SECURITIES PURCHASE AGREEMENT
Among
UNIVIEW TECHNOLOGIES CORP.
and
THE PURCHASERS LISTED ON SCHEDULE I
Dated as of June 10, 1999
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated
as of June 10, 1999, among uniView Technologies Corp., a Texas
corporation (the "Company"), and the various purchasers identified and
listed on Schedule I hereto (each referred to herein as a "Purchaser"
and, collectively, the "Purchasers.")
INSERT RIDER RE: PRIOR TRANSACTIONS
WHEREAS, the Company and the Purchasers are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by Rule 506 under Regulation D as promulgated by
the United States Securities and Exchange Commission (the "Commission")
under Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act");
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers, and
the Purchasers desire to acquire from the Company, 720 shares of the
Company's Series 1999-D1 5% Convertible Preferred Stock, par value $1.00
per share, stated value $25,000 per share (the "Tranche A Preferred
Stock")
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers, and
the Purchasers desire to acquire from the Company, up to 1,000 shares of
the Company's Series 1999-D2 5% Convertible Preferred Stock, par value
$1.00 per share, stated value $25,000 per share (the "Tranche B Preferred
Stock" and, together with the Tranche A Preferred Stock, the "Security"
or "Securities"); and
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement in the form of Exhibit A attached hereto
(the "Registration Rights Agreement") pursuant to which the Company has
agreed to provide certain registration rights under the Securities Act
and the rules and regulations promulgated thereunder, and applicable
state securities laws.
NOW THEREFORE, in consideration of the promises and mutual
covenants and agreements hereinafter, the Company and the Purchasers
hereby agree as follows:
ARTICLE I.
PURCHASE AND SALE OF THE SECURITIES
1.1 Purchase and Sale.
a. Subject to the terms and conditions set forth herein, the
Company shall issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, shall purchase from the Company:
(i) On the Tranche A Closing Date (as defined below), an
aggregate of 720 shares of Tranche A Preferred Stock and,
in consideration thereof, the Purchasers shall deliver to
the Company the following:
i. 1,000,000 Series "B" Warrants of the Company, each having
a strike price of $1.00 per share, and collectively having an
aggregate value of $2,437,500;
ii. 100,000 Series "A" Warrants of the Company, each having
a strike price of $3.00 per share, and collectively having an
aggregate value of $43,750;
iii. 84 shares of the Company's Series 1999-B Preferred Stock,
each having a strike price of $.625, and collectively having
an aggregate value of $11,550,000; and
iv. $3,968,750 in cash.
(ii) On the Tranche B Closing Date (as defined below), an
aggregate of 1,000 shares of Tranche B Preferred Stock,
for an aggregate purchase price of $25,000,000 (or such
lesser number of shares, for such lesser purchase price
in proportion thereto, if the Purchaser's desire to
purchase less than 1,000 shares of Tranche B Preferred Stock).
b. Each Purchaser shall purchase the principal amount of
Securities as set forth for such Purchaser on Schedule I.
c. The Securities shall have the respective rights, preferences and
privileges set forth in the Certificate of Designation (the "Certificate
of Designation"), the form of which is attached hereto as Exhibit B,
which shall be approved by the Purchasers and the Company's Board of
Directors and filed on or prior to the Closing by the Company with the
Secretary of State of Texas. The Tranche B Preferred Stock shall be
identical to the Tranche A Preferred Stock and shall rank pari passu with
the Tranche A Preferred Stock with regard to dividends, liquidation,
voting rights and any other preferential rights designated therein,
except that the conversion price of the Tranche B Preferred Stock shall
be $7.00 per share.
1.2 The Closings.
a. The Tranche A Closing. The closing of the purchase and sale of
the Tranche A Preferred Stock (the "Tranche A Closing") shall take place at
the offices of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or by transmission by facsimile and
overnight courier, immediately following the execution hereof or such
later date or different location as the parties shall agree, but not
prior to the date that the conditions set forth in Section 4.1 have been
satisfied or waived by the appropriate party (the "Tranche A Closing
Date"). At the Tranche A Closing:
(i) Each Purchaser shall deliver, as directed by the Company,
(a) its portion of the purchase price as set forth next to its name on
Schedule I in United States dollars in immediately available funds to an
account or accounts designated in writing by the Company and (b) the warrants
and shares of preferred stock held by such Purchaser and set forth in Section
1.1(a)(i) hereof;
(ii) The Company shall deliver to each Purchaser the certificates
representing the number of Securities purchased by such Purchaser as set
forth on Schedule I hereto;
(iii) The Company shall pay to Xxxxx Xxxxxxx Asset Management, LLC
("Xxxxx Xxxxxxx") a commitment fee of $45,000 in United States dollars in
immediately available funds to an account designated in writing by Xxxxx
Xxxxxxx, of which $15,000 shall have been delivered to Xxxxx Xxxxxxx upon
the signing of the term sheet and $30,000 of which shall be delivered at
the Tranche A Closing; and
(iv) The parties shall execute and deliver each of the documents referred
to in Section 4.1 hereof.
