EXHIBIT 99.2
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of September
9, 2002, ( the "Execution Date") among SMARTSERV ONLINE, INC., a Delaware
corporation (the "Company") and the investors listed on Exhibit A hereto
(collectively, the "Investors", and each, individually, an "Investor").
RECITALS:
In consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF UNITS
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Section 1.1 Purchase and Sale. The Company hereby agrees to issue and
sell to each Investor and, subject to all of the terms and conditions hereof and
in reliance on the representations and warranties set forth or referred to
herein, each Investor severally agrees to purchase such number of units
(collectively, the "Purchased Units") as is equal to the result obtained when
the aggregate purchase price (as to each Investor, the "Aggregate Purchase
Price") being paid by each such Investor (as set forth opposite such Investor's
name on Exhibit A hereto) is divided by the "Per Unit Purchase Price" (as such
term is defined in Section 1.2 below). Each Purchased Unit shall consist of one
share of the Common Stock, par value $0.01 per share, of the Company ("Common
Stock") and a warrant to purchase shares of Common Stock, the form of which is
attached hereto as Exhibit B (the "Warrant").
Section 1.2 Purchase Price. The purchase price per Purchased Unit (the
"Per Unit Purchase Price") to be paid at Closing by the Investors for each of
the Purchased Units shall be equal to $0.9125 ( 91.25 Cents).
Section 1.3 Closing. The purchase and sale of the shares of Common
Stock constituting the Investment will take place at a closing (the "Closing")
at the offices of Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP, counsel to the Company,
at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 A.M. on September 9,
2002. The date and time of Closing are referred to herein as the "Closing Date."
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company represents and warrants to the Investors as follows, which
representations and warranties are true as of the date hereof and as of Closing:
Section 2.1 Corporate Organization. The Company is a corporation duly
incorporated, validly existing and subsisting under the laws of the State of
Delaware. The Company has all requisite power and authority to own, operate and
lease its properties and to conduct its business as currently conducted. The
Company is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which its ownership or leasing of property or the conduct
of its business requires such licensing or qualification, except to the extent
that the failure to be so qualified or licensed would not have a Material
Adverse Effect (as defined below). The Company has delivered to the Investors
complete and correct copies of its Amended and Restated Certificate of
Incorporation and By-laws, as in effect on
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the date hereof, copies of which are attached hereto as Exhibit C. As used in
this Agreement, "Material Adverse Effect" means any event, circumstance or
development which individually or in the aggregate could have a material adverse
effect on the business, properties, operations, condition (financial or
otherwise), assets, liabilities, earnings or results of operations of the
Company or on the transactions contemplated hereby.
Section 2.2 Subsidiaries. Except as set forth in Schedule 2.2, the
Company does not directly or indirectly own any equity or similar interest, or
any interest convertible into or exchangeable or exercisable for any equity or
similar interest, in any corporation, partnership, limited liability company,
joint venture or other business association, entity or person.
Section 2.3 Authorization. The Company has all requisite power and full
legal right to execute and deliver this Agreement and the Ancillary Agreements,
and to perform all of its obligations hereunder and thereunder in accordance
with the respective terms hereof and thereof. This Agreement and the Ancillary
Agreements and the transactions contemplated hereby and thereby have been duly
approved and authorized by all requisite corporate action on the part of the
Company, and this Agreement has been duly executed and delivered by the Company
and constitutes, and each of the Ancillary Agreements, when executed and
delivered by the Company at the Closing, will constitute, a legal, valid, and
binding obligation of the Company, enforceable against it in accordance with its
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to the enforcement of creditors' rights and remedies or by other
equitable principles of general application. The execution, delivery, and
performance by the Company of this Agreement and the Ancillary Agreements in
accordance with their respective terms, and the consummation by the Company of
the transactions contemplated hereby or thereby, will not result (with or
without the giving of notice or the lapse of time or both) in any conflict,
violation, breach, or default, or the creation of any Lien, or the termination,
acceleration, vesting, or modification of any right or obligation, under or in
respect of (x) the Amended and Restated Certificate of Incorporation or By-laws
of the Company, (y) any judgment, decree, order, statute, rule, or regulation
binding on or applicable to the Company, or (z) any agreement or instrument to
which the Company is a party or by which it or any of its assets is or are
bound.
Section 2.4 Capitalization. (a) Immediately prior to the Closing, not
giving effect to the sale and purchase of the Purchased Units, the authorized
and the outstanding capital stock of the Company (on a Fully Diluted Basis
including all Derivative Securities) will be as set forth in Schedule 2.4(a).
All such outstanding shares of capital stock will be duly authorized, validly
issued, fully paid, and nonassessable, and will have been issued free and clear
of Liens. Except as set forth in Schedule 2.4(a), no adjustment has previously
been made (or should have been made) nor will any adjustment be required to be
made as a result of the Company's issuance of the Purchased Units to the rate at
which any shares of any class of the equity securities of the Company,
subscriptions, options, warrants, calls, commitments or agreements or Derivative
Securities of the Company are convertible into or exercisable for shares of
Common Stock, Derivative Securities or shares of other equity securities of the
Company (by reason of any "anti-dilution" provisions or agreements or
otherwise).
