Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of
---------
May 17, 2002, among ACT Teleconferencing, Inc., a Colorado corporation (the
"Company"), and the purchasers identified on the signature pages hereto (each a
--------
"Purchaser" and collectively the "Purchasers").
--------- ----------
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act (as defined below),
and Rule 506 promulgated thereunder, the Company desires to issue and sell to
the Purchasers, and the Purchasers, severally and not jointly, desire to
purchase from the Company, certain securities of the Company, as more fully
described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
-----------
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"Action" means any action, suit, inquiry, notice of violation,
------
proceeding (including any partial proceeding such as a deposition) or
investigation pending or threatened in writing against or affecting the Company,
any Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency, regulatory authority
(federal, state, county, local or foreign), stock market or exchange.
"Affiliate" means any Person that, directly or indirectly through one
---------
or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 144.
"Business Day" means any day except Saturday, Sunday and any day which
------------
shall be a federal legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.
"Certificate of Designation" means the Certificate of Designations of
--------------------------
the Rights, Preferences and Privileges of the 6.5% Series C Convertible
Preferred Stock of the Company, in the form of Exhibit A attached hereto.
---------
"Closing" means the closing of the purchase and sale of the Shares and
-------
Warrants pursuant to Section 2.1.
-----------
"Closing Date" means the date of the Closing.
------------
"Commission" means the Securities and Exchange Commission.
----------
"Common Stock" means the common stock of the Company, no par value,
------------
and any securities into which such common stock may hereafter be reclassified.
"Common Stock Equivalents" means any securities of the Company or any
------------------------
Subsidiary which entitle the holder thereof to acquire Common Stock at any time,
including without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock or other securities that entitle the holder to receive, directly or
indirectly, Common Stock.
"Company Counsel" means Faegre & Xxxxxx LLP.
---------------
"Effective Date" means the date that the initial Registration
--------------
Statement required by the Registration Rights Agreement is first declared
effective by the Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Lien" means any lien, charge, encumbrance, security interest, right
----
of first refusal or other restrictions of any kind.
"Material Adverse Effect" has the meaning set forth in Section 3.1(b)
-----------------------
hereof.
"Person" means an individual or corporation, partnership, trust,
------
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"Preferred Stock" means the Company's 6.5% Series C Preferred Stock,
---------------
$.01 par value per share.
"Proceeding" means an action, claim, suit, investigation or proceeding
----------
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Purchaser Counsel" means Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx
-----------------
LLP.
"Purchaser Percentage" means, with respect to a Purchaser, the
--------------------
percentage equal to the product of (x) a fraction, the numerator of which shall
be the Investment Amount paid by such Purchaser on the Closing Date and the
denominator of which shall be the aggregate Investment Amount paid by all
Purchasers on the Closing Date times (y) 100.
-2-
"Registration Statement" means a registration statement meeting the
----------------------
requirements set forth in the Registration Rights Agreement and covering the
resale by the Purchasers of the Underlying Shares and Warrant Shares, and, if
applicable, the Underlying Option Shares and the related Warrant Shares.
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement, dated as of the date of this Agreement, among the Company and the
Purchasers, in the form of Exhibit B hereto.
---------
"Rule 144" means Rule 144 promulgated by the Commission pursuant to
--------
the Securities Act, as such Rules may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities" means the Shares, the Warrants and the Underlying Shares.
----------
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Shares" means the shares of Preferred Stock issued or issuable to the
------
Purchasers pursuant to this Agreement.
"Strategic Transaction" means a transaction or relationship in which
---------------------
the Company issues shares of Common Stock to a Person which is, itself or
through its subsidiaries, an operating company in a business synergistic with
the business of the Company and in which the Company receives material benefits
in addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities.
"Subsidiary" means any subsidiary of the Company that is required to
----------
be listed in Schedule 3.1(a).
---------------
"Trading Day" means (i) a day on which the Common Stock is traded on a
-----------
Trading Market, or (ii) if the Common Stock is not listed on a Trading Market, a
day on which the Common Stock is traded in the over-the-counter market, as
reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted
on the OTC Bulletin Board, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day
shall mean a Business Day.