b. The Tranche B Closing - Purchasers' Option. Subject to the
terms and conditions set forth in Section 4.2 and elsewhere in this Agreement,
the Purchasers shall have the right, beginning on that date which is
three (3) months from the Tranche A Closing Date, for a period of two
years from such date, to deliver a written notice to the Company (a
"Tranche B Notice") requiring the Company to issue and sell, at the
Purchaser's option, any or all of the shares of Tranche B Preferred
Stock. The closing of the purchase and sale of the Tranche B Preferred
Stock shall take place in the same manner as the Tranche A Closing,
within three (3) business days of the date after delivery of the Tranche
B Notice (the "Tranche B Closing Date"); provided, however, that in no
event shall the Tranche B Closing take place unless and until (i) the
conditions listed in Section 4.2 have been satisfied or waived by the
appropriate party and (ii) the Per Share Market Value (as defined in the
Certificate of Designation) is above $10.00 per share for at least twenty
(20) out of thirty (30) consecutive Trading Days (as defined in the
Certificate of Designation); provided further that, notwithstanding the
provisions of Section 4.2 hereof, upon the occurrence of a Change of
Control (as defined herein) the Purchasers right pursuant to this Section
1.1(b) shall become immediately exercisable if the Per Share Market Value
is above $7.00 per share. At the Tranche B Closing:
(i) Each Purchaser shall deliver to the Company the aggregate
amount of $25,000,000 (or, if such Purchasers desire to purchase less than
1,000 shares of Tranche B Preferred Stock, such aggregate amount which is
proportionate to the number of shares of Tranche B Preferred Stock
purchased by such Purchasers);
(ii) The Company shall deliver to each Purchaser the certificates
representing the number of Securities purchased by such Purchaser;
(iii) The Company shall pay to Xxxxx Xxxxxxx a commitment fee of
$45,000 in United States dollars in immediately available funds to an
account designated in writing by Xxxxx Xxxxxxx; and
(iv) The parties shall execute and deliver each of the documents referred
to in Section 4.2 hereof.
c. The Tranche B Closing - Company's Option. Subject to the terms
and conditions set forth in Section 4.2 and elsewhere in this Agreement, the
Company shall have the right, beginning on that date which is three (3)
months from the Tranche A Closing Date, for a period of two years from
such date, to deliver a written notice to the Purchasers (a "Tranche B
Company Notice") requiring the Purchasers to purchase any or all of the
shares of Tranche B Preferred Stock. The closing of the purchase and
sale of the shares of the Tranche B Preferred Stock shall take place in
the same manner as the Tranche A Closing, within three (3) business days
of the date after delivery of the Tranche B Company Notice (the "Tranche
B Closing Date"); provided, however, that in no event shall the Tranche B
Closing take place unless and until (i) the conditions listed in Section
4.2 have been satisfied or waived by the appropriate party and (ii) the
Per Share Market Value (as defined in the Certificate of Designation) is
above $15.00 per share for at least twenty (20) out of thirty (30)
consecutive Trading Days (as defined in the Certificate of Designation).