(b) Except as set forth on Schedule 2.4(b), the Company does not
have, is not bound by, and has no obligation to grant or enter into, any
outstanding subscriptions, options, warrants, calls, commitments, or agreements
of any character calling for it to issue, deliver, or sell, or cause to be
issued, delivered, or sold, any shares of its capital stock, any other equity
security, or any securities convertible into, exchangeable for, or representing
the right to subscribe for, purchase, or otherwise acquire any shares of its
capital stock or any other equity security.
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(c) Except as set forth in Schedule 2.4(b), the Company (i) has
no outstanding obligations, contractual or otherwise, to repurchase, redeem, or
otherwise acquire any shares of capital stock or other equity securities of the
Company, (ii) is not a party to or bound by any agreement or instrument relating
to the voting of any of its securities, and (iii) is not a party to or bound by
any agreement or instrument under which any person has the right to require it
to effect, or to include any securities held by such person in, any registration
under the Securities Act (as defined in Section 2.7).
(d) All of the Purchased Units have been offered and at the
Closing will be issued and sold, in compliance with (i) all applicable
preemptive or similar rights of all persons, and (ii) assuming the truthfulness
and accuracy of the representations made by the Investors in Section 3 hereof,
all applicable provisions of the Securities Act and the rules and regulations
thereunder, and all applicable state securities laws and the rules and
regulations thereunder.
(e) The Purchased Units (which, for purposes hereof shall be
deemed to include the Common Stock and all shares of Common Stock issued upon
exercise of the Warrant) shall, upon issuance pursuant to the terms hereof
and/or the terms of the Warrant, as the case may be, be duly authorized and
validly issued, fully paid and non-assessable and free and clear of any Lien,
security interest, option or other charge or encumbrance.
Section 2.5 Financial Statements. The Company has previously delivered
to the Investors complete and correct copies of its audited balance sheets,
statements of income and statements of cash flows as of and for the fiscal years
ended December 31, 2001 and 2000, and for the fiscal quarter ended June 30,
2002. All such financial statements were prepared from the books and records of
the Company, in conformity with GAAP applied on a consistent basis, are complete
and correct, contain provisions for all significant accruals or contingencies
and fairly and accurately present the financial position of the Company as of
the respective dates thereof and the results of operations and cash flows of the
Company for the periods shown therein. No event has occurred and nothing has
come to the attention of the Company since the date of the Balance Sheet (as
defined below) that would indicate that such financial statements are not true
and correct as of the date hereof nor has there been any change in the condition
of the Company since the date of the Balance Sheet that would individually, or
in the aggregate with other events, have a Material Adverse Effect.
Section 2.6 No Undisclosed or Contingent Liabilities. The Company has
no liabilities or obligations of any nature (whether absolute, accrued,
contingent or otherwise and whether due or to become due) which are not fully
reflected or reserved against on the balance sheet as of June 30, 2002
(including the footnotes and schedules thereto, the "Balance Sheet") in
accordance with GAAP, except for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice since the date
thereof nor has there been any change in the condition of the Company since the
date of the Balance Sheet that would individually, or in the aggregate with
other events, have a Material Adverse Effect.
Section 2.7 SEC Documents. The Company has delivered or made available
to the Investors true and complete copies of all requested documents (the "SEC
Documents") filed by the Company with the Securities and Exchange Commission
(the "SEC"). The SEC Documents comply in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act") or
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the
case may be, and rules and regulations of the SEC promulgated thereunder and
none of the SEC Documents contain any untrue statement of a material fact or
omit 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 Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto. The Company has
effected all
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filings required by the Securities Act, Exchange Act and the rules and
regulations promulgated by the SEC thereunder.