"Trading Market" means whichever of the New York Stock Exchange, the
--------------
American Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap
Market on which the Common Stock is listed or quoted for trading on the date in
question.
-3-
"Transfer Agent Instructions" means the instructions from the Company
---------------------------
to its transfer agent, in the form attached hereto as Exhibit D hereto.
---------
"Transaction Documents" means this Agreement, the Certificate of
---------------------
Designation, the Registration Rights Agreement, the Transfer Agent Instructions,
the Warrants and any other documents or agreements executed in connection with
the transactions contemplated hereunder.
"Underlying Shares" means the shares of Common Stock issuable upon
-----------------
conversion or redemption of the Preferred Stock and upon exercise of the
Warrants.
"VWAP" means, with respect to any date of determination, the daily
----
volume weighted average price (as reported by Bloomberg Financial L.P. (or its
successor to reporting stock prices) using the VAP function) of the Common Stock
on such date of determination, or if there is no such price on such date of
determination, then the daily volume weighted average price on the date nearest
preceding such date.
"Warrants" means the Common Stock purchase warrants, in the form of
--------
Exhibit C, issuable to the Purchasers at Closing.
---------
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. Subject to the terms and conditions set forth in this
-------
Agreement, at the Closing the Company shall issue and sell to the Purchasers,
and the Purchasers shall, severally and not jointly, purchase from the Company,
the Shares and the Warrants for an aggregate purchase price set forth below all
of the Purchasers address on the signature pages to this Agreement. The Closing
shall take place at the offices of Purchaser Counsel concurrently with the
execution and delivery of this Agreement by the parties or at such other
location or time as the parties may agree.
2.2 Closing Deliveries
------------------
(a) At the Closing, the Company shall deliver or cause to be
delivered to each Purchaser the following:
(i) this Agreement duly executed by the Company;
(ii) a certificate evidencing a number of Shares equal to the
Investment Amount indicated below such Purchaser's name on the signature page of
this Agreement divided by $10,000, registered in the name of such Purchaser;
(iii) a Warrant, registered in the name of such Purchaser,
pursuant to which such Purchaser shall have the right to acquire the number of
shares of Common Stock equal to 20% of the Investment Amount indicated below
such Purchaser"s name on the signature
-4-
page of this Agreement, divided by the average VWAP during the five Trading Days
immediately preceding the Closing Date;
(iv) the legal opinion of Company Counsel, in agreed form,
addressed to the Purchasers; and
(v) the Registration Rights Agreement duly executed by the
Company; and
(vi) the Transfer Agent Instructions duly executed by the
Company and acknowledged by the Company's transfer agent.
(b) At the Closing, each Purchaser shall deliver or cause to be
delivered to the Company the following:
(i) this Agreement duly executed by such Purchaser;
(ii) the Investment Amount indicated below such Purchaser's name
on the signature page of this Agreement, in United States dollars, by wire
transfer to an account designated in writing by the Company for such purpose;
and
(iii) the Registration Rights Agreement duly executed by such
Purchaser.
2.3 Additional Investment. At the mutual agreement of the Company and the
Purchasers, prior to the first anniversary of the Closing Date, if the average
VWAP for ten consecutive Trading Days is greater than 150% of the average VWAP
during the ten Trading Days immediately preceding the Closing Date, then each
Purchaser, in the ratio of each Purchaser"s Purchaser Percentage, may purchase
additional shares of the Company"s convertible preferred stock and warrants to
acquire shares of Common Stock for an aggregate purchase price of up to
$3,000,000. Any additional investment will be on terms identical those set forth
in the Transaction Documents, mutatis mutandis. In order to effectuate a
purchase and sale of the additional shares of preferred stock and warrants, the
Company and the Purchasers shall enter into the following agreements: (a) a
securities purchase agreement identical to this Agreement, mutatis mutandis and
shall include updated Schedules and (b) a registration rights agreement
identical to the Registration Rights Agreement, mutatis mutandis and shall
include updated Schedules.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
---------------------------------------------
makes the following representations and warranties to each Purchaser:
-5-
(a) Subsidiaries. The Company has no direct or indirect subsidiaries
------------
other than those listed in Schedule 3.1(a). Except as disclosed in Schedule
--------------- --------
3.1(a), the Company owns, directly or indirectly, all of the capital stock of
------
each Subsidiary free and clear of any and all Liens, and all the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights. If
the Company has no subsidiaries, then references in the Transaction Documents to
Subsidiaries will be disregarded.