At the Tranche B Closing:
(i) Each Purchaser shall deliver to the Company the aggregate amount of
$25,000,000 (or, if such Purchasers are purchasing less than 1,000 shares
of Tranche B Preferred Stock, such aggregate amount which is
proportionate to the number of shares of Tranche B Preferred Stock
purchased by such Purchasers);
(ii) The Company shall deliver to each Purchaser the certificates
representing the number of Securities purchased by such Purchaser;
(iii) The Company shall pay to Xxxxx Xxxxxxx a commitment fee of
$45,000 in United States dollars in immediately available funds to an
account designated in writing by Xxxxx Xxxxxxx; and
(iv) The parties shall execute and deliver each of the documents referred
to in Section 4.2 hereof.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company. The
Company hereby makes the following representations and warranties to each
of the Purchasers:
a. Organization and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Texas, with the requisite corporate power and authority to own
and use its properties and assets and to carry on its business as
currently conducted. Except as set forth on Schedule 2.1(a), the
Company has no subsidiaries (collectively, the "Subsidiaries"). Each of
the Subsidiaries (which for purposes of this Agreement means any entity
in which the Company, directly or indirectly, owns the majority of such
entity's capital stock or holds an equivalent equity or similar interest)
is a corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the full corporate power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. Each of the Company and the Subsidiaries is duly qualified as
a foreign corporation to do business and is in good standing as a foreign
corporation 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, would not, individually or in the aggregate, (x) adversely
affect the legality, validity or enforceability of any of this Agreement
or the Transaction Documents (as defined in Section 2.1(b)) or any of the
transactions contemplated hereby or thereby, (y) have or result in a
material adverse effect on the results of operations, assets, prospects,
or financial condition of the Company and its Subsidiaries, taken as a
whole or (z) impair the Company's ability to perform fully on a timely
basis its obligations under any Transaction Document (any of (x), (y) or
(z) being a "Material Adverse Effect").
b. Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by this Agreement, the Certificate of Designation, and the
Registration Rights Agreement (collectively, the "Transaction
Documents"), and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of this Agreement and the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action and no further action is required by the
Company, its Board of Directors or its stockholders. Each of this
Agreement and the Transaction Documents has 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, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or
by other equitable principles of general application. Neither the
Company nor any Subsidiary is in any material violation of any of the
provisions of its respective articles or certificates of incorporation,
bylaws or other charter documents such that any right of a holder of the
Securities would be affected. Prior to each of the Tranche A Closing
Date and the Tranche B Closing Date, as applicable, the Certificate of
Designation has been filed with the Secretary of State of Texas and will
be in full force and effect, enforceable against the Company in
accordance with the terms thereof, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable
principles of general application.
c. Capitalization. As of the date hereof, the authorized capital stock
of the Company is as set forth in Schedule 2.1(c). All of such
outstanding shares of capital stock have been, or upon issuance will be,
validly authorized and issued, fully paid and nonassessable and were
issued in accordance with the registration or qualification provisions of
the Securities Act, or pursuant to valid exemptions therefrom. Except as
disclosed in Schedule 2.1(c), (i) no shares of the Company's capital
stock are subject to preemptive rights or any other similar rights or any
liens or encumbrances suffered or permitted by the Company, nor is any
holder of the Common Stock entitled to preemptive or similar rights
arising out of any agreement or understanding with the Company by virtue
of any Transaction Document, (ii) there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible
into or exchangeable for, or giving any Person (as defined below) any
right to subscribe for or acquire, any shares of capital stock of the
Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital
stock of the Company or any of its Subsidiaries or options, warrants,
scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, (iii)
there are no outstanding debt securities, (iv) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the
Securities Act (except the Registration Rights Agreement), (v) there are
no outstanding securities of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any
of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries, (vi) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the shares of Common Stock as described in
this Agreement, (vii) the Company does not have any stock appreciation
rights or "phantom stock" plans or agreements or any similar plan or
agreement and (viii) except as specifically disclosed in the SEC
Documents (as defined in Section 2.1(k) hereof), no Person (as defined
below) or group of related Persons beneficially owns (as determined
pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) or has the right to acquire by
agreement with or by obligation binding upon the Company beneficial
ownership of in excess of 5% of the Common Stock. "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.
d. Authorization and Validity; Issuance of Shares. The shares of
Common Stock issuable upon conversion of the Securities (the "Underlying
Shares") are and will continue until issuance to be duly authorized and
reserved for issuance and the shares of Common Stock issued upon
conversion of the Securities (the "Conversion Shares") will be validly
issued, fully paid and non-assessable, free and clear of all liens,
encumbrances and Company rights of first refusal, other than liens and
encumbrances created by the Purchasers (collectively, "Liens") and will
not be subject to any preemptive or similar rights.