Section 2.8 Absence of Certain Changes. (a) Except as set forth on
Schedule 2.8 or otherwise disclosed in the SEC Documents, since the date of the
Balance Sheet, the Company has conducted its business only in the ordinary
course and consistent with past practice, and has not:
(b) suffered any Material Adverse Effect;
(c) materially increased, or experienced any change in any
assumptions underlying or methods of calculating, any bad debt, contingency or
other reserves;
(d) paid, discharged or satisfied any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) other than the payment,
discharge or satisfaction in the ordinary course of business and consistent with
past practice of liabilities and obligations reflected or reserved against in
the Balance Sheet or incurred in the ordinary course of business and consistent
with past practice since the date of the Balance Sheet;
(e) permitted or allowed any of its assets to be subjected to any
Lien of any kind;
(f) incurred any indebtedness not in the ordinary course of
business or executed any guarantees on behalf of any person;
(g) canceled any material debts or waived any claims or rights of
substantial value;
(h) sold, transferred or otherwise disposed of any of its
properties or assets, except in the ordinary course of business and consistent
with past practice;
(i) granted any general increase in the compensation of employees
(including any such increase pursuant to any bonus, pension, profit sharing or
other plan or commitment), other than such increases as are consistent with the
Company's past practice or required by agreement or understanding disclosed to
the Investors; or experienced any material loss of personnel of the Company,
material change in the terms and conditions of the employment of the Company's
key personnel, or entered into any written employment agreement with any Company
employee;
(j) made any capital expenditure or commitment for additions to
its property, equipment or intangible capital assets other than in the ordinary
course of business and consistent with past practice;
(k) made any change in any method of accounting or accounting
practice or failed to maintain its books, accounts and records in the ordinary
course of business and consistent with past practice;
(l) failed to maintain any material properties or equipment in
good operating condition and repair, ordinary wear and tear excepted;
(m) failed to maintain in full force and effect all existing
policies of insurance at least at such levels as were in effect prior to such
date or canceled any such insurance or taken or failed to take any action that
would enable the insurers under such policies to avoid liability for claims
arising out of occurrences prior to the Closing;
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(n) entered into any transaction or made or entered into any
material contract or commitment, except in the ordinary course of business and
consistent with past practice, or terminated or amended any material contract or
commitment;
(o) taken, suffered, or permitted any action or experienced any
development that could have a Material Adverse Effect;
(p) declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or redeemed, purchased or otherwise
acquired, directly or indirectly, any shares of its capital stock or other
securities;
(q) amended its Amended and Restated Certificate of Incorporation
or By-laws;
(r) taken, suffered, or permitted any action which would render
untrue any of the representations or warranties of the Company herein contained,
and not omitted to take any action, the omission of which would render untrue
any such representation or warranty; or
(s) agreed in writing or otherwise taken any action with respect
to any of the matters described in this Section 2.8.
Section 2.9 No Violation. Neither the execution and delivery of this
Agreement or any of the Ancillary Agreements by the Company nor the performance
by the Company of its obligations hereunder or thereunder will: (i) conflict
with or result in any breach of any provision of its Amended and Restated
Certificate of Incorporation or By-laws, (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default or give rise to any Lien on the Company's properties or assets or any
right of termination, cancellation or acceleration under any of the terms or
conditions of any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which the Company is a party or by which it or any
of its material properties or assets may be bound, or require the consent of any
person, or (iii) violate any statute, law, rule, regulation, writ, injunction,
judgment, order or decree of any court, administrative agency or governmental
authority binding on the Company or any of its properties or assets.
Section 2.10 Compliance with Applicable Law. The Company is currently
in compliance with all applicable laws (whether statutory or otherwise), rules,
regulations, orders, ordinances, judgments, decrees, writs, requirements and
injunctions of all governmental authorities, agencies, courts, and
administrative tribunals, except for such noncompliance that, individually and
in the aggregate, would not have a Material Adverse Effect. The Company has not
received any notice or request for information any federal, state, or local
governmental authority, (i) that it has been identified by the EPA or any state
environmental regulatory authority as a potentially responsible party under
CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R.
Part 300 Appendix B, or under any equivalent state law; or (ii) that it is or
may be in violation of any Environmental Laws or is or will or may be a named
party to any claim, action, cause of action, complaint, or legal or
administrative proceeding arising out of any third party's incurrence of Damages
in connection with any environmental matters.
Section 2.11 Licenses and Permits. The Company has and maintains all
licenses, permits and other authorizations from all governmental authorities as
are necessary for the conduct of its business as presently conducted or in
connection with the ownership or use of its properties, except for any such
licenses, permits, and other authorizations, the failure to obtain or maintain
which in effect, both singly or in the aggregate, has not had and could not
reasonably be expected to have a Material Adverse Effect.
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Section 2.12 Governmental Consents. Except for the filing of any forms
required under the federal securities laws (including any registration statement
under the Securities Act required to be filed by the Company under the
Registration Rights Agreement) and any filings required under state "blue sky"
laws, no consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority is required to be
made or obtained by the Company in connection with the execution and delivery of
this Agreement or any of the Ancillary Agreements by the Company or the
performance by the Company of its obligations hereunder and thereunder, or the
continued conduct by the Company of its present business after Closing.
Section 2.13 Taxes. The Company has filed all Tax (as hereinafter
defined) reports and returns that it was required to file. All such reports and
returns were correct and complete in all material respects. All Taxes owed by
the Company (whether or not shown on any report or return) have been paid or, if
not yet due, appropriate accruals therefor as required under GAAP have been made
on the Company's financial records and on the financial statements described in
Section 2.5. No claim has been made by a taxing authority in a jurisdiction
where the Company does not pay Tax or file tax returns that the Company is or
may be subject to Taxes assessed by such jurisdiction. There are no Liens for
Taxes (other than current Taxes not yet due and payable) on the assets of the
Company. There is no action, suit, investigation, liability, taxing authority
proceeding, or audit with respect to any Tax now in progress, pending or, to the
Company's knowledge, threatened, against or with respect to the Company, whether
in respect of any Tax reports and returns that were not filed in a timely manner
or for any other reason. No deficiency or proposed adjustment in respect of
Taxes that has not been settled or otherwise resolved has been asserted or
assessed by any taxing authority against the Company which is not accrued on the
Balance Sheet. The Company has not consented to extend the time in which any Tax
may be assessed or collected by any taxing authority. As used in this Section
2.13, the terms "Taxes" and "Tax" mean all federal, state, local and foreign
taxes, including, without limitation, income, unemployment, withholding,
payroll, social security, real property, personal property, excise, sales, use
and franchise taxes, levies, assessments, duties, licenses and registration fees
and charges of any nature whatsoever, including interest, penalties and
additions with respect thereto and any interest in respect of such additions and
penalties.
