Transfer Agent Instructions have been duly and validly authorized by the
Company, this Agreement has been duly executed and delivered on behalf of the
Company and this Agreement is, and the Registration Rights Agreement and the
Transfer Agent Instructions, when executed and delivered by the Company, will
be, valid and binding obligations of the Company enforceable in accordance with
their respective terms, subject as to enforceability to general principles of
equity and to bankruptcy, insolvency, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and limits upon rights
to indemnity.
(E) NON-CONTRAVENTION. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the issuance of the
Preferred Shares as contemplated by this Agreement and the other transactions
contemplated by this Agreement, the Registration Rights Agreement, the terms of
the Preferred Stock and the Transfer Agent Instructions do not and will not
conflict with or result in a breach by the Company of any of the terms or
provisions of, or constitute a default under, the Restated Certificate of
Incorporation
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or by-laws of the Company, or any indenture, mortgage, deed of trust or other
material agreement or instrument to which the Company is a party or by which it
or any of its properties or assets are bound which would have a material adverse
effect on the Company or any applicable law, rule or regulation or any
applicable decree, judgment or order of any court, United States federal or
state regulatory body, administrative agency or other governmental body having
jurisdiction over the Company or any of its properties or assets which would
have a material adverse effect on the Company.
(F) APPROVALS. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company for (1) the execution, delivery and performance by the Company of
this Agreement, the Registration Rights Agreement (except such authorization of
the SEC as is required with respect to accelerating the effectiveness of any
registration statement filed pursuant thereto) and the Transfer Agent
Instructions, (2) the issuance and sale of the Preferred Shares as contemplated
by this Agreement and (3) the issuance of Common Shares on conversion of the
Preferred Shares .
(G) INFORMATION PROVIDED. The information provided by or on behalf
of the Company to the Buyer in connection with the transactions contemplated by
the Agreement, including, without limitation, the information referred to in
Section 2(e) of this Agreement, does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. The Company has not filed any reports with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended (the
"1934 Act") since December 31, 1996 other than the Annual Report on Form 10-K
for the fiscal year ended December 31, 1996.
(H) ABSENCE OF CERTAIN CHANGES. Since December 31, 1996, there has
been no material adverse change and no material adverse development in the
business, properties, operations, condition (financial or other), results of
operations or prospects of the Company, except as disclosed in the SEC Reports
or as otherwise disclosed to Buyer in writing.
(I) ABSENCE OF CERTAIN PROCEEDINGS. There is no action, suit or
proceeding, before or by any court, public board or body or governmental agency
pending or, to the knowledge of the Company or any of its subsidiaries,
threatened against the Company or any of its subsidiaries and, to the knowledge
of the Company, there is no inquiry or investigation before or by any court,
public board or body or governmental agency pending or threatened against the
Company or any of its subsidiaries, in any such case wherein an unfavorable
decision, ruling or finding would have a material adverse effect on the
business, properties, operations, condition (financial or other), results of
operations or prospects of the Company and its subsidiaries taken as a whole or
the transactions contemplated by this Agreement or any of the documents
contemplated hereby or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of such other documents; the Company
does not have pending before the SEC any request for confidential treatment of
information and to the best of the Company's knowledge no such request will be
made by the Company prior to the time the Registration Statement relating to the
Common Shares which is contemplated by the Registration Rights Agreement is
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first ordered effective by the SEC; and to the best of the Company's knowledge
there is not pending or contemplated, and there has been no, investigation by
the SEC involving the Company or any director or officer of the Company.
(J) PROPERTIES. The Company and its subsidiaries have good title to
all property real and personal (tangible and intangible) and other assets owned
by them, free and clear of all security interests, charges, mortgages, liens or
other encumbrances, except such as are described in the SEC Reports or such as
do not materially interfere with the use of such property made, or proposed to
be made, by the Company or its subsidiaries. The leases, licenses or other
contracts or instruments under which the Company and its subsidiaries lease,
hold or are entitled to use any property, real or personal, are valid,
subsisting and enforceable with only such exceptions as do not materially
interfere with the use of such property made, or proposed to be made, by the
Company or its subsidiaries. Neither the Company nor any of its subsidiaries
has received notice of any material violation of any applicable law, ordinance,
regulation, order or requirement relating to its owned or leased properties.
(K) LABOR RELATIONS. No material labor problem exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company or any of its subsidiaries.
(L) SEC FILINGS. The Company has timely filed all required forms,
reports and other documents with the SEC. All of such forms, reports and other
documents complied, when filed, in all material respects, with all applicable
requirements of the 1933 Act and the 1934 Act.