e. No Conflicts. The execution, delivery and performance of this
Agreement and each of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby (including the issuance of the Underlying Shares) do not and will
not (i) conflict with or violate any provision of the Company's
Certificate of Incorporation, as amended and as in effect on the date
hereof (the "Certificate of Incorporation"), the Company's Bylaws, as in
effect on the date hereof (the "Bylaws") or other organizational
documents of the Company or any of the Subsidiaries, (ii) subject to
obtaining the consents referred to in Section 2.1(f), conflict with, or
constitute a default (or an event which 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 of, any agreement,
indenture, patent, patent license or instrument (evidencing a Company or
Subsidiary debt or otherwise) 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 any
Subsidiary is subject (including Federal and state securities laws and
regulations and the rules and regulations of the principal market or
exchange on which the Common Stock is traded or listed) applicable to the
Company or any of its Subsidiaries, or by which any material property or
asset of the Company or any Subsidiary is bound or affected.
f. Consents and Approvals. Except as specifically set forth on
Schedule 2.1(f), neither the Company nor any Subsidiary is 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, regulatory or self
regulatory agency, or other Person in connection with the execution,
delivery and performance by the Company of this Agreement or the
Transaction Documents, other than (i) the filing of a registration
statement (the "Registration Statement') with the Commission, which shall
be filed in accordance with and in the time periods set forth in the
Registration Rights Agreement, (ii) the application(s) or any letter(s)
acceptable to the Nasdaq Stock Market ("Nasdaq") for the listing of the
Underlying Shares with Nasdaq (and with any other national securities
exchange or market on which the Common Stock is then listed), (iii) any
filings, notices or registrations under applicable state securities laws
and (iv) the approval of the Company's Board of Directors and the filings
of the Certificate of Designation with the Secretary of State of Texas,
which filing and approval shall be effected on or prior to the Tranche A
Closing Date or the Tranche B Closing Date, as applicable (together with
the consents, waivers, authorizations, orders, notices and filings
referred to on Schedule 2.1(f), the "Required Approvals").
g. Litigation; Proceedings. Except as specifically set forth on
Schedule 2.1(g), there is no action, suit, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or
any of their respective properties before or by any court, governmental
or administrative agency or regulatory authority (federal, state, county,
local or foreign) which (i) adversely affects or challenges the legality,
validity or enforceability of any of this Agreement or the Transaction
Documents or (ii) could reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect.
h. No Default or Violation. Neither the Company nor any Subsidiary (i)
is in default under or in violation of any indenture, loan or other
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, (ii) is in
violation of any order of any court, arbitrator or governmental body
applicable to it, (iii) is in violation of any statute, rule or
regulation of any governmental authority to which it is subject or (iv)
is in default under or in violation of its Certificate of Incorporation,
Bylaws or other organizational documents, respectively. The business of
the Company and its Subsidiaries is not being conducted, and shall not be
conducted, in violation of any law, ordinance, rule or regulation of any
governmental entity, except where such violations have not resulted or
would not reasonably result, individually or in the aggregate, in a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries
is in breach of any agreement where such breach, individually or in the
aggregate, would have a Material Adverse Effect
i. Disclosure; Absence of Certain Changes. None of this Agreement, the
Schedules to this Agreement, the Transaction Documents, the SEC Documents
(as defined in the Section 2.1(k)) or any other written or formally
presented information, report, financial statement, exhibit, schedule or
document furnished by or on behalf of the Company in connection with the
negotiation of the transactions contemplated hereby contained, contains,
or will contain at the time it was or is so furnished any untrue
statement of a material fact or omitted, omits or will omit at such time
to state any material fact necessary in order to make the statements made
herein and therein, in light of the circumstances under which they were
made, not misleading. Except as disclosed on Schedule 2.1(i) or in SEC
Documents filed on XXXXX at least five business days prior to the date
hereof, since December 31, 1998, there has been no material adverse
change and no material adverse development in the business, properties,
operations, financial condition, liabilities or results of operations or,
insofar as can reasonably be foreseen, prospects of the Company or the
Subsidiaries. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings. No event, liability, development or
circumstance has occurred or exists, or is contemplated to occur, with
respect to the Company or its Subsidiaries or their respective
businesses, properties, operations or financial condition or, insofar as
can reasonably be foreseen, prospects, that would be required to be
disclosed by the Company under applicable securities laws on a
registration statement (including by way of incorporation by reference)
filed with the Commission, on the date this representation is made or
deemed to be made, relating to an issuance and sale by the Company of its
Common Stock and which has not been publicly disclosed.