(b) Organization and Qualification. Each of the Company and each
------------------------------
Subsidiary is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and each Subsidiary is duly qualified to conduct business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, have
or reasonably be expected to result in (i) an adverse affect on the legality,
validity or enforceability of any Transaction Document, (ii) an adverse effect
on the results of operations, assets, prospects, business or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole,
or (iii) an adverse impairment to the Company's ability to perform on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a "Material Adverse Effect").
-----------------------
(c) Authorization; Enforcement. The Company has the requisite power
--------------------------
and authority to enter into and to consummate the transactions contemplated by
each of the Transaction Documents and otherwise to carry out its obligations
thereunder. The execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated thereby
have been duly authorized by all necessary action on the part of the Company and
no further action is required by the Company in connection therewith. Each
Transaction Document has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.
(d) No Conflicts. The execution, delivery and performance of the
------------
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or
-6-
Subsidiary debt or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected;
except in the case of each of clauses (ii) and (iii), such as could not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not required to
-------------------------------
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than (i) the filing with the Commission of one or more Registration
Statements and (ii) the application(s) to each Trading Market for the listing of
the Underlying Shares for trading thereon in the time and manner required
thereby (collectively, the "Required Approvals").
------------------
(f) Issuance of the Securities. The Securities have been duly
--------------------------
authorized and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens. The Company has reserved from its duly authorized
capital stock the maximum number of shares of Common Stock issuable pursuant to
this Agreement, the Certificate of Designation and the Warrants in order to
issue the full number of Underlying Shares as are or may become issuable in
accordance with the Preferred Stock and the Warrants.
(g) Capitalization. The number of shares and type of all authorized,
--------------
issued and outstanding capital stock of the Company is set forth in Schedule
--------
3.1(g). Except as set forth in Schedule 3.1(g), no securities of the Company
------ ---------------
are entitled to preemptive or similar rights, and no Person has any right of
first refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.
Except as a result of the purchase and sale of the Securities and except as
disclosed in Schedule 3.1(g), there are no outstanding options, warrants, script
---------------
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. Except as set forth in Schedule
--------
3.1(g), the issue and sale of the Securities will not, immediately or with the
------
passage of time, obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities.
-7-
(h) SEC Reports; Financial Statements. Except as set forth in
---------------------------------
Schedule 3.1(h), the Company has filed all reports required to be filed by it
---------------
under the Securities Act and the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the two years preceding the date hereof (or such
shorter period as the Company was required by law to file such reports) (the
foregoing materials being collectively referred to herein as the "SEC Reports"
-----------
and, together with the Schedules to this Agreement, the "Disclosure Materials")
--------------------
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension.
The Company has delivered to the Purchasers a copy of all SEC Reports filed
within the 10 days preceding the date hereof. As of their respective dates, the
SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved ("GAAP"), except as may be otherwise specified in such
----
financial statements or the notes thereto, and fairly present in all material
respects the financial position of the Company and its consolidated subsidiaries
as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(i) Material Changes. Except as set forth on Schedule 3.1(i), since
---------------- ---------------
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in the SEC Reports, (i) there has been
no event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting or the identity of its auditors, (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its stockholders
or purchased, redeemed or made any agreements to purchase or redeem any shares
of its capital stock, and (v) the Company has not issued any equity securities
to any officer, director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the Commission any
request for confidential treatment of information.
(j) Litigation. Except as set forth in Schedule 3.1(j), there is no
---------- ---------------
Action which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any Subsidiary, nor any director or officer thereof, is or has
been the subject of
-8-
any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities Act.
(k) Labor Relations. No material labor dispute exists or, to the
---------------
knowledge of the Company, is imminent with respect to any of the employees of
the Company.