Section 2.14 Litigation. Except as disclosed in the Company's SEC
Documents, there are no claims, actions, suits, proceedings, investigations or
inquiries pending before any court, arbitrator or governmental or regulatory
official or office, or, to the knowledge of the Company, threatened, against or
affecting the Company or its assets in any material respect, or questioning the
validity of this Agreement or any of the Ancillary Agreements, the transactions
contemplated hereby or thereby or any action taken or to be taken by the Company
pursuant to this Agreement or any of the other Ancillary Agreements, at law or
in equity. The Company is not subject to any unsatisfied judgment.
Section 2.15 Title to Properties. The Company does not own any real
property. Except as set forth on Schedule 2.15, the Company has title to all of
its properties and assets free and clear of all liens, charges and encumbrances,
except liens for taxes not yet due and payable and such liens or other
imperfections of title, if any, that do not materially detract from the value of
or interfere with the present use of the property affected thereby. There is no
existing default or event of default (or event which with notice or lapse of
time, or both, would constitute a default) by the Company under any lease
pursuant to which the Company leases real or personal property.
Section 2.16 Contracts and Commitments. Except as set forth in the SEC
Documents, the Company is not a party or subject to or bound by (whether written
or oral) nor has it committed to enter into in the future:
(a) any acquisition, merger or similar agreement;
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(b) any agreement requiring it to purchase all or substantially
all of its requirements for a particular product or service from a particular
supplier or suppliers, or requiring it to supply all of a particular customer's
or customers' requirements for a certain service or product;
(c) any agreement with any current or former Affiliate, officer
or director of the Company, or with any person in which any such Affiliate has
an interest; and
(d) any agreement with any domestic or foreign government or
agency or executive office thereof or any subcontract between it and any third
party relating to a contract between such third party and any domestic or
foreign government or agency or executive office thereof.
Section 2.17 Intellectual Property. (a) All patents, patent
applications, trademarks, trade names, service marks, logos and copyrights used
in or necessary to the Company's business as now being conducted or as proposed
to be conducted (collectively, and together with any technology, know-how, trade
secrets, processes, formulas, and techniques used in or necessary to the
Company's business, "Proprietary Information") are either owned or licensed by
the Company.
(b) To the Company's knowledge, none of the Proprietary
Information is being infringed by others, or is subject to any outstanding
order, decree, judgment, or stipulation. No litigation (or other proceedings in
or before any court or other governmental, adjudicatory, arbitral, or
administrative body) relating to the Proprietary Information is pending or, to
the Company's knowledge, threatened, nor, to the Company's knowledge, is there
any basis for any such litigation or proceeding.
(c) To the Company's knowledge, it is not infringing or making
unlawful use of any proprietary or confidential information of any Person. No
litigation (or other proceedings in or before any court or other governmental,
adjudicatory, arbitral, or administrative body) charging the Company with
infringement or unlawful use of any patent, trademark, copyright, or other
proprietary right is pending or, to the Company's knowledge, threatened; nor, to
the Company's knowledge, is there any basis for any such litigation or
proceeding.
Section 2.18 Insurance. The Company maintains policies of insurance
with, to the knowledge of the Company, financially sound and reputable insurance
companies, funds, or underwriters, which are of the kinds and which cover such
risks, and are in such amounts and with such deductibles and exclusions, as are
consistent with prudent business practice. All such policies are in full force
and effect, are sufficient for compliance in all respects by the Company with
all requirements of law and of all agreements to which it is a party and will
not terminate or lapse or otherwise be affected in any way by reason of the
transactions contemplated hereby.
Section 2.19 Investment Company. The Company is not an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended, and will not be an investment company under such Act upon consummation
of the transactions contemplated hereby or after giving effect to the use of
proceeds from the purchase of the Purchased Units.
Section 2.20 Securities Laws. The offer, sale and issuance of the
Purchased Units without registration (assuming the accuracy of the
representations and warranties made by the Investors in Section 3.1 hereof) will
not violate the Securities Act, or any applicable state securities or "blue sky"
laws. None of the Company, its affiliates or any person acting on its behalf has
engaged in any form of general solicitation or advertising (as defined in Rule
502(c) of the Securities Act) or engaged in any action that would require the
registration under the Securities Act of the offering and sale of the Purchased
Units pursuant to this Agreement.
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Section 2.21 Investment Banking; Brokerage. Except as set forth on
Schedule 2.21, there are no claims for investment banking fees, brokerage
commissions, finder's fees or similar compensation (exclusive of professional
fees to attorneys and accountants) in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Company or any of its Affiliates.