j. Private Offering. The Company and all Persons acting on its behalf
have not made, directly or indirectly, and will not make, offers or sales
of any securities or solicited any offers to buy any security under
circumstances that would require registration of the Securities, the
Conversion Shares or the Underlying Shares or the issuance of such
securities under the Securities Act. The offer, sale and issuance of the
Securities and the Conversion Shares to the Purchasers will not be
integrated with any other offer, sale and issuance of the Company's
securities (past, current, or future) under the Securities Act or any
regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated or for purposes of
any stockholder approval provision applicable to the Company or its
securities. Subject to the accuracy and completeness of the
representations and warranties of the respective Purchasers contained in
Section 2.2 hereof, the offer, sale and issuance by the Company to the
Purchasers of the Securities and the Underlying Shares is exempt from the
registration requirements of the Securities Act.
k. SEC Documents; Financial Statements. The Common Stock of the
Company is registered pursuant to Section 12(g) of the Exchange Act. The
Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Commission pursuant to the
reporting requirements of the Exchange Act, including pursuant to Section
13, 14 or 15(d) thereof (the foregoing materials and all exhibits
included therein and financial statements and schedules thereto and
documents (other than exhibits to such documents) incorporated by
reference therein being collectively referred to herein as the "SEC
Documents"), on a timely basis or has received a valid extension of such
time of filing and has filed any such SEC Documents prior to the
expiration of any such extension. As of their respective dates, the SEC
Documents 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 Documents, 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. All agreements to which the Company or
any Subsidiary is a party or to which the property or assets of the
Company or any Subsidiary are subject and which are required to be filed
as exhibits to the SEC Documents have been filed as exhibits to the SEC
Documents as required and neither the Company nor any Subsidiary is in
breach of any such agreement. As of their respective dates, 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 Commission
with respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the
periods involved, 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 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. No other information provided by
or on behalf of the Company to the Purchasers which is not included in
the SEC Documents, including, without limitation, information referred to
in Section 2.1(i) of this Agreement, contains any untrue statement of a
material fact or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstance under which
they are or were made, not misleading. Neither the Company nor any of
its Subsidiaries or any of their officers, directors, employees or agents
have provided the Purchasers with any material, nonpublic information.
The Company acknowledges that the Purchasers will be trading in the
securities of the Company in reliance on the foregoing representation and
warranty.
l. Investment Company. The Company is not, and is not controlled by or
under common control with an affiliate (an "Affiliate") of an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
m. Broker's Fees. Except for the fees payable by the Company to Xxxxx
Xxxxxxx Asset Management pursuant to Section 6.6 hereof, no fees or
commissions or similar payments with respect to the transactions
contemplated by this Agreement or the Transaction Documents have been
paid or will be payable by the Company to any broker, financial advisor,
finder, investment banker, or bank, other than as set forth in Schedule
2.1(m). 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 2.1(m) that may be due in
connection with the transactions contemplated by this Agreement and the
Transaction Documents.
n. Form S-3 Eligibility. The Company is, and at the Tranche A Closing
Date and the Tranche B Closing Date will be, eligible to register
securities (including the Underlying Shares) for resale with the
Commission under Form S-3 (or any successor form) promulgated under the
Securities Act.
o. Listing and Maintenance Requirements Compliance. The principal
market on which the Common Stock is currently traded is Nasdaq. Except
as disclosed on Schedule 2.1(o), the Company has not in the three years
preceding the date hereof received notice (written or oral) from Nasdaq
(or any stock exchange, market or trading facility on which the Common
Stock is or has been listed (or on which it has been quoted)) to the
effect that the Company is not in compliance with the listing or
maintenance requirements of such market or exchange. Except as disclosed
on Schedule 2.1(o), the Company is not in default under or in violation
of any of the listing requirements of Nasdaq as in affect on the date
hereof and is not aware of any facts which would reasonably lead to
delisting or suspension of the Common Stock by Nasdaq. Notwithstanding
the foregoing, the Purchasers agree to waive any penalties and remedies
for breach of this Section 2.1(o) should delisting occur for reasons
solely related to the Company's Series Q Preferred Stock. The Company
covenants to provide the Purchasers promptly, but in no event later than
two (2) business days after the mailing or receipt thereof, with copies
of all Nasdaq and Commission correspondence relating to the Series Q
Preferred Stock. After giving effect to the transactions contemplated by
this Agreement and the Transaction Documents, the Company is and will be
in compliance with all such maintenance requirements.