(M) ABSENCE OF BROKERS, FINDERS, ETC. No broker, finder or similar
person is entitled to any commission, fee or other compensation by reason of the
transactions contemplated by this Agreement other than as disclosed in writing
by the Company to the Buyer with respect to two such persons prior to execution
and delivery of this Agreement by the Buyer, and the Company shall pay, and
indemnify and hold harmless the Buyer from, any claim made against the Buyer by
any person for any such commission, fee or other compensation.
(N) RIGHTS AGREEMENT. Assuming that the Buyer does not hold any
shares of Common Stock other than as acquired pursuant to this Agreement or upon
conversion of the Preferred Shares pursuant to the Certificate of Designations,
and subject to the limitations on the number of shares of Common Stock that may
be held by the Buyer contained therein, the execution and delivery of this
Agreement by the Company, the issuance of the Preferred Shares as contemplated
by this Agreement, the issuance of the shares of Common Stock upon conversion of
the Preferred Shares and the other transactions contemplated by this Agreement,
the Registration Rights Agreement, the terms of the Preferred Stock and the
Transfer Agent Instructions will not constitute a Triggering Event, as defined
in the Rights Agreement dated July 8, 1996, between the Company and the Transfer
Agent, as Rights Agent, as amended. The holder of the Preferred Shares will be
entitled, with respect to the Common Shares, to the benefits available to the
holders of Common Stock under the Rights Agreement.
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4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
(A) TRANSFER RESTRICTIONS. The Buyer acknowledges that (1) the
Preferred Shares have not been and are not being registered under the provisions
of the 1933 Act and, except as provided in the Registration Rights Agreement,
the Common Shares have not been and are not being registered under the 1933 Act,
and may not be transferred unless (A) subsequently registered thereunder or (B)
the Buyer shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
Shares to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Shares made in reliance on
Rule 144 promulgated under the 1933 Act may be made only in accordance with the
terms of said Rule and further, if said Rule is not applicable, any such resale
of Shares 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 used in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other person is under any obligation to register the Shares
(other than pursuant to the Registration Rights Agreement) under the 1933 Act or
to comply with the terms and conditions of any exemption thereunder (other than
pursuant to Section 4(d) hereof and pursuant to the Registration Rights
Agreement).
(B) RESTRICTIVE LEGEND. The Buyer acknowledges and agrees that the
certificates for the Preferred Shares and, until such time as the Common Shares
have been registered for resale under the 1933 Act as contemplated by the
Registration Rights Agreement, the certificates for the Common Shares issued
upon conversion of the Preferred Shares, may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for the Shares):
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 the
Securities Act of 1933, as amended, or an opinion of counsel that
registration is not required under said Act.
Once the Registration Statement required to be filed by the Company pursuant to
Section 2 of the Registration Rights Agreement has been declared effective,
thereafter (1) upon request of the Buyer the Company will substitute
certificates without restrictive legend for certificates for any Common Shares
issued prior to the date such Registration Statement is declared effective by
the SEC which bear such restrictive legend and remove any stop-transfer
restriction relating thereto promptly, but in no event later than three days
after surrender of such certificates by the Buyer and (2) the Company shall not
place any restrictive legend on certificates for Common Shares issued on
conversion of the Preferred Shares or impose any stop-transfer restriction
thereon.
(C) REGISTRATION RIGHTS AGREEMENT. The parties hereto agree to enter
into the Registration Rights Agreement on or before the Closing Date.
(D) FORM D; BLUE SKY LAWS. The Company agrees to file a Form D with
respect to the Shares as required under Regulation D and to provide a copy
thereof to the Buyer
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promptly after such filing. The Buyer agrees to cooperate with the Company in
connection with such filing and, upon request of the Company, to provide all
information relating to the Buyer reasonably required for such filing.
(E) AUTHORIZATION FOR TRADING; REPORTING STATUS. On or before the
Closing Date, the Company shall file a notification for listing of additional
shares with the Nasdaq and shall provide evidence of such filing to the Buyer.
So long as the Buyer beneficially owns any of the Preferred Shares or the Common
Shares, the Company shall file all reports required to be filed with the SEC
pursuant to Section 13 or 15(d) of the 1934 Act and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would permit such
termination.