Section 2.22 Labor Relations. There is no charge pending or, to the
Company's knowledge, threatened, against or with respect to the Company before
any court or agency and alleging unlawful discrimination in employment
practices, and there is no charge of or proceeding with regard to any unfair
labor practice against the Company pending before the National Labor Relations
Board. There is no labor strike, dispute, slow-down, or work stoppage pending
or, to the Company's knowledge, threatened against or involving the Company.
None of the employees of the Company is covered by any collective bargaining
agreement, and no such collective bargaining agreement is currently being
negotiated. No one has petitioned and, to the Company's knowledge, no one is now
petitioning, for union representation of any employees of the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
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Section 3.1 Representations and Warranties. Each Investor represents
severally as to himself only that (each of which representations and warranties
are true as of the date hereof and as of Closing):
(a) He has all requisite power and full legal right to execute
and deliver this Agreement and the Ancillary Agreements to which he is a party
and to carry out his obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Ancillary Agreements to which he is a party
and the performance by him of his obligations hereunder and thereunder, have
been duly authorized by him, and no other proceeding therefor on his part is
required. This Agreement and each of the Ancillary Agreements to which he is a
party have been duly executed and delivered by him and constitute his valid and
binding obligations, enforceable against him in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to
the enforcement of creditors' rights and remedies or by other equitable
principles of general application.
(b) He is purchasing the Purchased Units for its own account for
investment only and not with a present view to the distribution thereof.
(c) He has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
investment contemplated by this Agreement and making an informed investment
decision with respect thereto.
(d) He is an "accredited investor" as such term is defined in
Rule 501 under the Securities Act.
(e) He has had the opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of securities
purchased hereunder, as well as the opportunity to obtain additional information
necessary to verify the accuracy of information furnished in connection with
such offering that the Company possesses or can acquire without unreasonable
effort or expense.
(f) He understands that the Purchased Units have not been
registered under the Securities Act or any state securities laws, and may not be
transferred unless subsequently registered thereunder or pursuant to an
exemption from registration, and that a legend indicating such restrictions will
be placed on the certificates representing such Common Stock and Warrants.
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(g) There are no claims for investment banking fees, brokerage
commissions, finder's fees or similar compensation (other than professional fees
to attorneys and accountants) in connection with the transactions contemplated
by this Agreement or any of the Ancillary Agreements based on any arrangement or
agreement made by or on behalf of him.
(h) Neither the execution and delivery of this Agreement or any
of the Ancillary Agreements by him nor the performance by him of his obligations
hereunder or thereunder will: (i) constitute (with or without due notice or
lapse of time or both) a default or give rise to any lien or encumbrance on any
of his material properties or assets or any right of termination, cancellation
or acceleration under any of the terms or conditions of any material note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which he is a party or by which he or any of his material properties or assets
may be bound, or (ii) violate any statute, law, rule, regulation, writ,
injunction, judgment, order or decree of any court, administrative agency or
governmental authority binding on him or any of his material properties or
assets.
(i) Except for filings required under federal or state securities
laws, no consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority is required to be
made or obtained by him in connection with the execution and delivery of this
Agreement or any of the Ancillary Agreements by him, or the performance by him
of his obligations hereunder and thereunder.
(j) There are no claims, actions, suits, proceedings,
investigations or inquiries pending before any court, arbitrator or governmental
or regulatory official or office, or, to his knowledge, threatened, against or
affecting him which question the validity of this Agreement or any of the
Ancillary Agreements, the transactions contemplated hereby or thereby or any
action taken or to be taken by him pursuant to this Agreement or any of the
Ancillary Agreements, at law or in equity.
(k) Except as set forth on Schedule 3.1, none of the Investors is
an Affiliate of any other of the Investors.
ARTICLE IV
COVENANTS OF THE COMPANY AND THE INVESTORS
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Section 4.1 Further Assurances. The Company and each Investor shall
execute and deliver, or cause to be executed and delivered, each Ancillary
Agreement to be executed and delivered by it or him and such additional
instruments and other documents and shall take such further actions as the
Company or the Investors, as the case may be, may reasonably require to
effectuate, carry out and comply with all of the terms of this Agreement, the
Ancillary Agreements and the transactions contemplated hereby and thereby.
Section 4.2 Reservation of Shares; Compliance with Securities Laws. The
Company will at all times reserve the appropriate number of shares of Common
Stock solely for the purpose of issuance upon exercise of the Warrants. The
Company will file within the required time periods all filings, notices and
other documents required by applicable federal and state securities laws in
connection with the transactions contemplated by this Agreement.
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ARTICLE V
CLOSING CONDITIONS
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Section 5.1 Investor Closing Conditions. The obligation of the
Investors to consummate the transactions contemplated hereby is subject to
satisfaction or waiver of each of the following conditions at or prior to
Closing:
(a) Secretary's Certificate. The Company shall have delivered to
the Investors a certificate of the Secretary of the Company, dated as of the
Closing Date, certifying: (i) the adoption by the Company's Board of Directors
of attached resolutions authorizing, among other things, the execution and
delivery of this Agreement and the Ancillary Agreements and the consummation of
the transactions contemplated herein, and (ii) the incumbency and signatures of
the officers of the Company executing this Agreement, the Ancillary Agreements
and the other agreements and instruments contemplated herein.