p. Intellectual Property Rights. The Company and each of its
Subsidiaries own or possess adequate rights or licenses to use all
trademarks, trademark applications, trade names and service marks,
whether or not registered, and all patents, patent applications,
copyrights, inventions, licenses, approvals, governmental authorizations,
trade secrets and intellectual property rights (collectively,
"Intellectual Property Rights") which are necessary for use in connection
with their respective businesses as now conducted and as described in the
SEC Documents. Except as set forth on Schedule 2.1(p), none of the
Company's Intellectual Property Rights have expired or terminated, or are
expected to expire or terminate within two years from the date of this
Agreement. Neither the Company nor any of its Subsidiaries has infringed
or is infringing on any of the Intellectual Property Rights of any Person
and, except as set forth on Schedule 2.1(p), there is no claim, action or
proceeding which has been made or brought against, or to the Company's
knowledge, is being made, brought or threatened against, the Company or
its Subsidiaries regarding the infringement of any of the Intellectual
Property Rights, and the Company and its Subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing,
except where any of the foregoing would not have a Material Adverse
Effect. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of
their intellectual properties.
q. Employee Relations. Neither the Company nor any of its Subsidiaries
is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened.
Neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement, and the Company and its Subsidiaries
believe that relations with their employees are good. Except as set
forth on Schedule 2.1(q), since December 1, 1998 no executive officer (as
defined in Rule 501(f) under the Securities Act) has notified the Company
that such officer intends to leave the Company or otherwise terminate
such officer's employment with the Company.
r. Registration Rights; Rights of Participation. Except as described
on Schedule 2.1(r) hereto, (i) 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 which has not been
satisfied and (ii) no Person, including, but not limited to, current or
former stockholders of the Company, underwriters, brokers or agents, has
any right of first refusal, preemptive right, right of participation, or
any similar right to participate in the transactions contemplated by this
Agreement or any Transaction Document.
s. Title. Except as disclosed on Schedule 2.1(s), the Company and each
of its Subsidiaries have good and marketable title in fee simple to all
real property and personal property owned by them which is material to
the business of the Company and its Subsidiaries, in each case free and
clear of all Liens, except for Liens that do not materially adversely
affect the value of such property and do not 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, to the Company's best knowledge, enforceable leases with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and the
Subsidiaries.
t. Permits. The Company and each of its Subsidiaries possess all
certificates, authorizations, licenses, easements, consents, approvals,
orders and permits necessary to own, lease and operate their respective
properties and to conduct their respective businesses as currently
conducted except where the failure to possess such permits would not,
individually or in the aggregate, have a Material Adverse Effect
("Material Permits"), and there is no proceeding pending, or, to the
knowledge of the Company, threatened relating to the revocation,
modification, suspension or cancellation of any Material Permit. Neither
the Company nor any of the Subsidiaries is in conflict with or default or
violation of any Material Permit.
u. Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverages as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business, at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or
operations of the Company and its Subsidiaries, taken as a whole.
v. Internal Accounting Controls. The Company and each of 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 United States 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.
w. Tax Status; Firpta. Except as set forth on Schedule 2.1(w), the
Company and each of its Subsidiaries has made or filed all federal and
state income and all other tax returns, reports and declarations required
by any jurisdiction to which it is subject (unless and only to the extent
that the Company and each of its Subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined
to be due on such returns, reports and declarations, except those being
contested in good faith (which are set forth on Schedule 2.1(w) hereof),
and has set aside on it books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any
such claim. The Company is not a "United States real property holding
corporation" within the meaning of Section 847(c)(2) of the Internal
Revenue Code of 1986, as amended.
x. Transactions With Affiliates. Except as set forth on Schedule
2.1(x), and other than the grant of stock options and warrants disclosed
on Schedule 2.1(c), none of the officers, directors, or employees of the
Company is presently a party to any transaction with the Company or any
of its Subsidiaries (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 corporation, partnership, trust or entity in which any
officer, director, or any such employee has a substantial interest or is
an officer, director, trustee or partner.