(l) Compliance. Neither the Company nor any Subsidiary (i) is in
----------
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as could not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect.
(m) Regulatory Permits. The Company and the Subsidiaries possess all
------------------
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits would not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect ("Material
--------
Permits"), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.
(n) Title to Assets. The Company and the Subsidiaries have good and
---------------
marketable title in fee simple to any and all real property owned by them that
is material to their respective businesses and good and marketable title in all
personal property owned by them that is material to their respective the
businesses, in each case free and clear of all Liens, except for Liens as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
the Subsidiaries. Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases of which the Company and the Subsidiaries are in compliance.
(o) Patents and Trademarks. The Company and the Subsidiaries have, or
----------------------
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in
-9-
connection with their respective businesses as described in the SEC Reports and
which the failure to so have could, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect (collectively, the
"Intellectual Property Rights"). Neither the Company nor any Subsidiary has
----------------------------
received a written notice that the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of any Person.
Except as set forth in the SEC Reports, to the knowledge of the Company, all
such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights.
(p) Insurance. The Company and the Subsidiaries are insured by
---------
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged. The Company has no reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business without a significant increase in cost.
(q) Transactions With Affiliates and Employees. Except as set forth
------------------------------------------
in the SEC Reports, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
(r) Internal Accounting Controls. The Company and the Subsidiaries
----------------------------
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(s) Solvency. Based on the financial condition of the Company as of
--------
the Closing Date, (i) the Company's fair saleable value of its assets exceeds
the amount that will be required to be paid on or in respect of the Company's
existing debts and other liabilities (including known contingent liabilities) as
they mature; (ii) the Company's assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii)
the current cash flow of the Company, together with the proceeds the Company
would receive, were it to liquidate all of its assets, after
-10-
taking into account all anticipated uses of the cash, would be sufficient to pay
all amounts on or in respect of its debt when such amounts are required to be
paid. The Company does not intend to incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of cash to be
payable on or in respect of its debt).
(t) Certain Fees. Except as described in Schedule 3.1(t), no
------------ ---------------
brokerage or finder's fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Purchasers shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement.
(u) Private Placement. Assuming the accuracy of the Purchasers'
-----------------
representations and warranties set forth in Section 3.2(b)-(f), no registration
under the Securities Act is required for the offer and sale of the Securities by
the Company to the Purchasers as contemplated by the Transaction Documents.
(v) Listing and Maintenance Requirements. The Company has not, in the
------------------------------------
two years preceding the date hereof, received notice (written or oral) from any
Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements of the Trading Market. The
issuance and sale of the Securities hereunder do not contravene the rules and
regulations of the Trading Market and no shareholder approval is required for
the Company to fulfill its obligations under the Transaction Documents,
including issuing and delivering to the Purchasers the maximum number of Shares
contemplated by this Agreement and the maximum number of Warrant Shares issuable
upon exercise in full of the Warrants based on their present conversion,
redemption and exercise prices.
(w) Investment Company. The Company is not, and is not an Affiliate
------------------
of, an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(x) Registration Rights. Except as described in Schedule 3.1(x), the
------------------- ---------------
Company has not granted or agreed to grant to any Person any rights (including
"piggy-back" registration rights) to have any securities of the Company
registered with the Commission or any other governmental authority that have not
been satisfied.
(y) Application of Takeover Protections. The Company has taken all
-----------------------------------
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company's
Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the
-11-
Purchasers as a result of the Purchasers and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including without limitation the Company's issuance of the Securities and the
Purchasers' ownership of the Securities.
(z) Disclosure. The Company confirms that neither the Company nor
----------
any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that the Company believes
constitutes material, non-public information. The Company understands and
confirms that the Purchasers will rely on the foregoing representations and
covenants in effecting transactions in securities of the Company. All disclosure
provided to the Purchasers regarding the Company, its business and the
transactions contemplated hereby, furnished by or on behalf of the Company are
true and correct and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
3.2 Representations and Warranties of the Purchasers. Each Purchaser
------------------------------------------------
hereby, for itself and for no other Purchaser, represents and warrants to the
Company as follows:
(a) Organization; Authority. Such Purchaser is an entity duly
-----------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution, delivery and performance by such
Purchaser of the transactions contemplated by this Agreement has been duly
authorized by all necessary corporate or partnership action on the part of such
Purchaser. Each of this Agreement and the Registration Rights Agreement has been
duly executed by such Purchaser, and when delivered by such Purchaser in
accordance with terms hereof, will constitutes the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms.