(F) USE OF PROCEEDS. Neither the Company nor any subsidiary of the
Company owns or has any present intention of acquiring any "margin stock" as
defined in Regulation G (12 CFR Part 207) of the Board of Governors of the
Federal Reserve System ("margin stock"). The proceeds of sale of the Preferred
Shares will be used for general working capital purposes and in the operation of
the Company's business. None of such proceeds will be used, directly or
indirectly (1) (other than financing its subsidiaries in the ordinary course of
business) to make any loan to or investment in any other person or (2) for the
purpose, whether immediate, incidental or ultimate, of purchasing or carrying
any margin stock or for the purpose of maintaining, reducing or retiring any
indebtedness which was originally incurred to purchase or carry any stock that
is currently a margin stock or for any other purpose which might constitute the
transactions contemplated by this Agreement a "purpose credit" within the
meaning of such Regulation G. Neither the Company nor any agent acting on its
behalf has taken or will take any action which might cause this Agreement or the
transactions contemplated hereby to violate Regulation G, Regulation T or any
other regulation of the Board of Governors of the Federal Reserve System or to
violate the 1934 Act, in each case as in effect now or as the same may hereafter
be in effect.
(G) BLUE SKY LAWS. On or before the Closing Date, the Company shall
take such action as shall be necessary to qualify, or to obtain an exemption
for, the Preferred Shares for sale to the Buyer pursuant to this Agreement and
the Common Shares for issuance to the Buyer on conversion of the Preferred
Shares under such of the securities or "blue sky" laws of jurisdictions as shall
be applicable to the sale of the Preferred Shares pursuant to this Agreement and
the issuance to the Buyer of Common Shares on conversion of the Preferred
Shares. The Company shall furnish copies of all filings, applications, orders
and grants or confirmations of exemptions relating to such securities or "blue
sky" laws on or prior to the Closing Date.
(H) CERTAIN EXPENSES. Whether or not the closing occurs, the Company
shall pay or reimburse the Buyer for all reasonable expenses (including, without
limitation, legal fees and expenses of counsel to the Buyer) incurred by the
Buyer, not in excess of $7,500, in connection with this Agreement and the
transactions contemplated hereby.
(I) CERTAIN ISSUANCES OF SECURITIES. (1) Unless the Company obtains
Stockholder Approval (as defined in the Certificate of Designations) or a waiver
thereof from Nasdaq, the Company will not issue any shares of Common Stock or
shares of any other series of preferred stock or other securities convertible
into, exchangeable for or otherwise entitling
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the holder to acquire shares of Common Stock which would be subject to the
requirements of Rule 4460(i) of the Nasdaq (or any successor or replacement
provision thereof) and which would be integrated with the sale of the Preferred
Shares to the Buyer or the issuance of Common Shares upon conversion thereof for
purposes of Rule 4460(i) of the Nasdaq (or any successor or replacement
provision thereof).
(2) The Company shall not offer, sell, contract to sell or issue (or
engage any person to assist the Company in taking any such action) any equity
securities or securities convertible into, exchangeable for or otherwise
entitling the holder to acquire, any Common Stock (collectively, "Equity
Securities") at a price below the market price of the Common Stock during the
period from the date of this Agreement to the date on which the Registration
Statement (as defined in the Registration Rights Agreement) shall have been
effective with the SEC for 60 consecutive days; provided, however, that nothing
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in this Section 4(i)(2) shall prohibit the Company from issuing securities (x)
pursuant to compensation plans for employees, directors, officers, advisers or
consultants of the Company and in accordance with the terms of such plans as in
effect as of the date of this Agreement or (y) upon exercise of conversion,
exchange, purchase or similar rights issued, granted or given by the Company and
outstanding as of the date of this Agreement.
(J) BEST EFFORTS. Each of the parties shall use its best efforts
------------
timely to satisfy each of the conditions to the other party's obligations to
sell and purchase the Preferred Shares set forth in Section 7 or 8, as the case
may be, of this Agreement on or before the Closing Date.