y. Application to Takeover Protection. The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination or other
similar anti-takeover provision under the Certificate of Incorporation,
Bylaws or the laws of the State of Texas which is or could become
applicable to the Purchasers or the Transaction Documents as a result of
the transactions contemplated by this Agreement or the Transaction
Documents. None of the transactions contemplated by this Agreement or
the Transaction Documents, including the conversion of the Securities,
will trigger any poison pill provisions of any of the Company's
stockholders' rights or similar agreements.
z. Environmental Laws. Except as set forth on Schedule 2.1(z), the
Company and its Subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms
and conditions of any such permits, licenses or other approvals except
where the failure of any of the foregoing would not result in a Material
Adverse Effect.
aa. Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any of its Subsidiaries has, in the
course of its actions for, or on behalf of, the Company used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity; made any direct
or indirect unlawful payment to any foreign or domestic government
official or employee form corporate funds; violated or is in violation of
any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
bb. Solicitation Materials; Certain Information. The Company has not
(i) distributed any offering materials in connection with the offering
and sale of the Securities, other than the SEC Documents, the Schedules
to this Agreement, any amendments and supplements thereto and the
materials listed on Schedule 2.1(bb), or (ii) solicited any offer to buy
or sell the Securities by means of any form of general solicitation or
advertising. Neither the Company, nor any of its Affiliates, nor any
Person acting on its or their behalf, has engaged or will engage in any
form of general solicitation or general advertising (within the meaning
of Regulation D under the Securities Act) in connection with the offer or
sale of the Securities. The Company acknowledges that the Purchasers
will be trading in the securities of the Company in reliance on the
foregoing representation and warranty.
cc. Acknowledgement of Dilution. The Company understands and
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Conversion Shares upon conversion of the Securities. The
Company further acknowledges that its obligation to issue the Conversion
Shares upon conversion of the Securities in accordance with this
Agreement and the Certificate of Designation is absolute and
unconditional regardless of the dilutive effect that such issuance may
have on the ownership interests of other stockholders of the Company.
dd. Acknowledgement Regarding Purchasers' Purchase of Securities. The
Company acknowledges and agrees that the Purchasers are acting solely in
the capacity of arm's length purchasers with respect to this Agreement
and the transactions contemplated hereby. The Company further
acknowledges that no Purchaser is acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to
this Agreement and the transactions contemplated hereby and any statement
made by any Purchaser or any of their respective representatives or
agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely
incidental to the Purchasers' purchase of the securities. The Company
further represents to each Purchaser that the Company's decision to enter
into this Agreement has been based solely on the independent evaluation
of the transactions contemplated hereunder by the Company and its
representatives.
ee. Solvency. The Company (both before and after giving effect to the
transactions contemplated by this Agreement) is solvent (i.e., its assets
have a fair market value in excess of the amount required to pay its
probable liabilities on its existing debts as they become absolute and
matured) and currently the Company has no information that would lead it
to reasonably conclude that the Company would not have the ability to,
nor does it intend to take any action that would impair its ability to,
pay its debts from time to time incurred in connection therewith as such
debts mature. The Company does not anticipate or know of any basis upon
which its auditors might issue a qualified opinion in respect of its
current fiscal year.
ff. Other Agreements. The Company has not, directly or indirectly, made
any agreements with any Purchasers relating to the terms and conditions
of the transactions contemplated by the Transaction Documents except as
set forth in the Transaction Documents.
2.2 Representations and Warranties of the Purchasers. Each of the
Purchasers, severally and not jointly, hereby represents and warrants to
the Company as follows:
a. Organization; Authority. Such Purchaser is a corporation or a
limited duration company or a limited liability company or limited
partnership duly formed, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation with the
requisite power and authority, corporate or otherwise, to enter into and
to consummate the transactions contemplated hereby and by the Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The purchase by such Purchaser of the Securities hereunder
has been duly authorized by all necessary action on the part of such
Purchaser. Each of this Agreement and the Registration Rights Agreement
has been duly executed and delivered by such Purchaser and constitutes
the valid and legally binding obligation of such Purchaser, enforceable
against such Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.
b. Investment Intent. Such Purchaser is acquiring the Securities for
its own account and not with a present view to or for distributing or
reselling the Securities or the Conversion Shares or any part thereof or
interest therein in violation of the Securities Act; provided, however,
that by making the representations herein, such Purchaser does not agree
to hold any of the Securities or the Conversion Shares for any minimum or
other specific term and reserves the right to dispose of the Securities
at any time in accordance with or pursuant to a registration statement or
an exemption under the Securities Act.