(b) Investment Intent. Such Purchaser is acquiring the Securities as
-----------------
principal for its own account for investment purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof, without
prejudice, however, to such Purchaser's right at all times to sell or otherwise
dispose of all or any part of such Securities in compliance with applicable
federal and state securities laws. Nothing contained herein shall be deemed a
representation or warranty by such Purchaser to hold Securities for any period
of time. Such Purchaser is acquiring the Securities hereunder in the ordinary
course of its business. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities.
(c) Purchaser Status. At the time such Purchaser was offered the
----------------
Securities, it was, and at the date hereof it is, and on each date on which it
exercises the Warrants or converts the Shares and Underlying Shares, it will be
an "accredited investor" as defined in Rule 501(a) under the Securities Act.
Such Purchaser is not a registered broker-dealer under Section 15 of the
Exchange Act.
-12-
(d) Experience of such Purchaser. Such Purchaser, either alone or
----------------------------
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.
(e) General Solicitation. Such Purchaser is not purchasing the
--------------------
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
(f) Access to Information. Such Purchaser acknowledges that it has
---------------------
reviewed the Disclosure Materials and has been afforded (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser's right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company's representations and
warranties contained in the Transaction Documents.
The Company acknowledges and agrees that each Purchaser does not make or
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
---------------------
(a) Securities may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of Securities other
than pursuant to an effective registration statement, to the Company, to an
Affiliate of a Purchaser or in connection with a pledge as contemplated in
Section 4.1(b), the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities
under the Securities Act.
(b) The Securities will contain the following legend, so long as is
required by this Section 4.1(b):
--------------
-13-
[NEITHER] THESE SECURITIES [NOR THE SECURITIES ISSUABLE UPON
[CONVERSION][EXERCISE] OF THESE SECURITIES] HAVE [NOT] BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE 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, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees that a Purchaser may from time to
time pledge pursuant to a bona fide margin agreement or grant a security
interest in some or all of the Securities and, if required under the terms of
such arrangement, such Purchaser may transfer pledged or secured Securities to
the pledgees or secured parties. Such a pledge or transfer would not be subject
to approval or consent of the Company and no legal opinion of legal counsel of
the pledgee, secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge. At the appropriate
Purchaser's expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request
in connection with a pledge or transfer of the Securities, including the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) of the Securities Act or other applicable provision of the Securities
Act to appropriately amend the list of Selling Stockholders thereunder.
(c) Certificates evidencing the Underlying Shares shall not contain
any legend (including the legend set forth in Section 4.1(b)), (i) while a
registration statement (including the Registration Statement) covering the
resale of such Underlying Shares is effective under the Securities Act, or (ii)
following any sale of such Underlying Shares pursuant to Rule 144, or (iii) if
such Underlying Shares are eligible for sale under Rule 144(k), or (iv) if such
legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the Staff of
the Commission). Accordingly, the Underlying Shares issuable upon receipt of a
conversion of, or in respect of a redemption of, Shares or an exercise of the
Warrants shall not contain any legends. The Company shall cause its counsel to
issue the legal opinion included in the Transfer Agent Instructions to the
Company's transfer agent on the Effective Date. Following the Effective Date or
at such earlier time as a legend is no longer required for Underlying Shares
under this Section 4.1(c), the Company will, no later
-14-
than three Trading Days following the delivery by a Purchaser to the Company or
the Company's transfer agent of a certificate representing Underlying Shares
containing a restrictive legend, deliver or cause to be delivered to such
Purchaser a certificate representing such Underlying Shares that is free from
all restrictive and other legends. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section.
(d) In addition to such Purchaser's other available remedies, the
Company shall pay to a Purchaser, in cash, as liquidated damages and not as a
penalty, $5,000 for each day after such third (3rd) Trading Day until such
certificate is delivered.