(b) Certificates. The Company shall have delivered to each
Investor a certificate representing the shares of Common Stock and a certificate
evidencing the Warrants acquired by such Investor pursuant to the terms hereof.
(c) Closing Certificate. The Company shall have delivered to the
Investors a certificate of an authorized officer of the Company certifying that
the representations and warranties of the Company contained in this Agreement
and in each certificate or document delivered by the Company to the Investors in
connection with the transactions contemplated hereby and thereby are true and
correct in all material respects on and as of the date of this Agreement and the
Company shall have performed all obligations and complied in all material
respects with all agreements, undertakings, covenants and conditions required
hereunder or thereunder to be performed by it prior to the Closing.
(d) Opinion of Counsel. The Investors shall have received at the
Closing from Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP, counsel to the Company, a
favorable written opinion dated as of the Closing Date which shall be to the
effect set forth in Exhibit 5.1(d) hereto.
(e) No Injunction. There shall not be in effect any order, decree
or injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby.
Section 5.2 Company Closing Conditions. The obligation of the Company
to consummate the transactions contemplated hereby is subject to the
satisfaction or waiver of each of the following conditions at or prior to
Closing:
(a) Payment of Purchase Price. XxXxxxxxxx, Keen & Xxxxxxx, as
escrow agent under a certain escrow agreement dated August __, 2002 among the
Company, certain of the Investors and the escrow agent, shall tender payment by
wire transfer of that portion of the Aggregate Purchase Price being paid by such
Investors at the Closing. Each of the Investors who is not a party to such
escrow agreement shall tender payment by wire transfer of that portion of the
Aggregate Purchase Price being paid by such Investors at the Closing.
(b) No Injunction. There shall not be in effect any order, decree
or injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby.
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ARTICLE VI
DEFINITIONS
-----------
Section 6.1 Certain Defined Terms. For all purposes of this Agreement,
the following terms shall have the meanings set forth or cross-referenced in
this Section 6:
"Affiliate" means any other person directly or indirectly controlling,
controlled by, or under direct or indirect common control with any referenced
person and includes without limitation, (a) any Person who is an officer,
director, or direct or indirect beneficial holder of at least 5% of the then
outstanding capital stock of any referenced Person, and any of the Family
Members of any such Person, (b) any Person of which a referenced Person and/or
its Affiliates (as defined in clause (a) above), directly or indirectly, either
beneficially own(s) at least 5% of the then outstanding equity securities or
constitute(s) at least a 5% equity participant, (c) in the case of a specified
Person who is an individual, Family Members of such Person, and (d) in the case
of the Investors, any entities for which an Investor or any of its Affiliates
serve as general partner and/or investment adviser or in a similar capacity, and
all mutual funds or other pooled investment vehicles or entities under the
control or management of such Investor or the general partner or investment
adviser thereof, or any Affiliate of any of them, or any Affiliates of any of
the foregoing.
"Affiliated Group" has the meaning given to it in Section 1504 of the
Code, and in addition includes any analogous combined, consolidated, or unitary
group, as defined under any applicable state, local, or foreign income Tax law.
"Ancillary Agreements" means the Warrant(s), the Registration Rights
Agreement and any other agreement or document delivered or executed in
connection with this Agreement or the transactions contemplated hereby.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
"Damages" means all damages, losses, claims, demands, actions, causes
of action, suits, litigations, arbitrations, liabilities, costs, and expenses,
including without limitation court costs and the fees and expenses of counsel
and experts.
"Derivative Securities" means (i) all shares of stock and other
securities that are convertible into or exchangeable for shares of Common Stock,
and (ii) all options, warrants, and other rights to acquire shares of Common
Stock or any class of stock or other security or securities convertible into or
exchangeable for shares of Common Stock or any class of stock or other security.
"Environmental Laws" means, collectively, the Resource Conservation and
Recovery Act, CERCLA, the Superfund Amendments and Reauthorization Act of 1986,
the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances
Control Act, and any and all state or local statutes, regulations, ordinances,
orders, and decrees relating to health, safety, or the environment, each, as the
case may be, as amended.
"Family Members" means, as applied to any individual, any parent,
spouse, child, spouse of a child, brother or sister of the individual, and each
trust created for the benefit of one or more of
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such persons and each custodian of a property of one or more such persons and
the estate of any such persons.
"Fully Diluted Basis" means that the relevant calculation of the
ownership or percentage ownership (as applicable) of any Person of the equity
securities of the Company shall be performed as if (i) all Derivative Securities
have been exercised or converted, as the case may be, into shares of Common
Stock of the Company, and (ii) all shares of preferred stock or any other series
of equity securities of the Company shall have been converted into shares of
Common Stock of the Company.
"GAAP" means generally accepted accounting principles that are (i)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, (ii) applied on a basis
consistent with prior periods, and (iii) such that, insofar as the use of
accounting principles is pertinent, a certified public accountant could deliver
an unqualified opinion with respect to financial statements in which such
principles have been properly applied.