5. TRANSFER AGENT INSTRUCTIONS; CONVERSION PROCEDURE.
(A) TRANSFER AGENT INSTRUCTIONS. Promptly following the delivery by
the Buyer of the aggregate purchase price for the Preferred Shares in accordance
with Section 1(c) hereof, and in any event prior to the Closing Date, the
Company will (1) execute and deliver the Transfer Agent Instructions
substantially in the form attached hereto as ANNEX IV to and thereby irrevocably
instruct, American Stock Transfer & Trust Company, as Transfer Agent and
Registrar (the "Transfer Agent"), to issue certificates for the Common Shares
from time to time upon conversion of the Preferred Shares in such amounts as
specified from time to time to the Transfer Agent in the Notices of Conversion
surrendered in connection with such conversions and referred to in Section 5(b)
of this Agreement and (2) appoint the Transfer Agent the conversion agent for
the Preferred Stock. The certificates for the Common Shares may bear the
restrictive legend specified in Section 4(b) of this Agreement prior to
registration of the resale of the Common Shares under the 1933 Act. The
certificates for the Common Shares shall be registered in the name of the Buyer
or its nominee and in such denominations to be specified by the Buyer in
connection with each conversion of Preferred Shares. The Company warrants that
no instruction other than (x) such instructions referred to in this Section 5,
(y) stop transfer instructions to give effect to Section 4(a) hereof prior to
registration of the resale of the Common Shares under the 1933 Act and (z) the
instructions required by Section 3(n) of the Registration Rights Agreement will
be given by the Company to the Transfer Agent and that the Common Shares 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 5(a) shall
limit in any way the Buyer's obligations and agreement to comply with all
applicable securities laws upon resale of
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the Shares. If the Buyer provides the Company with an opinion of counsel
reasonably satisfactory in form, scope and substance to the Company that
registration of a resale by the Buyer of any of the Shares in accordance with
clause (1)(B) of Section 4(a) of this Agreement is not required under the 1933
Act, the Company shall permit the transfer of such Shares and, in the case of
the Common Shares, promptly, but in no event later than three days after receipt
of such opinion, instruct the Company's transfer agent to issue upon transfer
one or more share certificates in such name and in such denominations as
specified by the Buyer. Nothing in this Section 5(a) shall limit the
obligations of the Company under Section 3(n) of the Registration Rights
Agreement.
(B) CONVERSION PROCEDURE. In connection with the exercise of
conversion rights relating to the Preferred Shares, the Buyer or any subsequent
holder of the Preferred Shares shall complete, sign and furnish to the Transfer
Agent a Notice of Conversion in the form attached hereto as ANNEX V, which shall
be deemed to satisfy all requirements of the Certificate of Designations.
6. CLOSING DATE.
The date and time of the issuance and sale of the Preferred Shares
(the "Closing Date") shall be 12:00 noon, New York City time, on the date which
is one Business Day after the date on which the Buyer has deposited the purchase
price for the Preferred Shares with the Escrow Agent in accordance with Section
1(c) hereof, or such other mutually agreed to time. The closing shall occur on
the Closing Date at the offices of the Escrow Agent.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND ISSUE.
The Buyer understands that the Company's obligation to sell the
Preferred Shares to the Buyer pursuant to this Agreement is conditioned upon the
satisfaction of the following conditions precedent on or before the Closing Date
(any or all of which may be waived by the Company in its sole discretion):
(a) The receipt and acceptance by the Company of this Agreement as
evidenced by execution of this Agreement by the Company and delivery of an
executed counterpart of this Agreement to the Buyer or its legal counsel;
(b) Delivery by the Buyer to the Escrow Agent of good funds as
payment in full of an amount equal to the purchase price for the Preferred
Shares in accordance with Section 1(c) hereof; and
(c) The accuracy on the Closing Date of the representations and
warranties of the Buyer contained in this Agreement as if made on the Closing
Date and the performance by the Buyer on or before the Closing Date of all
covenants and agreements of the Buyer required to be performed on or before the
Closing Date.
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8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Preferred Shares on the Closing Date is conditioned upon the satisfaction of the
following conditions precedent on or before the Closing Date (any or all of
which may be waived by the Buyer in its sole discretion):
(a) Delivery by the Company to the Escrow Agent of the certificates
for the Preferred Shares in accordance with this Agreement;
(b) The accuracy on the Closing Date of the representations and
warranties of the Company contained in this Agreement as if made on the Closing
Date and the performance by the Company on or before the Closing Date of all
covenants and agreements of the Company required to be performed on or before
the Closing Date and receipt by the Buyer of a certificate, dated the Closing
Date, of the Chief Executive Officer or the Chief Financial Officer of the
Company confirming such matters and such other matters as the Buyer may
reasonably request;
(c) The receipt by the Buyer of confirmation of the filing with the
Secretary of State of the State of Delaware of the Certificate of Designations;
(d) The receipt by the Buyer of a certificate, dated the Closing
Date, of the Secretary of the Company certifying (1) the Restated Certificate of
Incorporation and By-Laws of the Company as in effect on the Closing Date, (2)
all resolutions of the Board of Directors (and committees thereof) of the
Company relating to this Agreement and the transactions contemplated hereby and
(3) such other matters as reasonably requested by the Buyer; and
(e) Receipt by the Buyer on the Closing Date of an opinion of counsel
for the Company, dated the Closing Date, in form, scope and substance reasonably
satisfactory to the Buyer, to the effect set forth in ANNEX VI attached hereto.
9. MISCELLANEOUS.
(a) This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York.
(b) This Agreement may be executed in counterparts and by the parties
hereto on separate counterparts, all of which together shall constitute one and
the same instrument. A facsimile transmission of this Agreement bearing a
signature on behalf of a party hereto shall be legal and binding on such party.