4.2 Furnishing of Information. As long as any Purchaser owns Securities,
-------------------------
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act. Upon the request
of any such Person, the Company shall deliver to such Person a written
certification of a duly authorized officer as to whether it has complied with
the preceding sentence. As long as any Purchaser owns Securities, if the Company
is not required to file reports pursuant to such laws, it will prepare and
furnish to the Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell the Securities
under Rule 144. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, all to the extent
required from time to time to enable such Person to sell such Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.
4.3 Integration. The Company shall not, and shall use its best efforts to
-----------
ensure that no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers, or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market.
4.4 Subsequent Placements.
---------------------
(a) Prior to the expiration of the 30/th/ Trading Day after the
Effective Date (as extended hereunder), the Company shall not, directly or
indirectly, offer, sell, grant any option to purchase, or otherwise dispose of
(or announce any offer, sale, grant or any option to purchase or other
disposition of any of Common Stock or Common Stock Equivalents.)
(b) Prior to the expiration of the 30/th/ Trading Day after the
Effective Date (as extended hereunder), the Company shall not, directly or
indirectly, file a registration statement (other than on Form S-8 or pursuant to
the Registration Rights Agreement) with the Commission with respect to any
securities of the Company.
(c) Prior to the expiration of the first anniversary of the Closing
Date, the Company will not, directly or indirectly, offer, sell, grant any
option to purchase, or otherwise
-15-
dispose of (or announce any offer, sale, grant or any option to purchase or
other disposition of any of Common Stock or Common Stock Equivalents or any of
its Subsidiaries' equity or Common Stock Equivalents (such offer, sale, grant,
disposition or announcement being referred to as "Subsequent Placement"), unless
--------------------
(i) the Company delivers to each Purchaser a written notice (the "Subsequent
----------
Placement Notice") of its intention to effect such Subsequent Placement, which
----------------
Subsequent Placement Notice shall describe in reasonable detail the proposed
terms of such Subsequent Placement, the amount of proceeds intended to be raised
thereunder, the Person with whom such Subsequent Placement is proposed to be
effected, and attached to which shall be a term sheet or similar document
relating thereto and (ii) such Purchaser shall not have notified the Company by
6:30 p.m. (New York City time) on the tenth Trading Day after its receipt of the
Subsequent Placement Notice of its willingness to provide (or to cause its
designee to provide), subject to completion of mutually acceptable
documentation, all or part of such financing to the Company on the same terms
set forth in the Subsequent Placement Notice. If the Purchasers shall fail to so
notify the Company of their willingness to participate in full in the Subsequent
Placement, the Company may effect the remaining portion of such Subsequent
Placement on the terms and to the Persons set forth in the Subsequent Placement
Notice. The Company shall provide the Purchasers with a second Subsequent
Placement Notice and the Purchasers will again have the right of first refusal
set forth in this Section 4.4(c), if the Subsequent Placement subject to the
initial Subsequent Placement Notice is not consummated for any reason on the
terms set forth in such Subsequent Notice within 30 Trading Days after the date
of the initial Subsequent Placement Notice with the Person identified in the
Subsequent Placement Notice. If the Purchasers indicate a willingness to provide
financing in excess of the amount set forth in the Subsequent Placement Notice,
then each Purchaser will be entitled to provide financing pursuant to such
Subsequent Placement Notice up to an amount equal to such Purchaser Percentage
of the financing, but the Company shall not be required to accept financing from
the Purchasers in an amount in excess of the amount set forth in the Subsequent
Placement Notice.
(d) The 30 Trading Day-period set forth in Sections 4.4(a) and (b)
above and the one-year period set forth in Section 4.4(c) shall be extended for
the number of Trading Days during such period in which (i) trading in the Common
Stock is suspended by any Trading Market, or (ii) following the Effective Date,
the Registration Statement is not effective or the prospectus included in the
Registration Statement may not be used by the Purchasers for the resale of the
Underlying Shares.