"Liens" means any and all liens, claims, mortgages, security interests,
charges, encumbrances, and restrictions on transfer of any kind, except: (i) in
the case of references to securities, any of the same arising under applicable
securities laws solely by reason of the fact that such securities were issued
pursuant to exemptions from registration under such securities laws, (ii) real
estate taxes not yet due and payable, and (iii) any lien in favor of any
landlord for unpaid rent, additional rent, or other charges, which lien is
created by statute or under any lease under which the Company or any of its
Subsidiaries is lessee.
"Person" or "person" (regardless of whether capitalized) means any
natural person, entity, or association, including without limitation any
corporation, partnership, limited liability company, government (or agency or
subdivision thereof), trust, joint venture, or proprietorship.
"Registration Rights Agreement" means the Registration Rights Agreement
of even date among the Company and each of the Investors.
"Subsidiary" or "Subsidiaries" means, with respect to any person, any
corporation a majority (by number of votes) of the outstanding shares of any
class or classes of which are at the time owned by such person or by a
Subsidiary of such person, if the holders of the shares of such class or classes
(a) are ordinarily, in the absence of contingencies, entitled to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, even though the right so to vote has been
suspended by the happening of such a contingency, or (b) are at the time
entitled, as such holders, to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof,
whether or not the right so to vote exists by reason of the happening of a
contingency.
Section 6.2 Terms Defined Elsewhere. The following terms are defined
herein in the sections identified below:
TERM SECTION
---- -------
Aggregate Purchase Price 1.1
Agreement Preamble
Balance Sheet 2.6
Closing 1.3
Closing Date 1.3
Common Stock 1.1
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Company Preamble
Exchange Act 2.7
Execution Date Preamble
Investor Preamble
Material Adverse Effect 2.1
Permitted Transferee 7.10
Per Unit Purchase Price 1.2
Proprietary Information 2.17
Purchased Units 1.1
SEC 2.7
SEC Documents 2.7
Securities Act 2.7
Tax 2.13
Warrant 1.1
ARTICLE VII
MISCELLANEOUS
-------------
Section 7.1 Amendments, Waivers and Consents. For the purposes of this
Agreement and all agreements executed pursuant hereto, no course of dealing
between the Company and the Investors and no delay on the part of any party
hereto in exercising any rights hereunder or thereunder shall operate as a
waiver of the rights hereof or thereof. No provision hereof may be waived except
by a written instrument signed by the party so waiving such provision.
Section 7.2 Governing Law; Jurisdiction; Venue etc. This Agreement
shall be governed by, and construed and enforced in accordance with, the laws of
the State of Delaware, without giving effect to the principles of conflicts of
law thereof. The state and federal courts of the State of Delaware located in
New Castle County shall have exclusive jurisdiction to hear and determine any
claims or disputes between the Investors and the other party or parties hereto
pertaining directly or indirectly to this Agreement and all documents,
instruments and agreements executed pursuant hereto, or to any matter arising
therefrom (unless otherwise expressly provided for therein); the exclusive
choice of forum set forth in this Section 7.2 shall not be deemed to preclude
the enforcement of any judgment obtained in such forum or the taking of any
action to enforce the same in any other appropriate jurisdiction. All of the
parties hereto waive all rights to trial by jury in any action or proceeding
instituted by any party against any other party arising out of, on or by reason
of this Agreement or the documents and transactions contemplated herein.
Section 7.3 Headings. The descriptive headings in this Agreement have
been inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction or interpretation of any provision thereof or hereof.
Section 7.4 Counterparts. This Agreement may be executed simultaneously
in any number of counterparts, each of which when so executed and delivered
shall be taken to be an original; but such counterparts shall together
constitute but one and the same document.
Section 7.5 Notices and Demands. Any notice or demand which is required
or provided to be given under this Agreement shall be deemed to have been
sufficiently given and received for all purposes when delivered by hand,
telecopy, or nationally recognized overnight courier, or five (5) days after
being sent by certified or registered mail, postage and charges prepaid, return
receipt requested, to the following addresses:
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If to the Company:
Xxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Chief Financial Officer
Facsimile: (203) 353-5984With a copy to:
Xxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
And:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
If to the Investors:
To their respective addresses set forth on
Exhibit A.
----------
Section 7.6 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement, provided, however, that no such
severability shall be effective if it materially changes the economic benefit of
this Agreement to any party.
Section 7.7 Integration. This Agreement, including the exhibits,
documents and instruments referred to herein or therein, constitutes the entire
agreement, and supersedes any other prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
Section 7.8 Publicity. The Company and the Investors shall have the
right to approve before issuance any press releases or any other public
statements sought to be made by the other with respect to the transactions
contemplated hereby, except for any disclosures required in connection with
obtaining any consents to the transactions contemplated by this Agreement. The
Company shall have the right to issue any press release or other public
statement in connection with the transaction contemplated hereby, excluding the
identity of the Investors, without the prior consent of the Investors, but may
disclose the identity of the Investors upon prior written consent of the
Investors, which shall not be unreasonably withheld. The Company shall also have
the right to file this Agreement and the Ancillary Agreements with the SEC under
the Securities Act or the Exchange Act.