(c) The headings, captions and footers of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(d) 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
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the remainder of this Agreement or the validity or enforceability of this
Agreement in any other jurisdiction.
(e) This Agreement may be amended only by an instrument in writing
signed by the party to be charged with enforcement.
(f) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
or any course of dealings between the parties, shall not operate as a waiver
thereof or an amendment hereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or
exercise of any other right or power.
(g) Any notices required or permitted to be given under the terms of
this Agreement shall be sent by mail or delivered personally (which shall
include telephone line facsimile transmission with answer back confirmation) or
by courier and shall be effective five days after being placed in the mail, if
mailed, or upon receipt, if delivered personally or by courier, in the case of
the Company addressed to the Company at its address shown in the introductory
paragraph of this Agreement, Attention: Chief Executive Officer (telephone line
facsimile transmission number (000) 000-0000) or, in the case of the Buyer, at
its address shown on the signature page of this Agreement, with a copy to
Genesee International, Inc., 00000 X.X. 0xx Xxxxxx, Xxxxx 0000, Xxxxxxxx,
Xxxxxxxxxx 00000-0000 (telephone line facsimile transmission number 206-462-
4645) or such other address as a party shall have provided by notice to the
other party in accordance with this provision. The Buyer hereby designates as
its address for any notice required or permitted to be given to the Buyer
pursuant to the Certificate of Designations the address shown on the signature
page of this agreement, with a copy to: GFL Advantage Fund Limited, x/x Xxxxxxx
Xxxxxxxxxxxxx, Xxx., 00000 X.X. 0xx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxxxxxx
00000-0000 (facsimile number 206-462-4645), until the Buyer shall designate
another address for such purpose.
(h) Prior to the Closing Date, the Buyer shall have the right to
assign its rights and obligations under this Agreement with respect to the
purchase of all or any portion of the Preferred Shares, provided any such
assignee, by written instrument duly executed by such assignee, assumes all
obligations of the Buyer hereunder with respect to the purchase of the portion
of the Preferred Shares so assigned and makes the same representations and
warranties with respect thereto as the Buyer makes in this Agreement, whereupon
the Buyer shall be relieved of any further obligations, responsibilities and
liabilities with respect to the purchase of all or the portion of the Preferred
Shares the obligation for the purchase of which has been so assigned. In the
case of any such assignment, the Company shall agree in writing with such
assignee to make available to such assignee the benefits of the Registration
Rights Agreement with respect to the Common Shares issuable on conversion of the
Preferred Shares with respect to which the purchase under this Agreement has
been so assigned. Any transfer of the Preferred Shares by the Buyer after the
Closing Date shall be made in accordance with Section 4(a).
(i) The respective representations, warranties, covenants and
agreements of the Buyer and the Company contained in this Agreement or made by
or on behalf of them, respectively, pursuant to this Agreement shall survive the
delivery of payment for the Preferred
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Shares and shall remain in full force and effect regardless of any investigation
made by or on behalf of them or any person controlling or advising any of them.
(j) This Agreement and its Annexes set forth the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersede all prior agreements and understandings, whether written or oral, with
respect thereto.
(k) The Buyer shall have the right to terminate this Agreement by
giving notice to the Company at any time at or prior to the Closing Date if:
(1) the Company shall have failed, refused, or been unable at or
prior to the date of such termination of this Agreement to perform any of its
obligations hereunder;
(2) any other condition of the Buyer's obligations hereunder is not
fulfilled; or
(3) the closing shall not have occurred on a Closing Date on or
before April 21, 1997, other than solely by reason of a breach of this Agreement
by the Buyer.
Any such termination shall be effective upon the giving of notice thereof by the
Buyer. Upon such termination, the Buyer shall have no further obligation to the
Company hereunder and the Company shall remain liable for any breach of this
Agreement or the other documents contemplated hereby which occurred on or prior
to the date of such termination.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer
or one of its officers thereunto duly authorized as of the date set forth below.
NUMBER OF SHARES: 3,000
PRICE PER SHARE: $1,000.00
AGGREGATE PURCHASE PRICE: $3,000,000.00
GFL ADVANTAGE FUND LIMITED
SIGNATURE: /s/ X.X. xx Xxxxx
----------------------------------
Name: X.X. xx Xxxxx
Title: President
Address: x/x XXXXX
Xxxx Xxxxxxxxx 0
Xxxxxxx, Xxxxxxxxxxx Antilles
DATAWARE TECHNOLOGIES, INC.
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Xxxx Xxxxxxx
Chairman of the Board and
Chief Executive Officer
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