(e) The restrictions contained in Sections 4.4(a) and (c) shall not
apply to any grant or issuance by the Company of any of the following:
(i) any grant of an option or warrant for Common Stock or
issuance of any shares of Common Stock upon the exercise of any options or
warrants to employees, officers and directors of or consultants to the Company
pursuant to any stock option plan, employee stock purchase plan or similar plan
or incentive or consulting arrangement approved by the Company's board of
directors;
-16-
(ii) any rights or agreements to purchase Common Stock or Common
Stock Equivalents outstanding on the date hereof and as specified in Schedule
--------
3.1(g) (but not as to any amendments or other modifications to the number of
------
Common Stock issuable thereunder, the terms set forth therein, or the exercise
price set forth therein);
(iii) any issuances of Common Stock or Common Stock Equivalents
in connection with a Strategic Transaction (provided no registration statement
for such securities will be filed with the Commission prior to the 30/th/
Trading Day following the Effective Date (plus the number of Trading Days
following the Effective Date that the prospectus is not available for use by the
Purchasers to resell Underlying Shares)); and
(iv) any issuance of Common Stock or Common Stock Equivalents
issued pursuant to this Agreement, the Certificate of Designation or the
Warrants.
4.5 Securities Laws Disclosure; Publicity. The Company shall (i) on the
-------------------------------------
Closing Date (x) issue a press release reasonable acceptable to the Purchasers
disclosing the transactions contemplated hereby and (y) file a Current Report on
Form 8-K disclosing the transactions contemplated hereby and (ii) make such
other filings and notices in the manner and time required by the Commission.
Notwithstanding the foregoing and except for identifying the selling
shareholders in the Registration Statement, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except to the extent such
disclosure is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure.
4.6 Indemnification of Purchasers. The Company will indemnify and hold the
-----------------------------
Purchasers and their directors, officers, shareholders, partners, employees and
agents (each, a "Purchaser Party") harmless from any and all losses,
---------------
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys' fees and costs of investigation (collectively, "Losses") that any
------
such Purchaser Party may suffer or incur as a result of or relating to (a) any
misrepresentation, breach or inaccuracy, or any allegation by a third party
that, if true, would constitute a breach or inaccuracy, of any of the
representations, warranties, covenants or agreements made by the Company in any
Transaction Document; or (b) any Action brought or made against such Purchaser
Party and solely arising out of or resulting from the execution, delivery,
performance or enforcement of this Agreement or any of the other Transaction
Documents. In addition to the indemnity contained herein, the Company will
reimburse each Purchaser Party for its reasonable legal and other expenses
(including the cost of any investigation, preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred.
4.7 Shareholders Rights Plan. No claim will be made or enforced by the
------------------------
Company or any other Person that any Purchaser is an "Acquiring Person" under
any shareholders rights plan or similar plan or arrangement in effect or
hereafter adopted by the Company, or that any
-17-
Purchaser could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Securities under the Transaction Documents
or under any other agreement between the Company and the Purchasers.
4.8 Non-Public Information. The Company covenants and agrees that
----------------------
neither it nor any other Person acting on its behalf will provide any Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Purchaser
shall be relying on the foregoing representations in effecting transactions in
securities of the Company.
4.9 Use of Proceeds. The Company shall use the net proceeds from the
----------------
sale of the Securities hereunder for working capital purposes.
4.10 Certain Trading Limitations. For so long as a Purchaser holds
---------------------------
Preferred Stock such Purchaser agrees that it will not enter into any Short
Sales. For purposes of this Section 4.10, a "Short Sale" by a Purchaser means
----------
any sale of Common Stock that is marked as a "short sale" at a time when such
Purchaser has no equivalent offsetting long position in the Common Stock. For
purposes of determining whether a Purchaser has an equivalent offsetting long
position in the Common Stock, all Common Stock held by such Purchaser, all
Underlying Shares that would be issuable upon conversion or exercise in full of
all Securities then held by such Purchaser (assuming that such Securities were
then fully convertible or exercisable, notwithstanding any provisions to the
contrary, and giving effect to any conversion or exercise price adjustments
scheduled to take effect in the future) and all shares of Common Stock issuable
upon exercise of any call option or "call equivalent position" (as defined in
Rule 16a-1(b) under the Exchange Act) held by such Purchaser (assuming that such
call position was then fully convertible or exercisable, notwithstanding any
provisions to the contrary, and giving effect to any conversion or exercise
price adjustments scheduled to take effect in the future) shall be deemed to be
held long by such Purchaser.