Section 7.9 Expenses. The Company and the Investors will each bear
their own costs and expenses and those of their respective advisors related to
the transactions herein contemplated; provided, however, that the Company shall
pay reasonable attorneys' fees to XxXxxxxxxx, Keen & Xxxxxxx at the
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Closing not to exceed Ten Thousand Dollars ($10,000), plus reasonable expenses,
in connection with its representation of one or more of the Investors regarding
the transactions contemplated herein and in the Ancillary Documents.
Section 7.10 Assignment. (a) The Company may not assign this Agreement
or its rights and obligations hereunder.
(b) The rights and obligations hereunder and the Purchased Units
(or a component thereof) may be transferred by each of the Investors in its sole
discretion at any time, in whole or in part, to (i) any Affiliate(s) or
Affiliated Group(s) of the transferor or (ii) with the consent of the Company,
which shall not be unreasonably withheld, delayed, or conditioned, any party
that is an "accredited investor" (as such term is defined in Rule 501 under the
Securities Act), without the consent of any other party thereto (a "Permitted
Transferee").
(c) Notwithstanding the other provisions of this Section 7.10, no
Person acquiring any Common Stock in a public trade shall receive the benefit of
any of the covenants set forth in this Agreement as an assignee thereof.
(d) Subject to clause (c) immediately above, any Person
acquiring, in a manner permitted by this Agreement, any Units (or components
thereof) and/or rights of an Investor under this Agreement shall constitute an
Investor for purposes of this Agreement and any reference to an Investor in this
Agreement shall also refer to any such Person.
Section 7.11 Equitable Relief. Each of the parties acknowledges that
any breach by such party of his, her, or its obligations under this Agreement
would cause substantial and irreparable damage to one or more of the other
parties and that money damages would be an inadequate remedy therefor.
Accordingly, each party agrees that the other parties or any of them will be
entitled to an injunction, specific performance and/or other equitable relief to
prevent the breach of such obligations.
Section 7.12 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be original, and such counterparts shall
together constitute but one and the same instrument.
Section 7.13 Facsimile Signatures. A facsimile signature on this
Agreement shall be considered the same as an original.
IN WITNESS WHEREOF, the parties have caused this Stock Purchase
Agreement to be duly executed and delivered as of the day and year first above
written.
SMARTSERV ONLINE, INC.
By: ___________________________
Name:
Title:
INVESTORS:
_______________________________
Name:
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Exhibit A
---------
Investor Number of Purchased Shares Aggregate Purchase Price
Xxx X. Xxxxxx 328,767 $300,000
0000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Xxxxxxxx Xxxxxx Trust 109,589 $100,000
Xxxxxx Xxxxxx, Trustee
0000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Xxxxxxxx Xxxxxx Trust 109,589 $100,000
Xxxxxx Xxxxxx, Trustee
0000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Xxxxxx X. Xxxxxx 273,972 $250,000
0000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
SPH Investments 273,972 $250,000
FBO Xxxxxxx X. Xxxxxxxxxx
0000 Xx. Xxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxx 438,356 $400,000
0000 Xxxxxxx Xxxx
Xx. Xxxxx, XX 00000
A and R Investments L.L.C. 109,589 $100,000
0000 Xxxxxxx Xxxx
Xx. Xxxxx, XX 00000
Xxxxxx X. Xxxxx 219,178 $200,000
000 Xxxxx Xxxx Xxxx
Xxxxxxxx Xxxx, XX 00000
S & H Management, Inc. 273,972 $250,000
0000 X. Xx. Xxxxx
Xxxxxxxxxxx, XX 00000
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Xxxx Xxxx 164,383 $150,000
00 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxx X. Xxxxx 55,890 $51,000
000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxxx X. Xxx 54,794 $50,000
0000 X. Xxxxx Xxxxxx
Xxxxxx, XX 00000
Crestview Capital Offshore 21,918 $20,000.50
Fund, Inc.
00 Xxxxxx Xxxxx
Xxxxx X
Xxxxxxxxxx, XX 00000
Crestview Capital Fund II, LP 263,014 $240,000.90
00 Xxxxxx Xxxxx
Xxxxx X
Xxxxxxxxxx, XX 00000
Crestview Capital Fund, LP 263,014 $240,000.90
00 Xxxxxx Xxxxx
Xxxxx X
Xxxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxx XXX 109,589 $100,000
00 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxxxx Investments 328,767 $300,000
0000 Xxxxx Xxxxxx
Xx. 000
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Xxxx Xxxxxx 219,178 $200,000
0000 Xxxxx Xxxxxx
Xx. 000
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
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Xxxxxx X. Erlbaum 109,589 $100,000
00 Xxxx Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Erlbaum Investments, L.P. 109,589 $100,000
00 Xxxx Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Xxxxxxx Xxx-Xxx Xxxx 27,500 $25,093.75
00000 Xxxxxxx Xxxx Xxxxxx
Xxxxxx Xxxxxx, XX 00000
Xxxxx X. Xxxxx 20,000 $18,250
0000 Xxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
------------
TOTAL 3,884,209.00 $3,544,346.05
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