ARTICLE V.
MISCELLANEOUS
5.1 Fees and Expenses. The Company has agreed to reimburse $30,000
-----------------
to Purchasers (of which $15,000 have been delivered to Purchaser's Counsel for
the benefit of the Purchaser) as reimbursement for the Purchasers' legal and
other fees and expenses incurred to prepare and negotiate the Transaction
Documents. Accordingly, in lieu of the foregoing payments, the Company, on the
Closing Date, will direct that the aggregate amount that the Purchasers are to
pay for the Shares and Warrants at the Closing, be reduced by $15,000 (the
remaining portion of the $15,000 not yet paid). Except as specified in the
immediately preceding sentence and as contemplated in the Registration Rights
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this
-18-
Agreement. The Company shall pay all stamp and other taxes and duties levied in
connection with the sale of the Shares.
5.2 Entire Agreement. The Transaction Documents, together with the
----------------
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.3 Notices. Any and all notices or other communications or
-------
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 6:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section on a day that is not a Trading Day or later
than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as follows:
If to the Company: ACT Teleconferencing, Inc.
0000 Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Chief Financial Officer
Fax No.: (000) 000-0000
With a copy to: Faegre & Xxxxxx LLP
000 00/xx/ Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
If to a Purchaser: To the address set forth under such
Purchaser's name on the signature pages
hereof
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
5.4 Amendments; Waivers. No provision of this Agreement may be waived
-------------------
or amended except in a written instrument signed, in the case of an amendment,
by the Company and each of the Purchasers or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement
-19-
hereof, nor shall any delay or omission of either party to exercise any right
hereunder in any manner impair the exercise of any such right.
5.5 Construction. The headings herein are for convenience only, do not
------------
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party. Each of
the parties hereto represents and warrants that it has been advised by counsel.
This Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement or any of the
Transaction Documents.
5.6 Successors and Assigns. This Agreement shall be binding upon and inure
----------------------
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities, provided such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to the "Purchasers."
5.7 No Third-Party Beneficiaries. This Agreement is intended for the
----------------------------
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.6 and 4.7.
5.8 Governing Law. All questions concerning the construction, validity,
-------------
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, stockholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New
York, Borough of Manhattan. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of the any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such Proceeding is an inconvenient forum or improper venue.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein
-20-
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a Proceeding to
enforce any provisions of a Transaction Document, then the prevailing party in
such Proceeding shall be reimbursed by the other party for its attorney?s fees
and other costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding.
5.9 Survival. The representations, warranties, agreements and covenants
--------
contained herein shall survive the Closing and the delivery and exercise of the
Securities, as applicable.
5.10 Execution. This Agreement may be executed in two or more
---------
counterparts, all of which when taken together shall be consparty, it being
understood that both parties need not sign the same counterpart. In the event
that any signature is delivered by facsimile transmission, such signature shall
create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such facsimile
signature page were an original thereof.
5.11 Severability. If any provision of this Agreement is held to be
------------
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.12 Rescission and Withdrawal Right. Notwithstanding anything to the
-------------------------------
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.
5.13 Replacement of Securities. If any certificate or instrument
-------------------------
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
5.14 Remedies. In addition to being entitled to exercise all rights
--------
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that
-21-
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
5.15 Payment Set Aside. To the extent that the Company makes a payment or
-----------------
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
5.16 Independent Nature of Purchasers' Obligations and Rights. The
--------------------------------------------------------
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
-22-
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
ACT TELECONFERENCING, INC.
By: ________________________
Name: ________________________
Title: ________________________
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
-23-
DEEPHAVEN PRIVATE PLACEMENT TRADING LTD.
By:_____________________________________
Name:
Title:
Investment Amount: $[_______]
Address for Notice:
c/o Deephaven Capital Management LLC
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxxxxxxx
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
-24-