c. Purchaser Status. At the time such Purchaser was offered the
Securities and at the Tranche A Closing Date and Tranche B Closing Date,
(i) it was and will be an "accredited investor" as defined in Rule 501
under the Securities Act and (ii) such Purchaser, either alone or
together with its representatives, had and will have 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 the Conversion Shares.
d. Reliance. Such Purchaser understands and acknowledges that (i) the
Securities are being offered and sold to such Purchaser without
registration under the Securities Act in a private placement that is
exempt from the registration provisions of the Securities Act under
Section 4(2) of the Securities Act or Regulation D promulgated thereunder
or other applicable federal and state securities laws and (ii) the
availability of such exemptions depends in part on, and the Company will
rely upon the accuracy and truthfulness of, the representations set forth
in this Section 2.2 and such Purchaser hereby consents to such reliance.
e. Information. Such Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of
the Securities which have been requested by such Purchaser or its
advisors. Such Purchaser and its advisors, if any, have been afforded
the opportunity to ask questions of the Company. Neither such inquiries
nor any other due diligence investigation conducted by such Purchaser or
any of its advisors or representatives shall modify, amend or affect
Purchaser's right to rely on the Company's representations and warranties
contained in Section 2.1 above or representations and warranties of the
Company contained in any other Transaction Document. Such Purchaser
understands that its investment in the Securities involves a significant
degree of risk.
f. Governmental Review. Such Purchaser understands that no United
States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the
Securities.
g. Residency. Such Purchaser is a resident of the jurisdiction set
forth immediately below such Purchaser's name on Schedule II hereto.
The Company acknowledges and agrees that the Purchasers make no
representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this
Section 2.2.
ARTICLE III.
OTHER AGREEMENTS
3.1 Transfer Restrictions.
a. If any Purchaser should decide to dispose of the Securities or the
Conversion Shares held by it, such Purchaser understands and agrees that
it may do so only (i) pursuant to an effective registration statement
under the Securities Act, (ii) to the Company or (iii) pursuant to an
available exemption from the registration requirements of the Securities
Act or Rule 144 promulgated under the Securities Act ("Rule 144"). The
Company shall announce any material non-public information that it
legally is required to announce on or prior to the Effectiveness Date (as
defined in the Registration Rights Agreement) of the Registration
Statement filed pursuant to the Registration Rights Agreement and shall
not enter into any subsequent non-disclosure agreements that would
prevent it from announcing any such information that otherwise legally
could have been announced on or prior to the Effectiveness Date, unless
confidential treatment for such information is granted by the Commission.
In connection with any transfer of any Securities or Conversion Shares
other than pursuant to an effective registration statement, Rule 144(k)
or to the Company, the Company may require the transferor thereof to
provide to the Company a written opinion of counsel experienced in the
area of United States securities laws selected by the transferor, the
form and substance of which opinion shall be customary for opinions of
counsel in comparable transactions, to the effect that such transfer does
not require registration of such transferred securities under the
Securities Act; provided, however, that if the Securities or Conversion
Shares may be sold pursuant to Rule 144(k), no written opinion of counsel
shall be required from the Purchaser if such Purchaser provides
reasonable assurances that such security can be sold pursuant to Rule
144(k). Notwithstanding the foregoing, the Company hereby consents to
and agrees to register any transfer by any Purchaser to an Affiliate of
such Purchaser, provided that the transferee certifies to the Company
that it is an "accredited investor" as defined in Rule 501(a) under the
Securities Act. Any such transferee shall agree in writing to be bound
by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement and the Transaction Documents. If a Purchaser
provides the Company with an opinion of counsel, the form and substance
of which opinion shall be customary for opinions of counsel in comparable
transactions, to the effect that a public sale, assignment or transfer of
the Securities and the Conversion Shares may be made without registration
under the Securities Act or the Purchaser provides the Company with
reasonable assurances that the Securities and the Conversion Shares can
be sold pursuant to Rule 144(k) without any restriction as to the number
of securities acquired as of a particular date that can then be
immediately sold, the Company shall permit the transfer, and, in the case
of the Conversion Shares, promptly instruct its transfer agent to issue
one or more certificates in such name and in such denominations as
specified by such Purchaser and without any restrictive legend.
Notwithstanding the foregoing or anything else contained herein to the
contrary, the securities may be pledged as collateral in connection with
a bona fide margin account or other lending arrangement.
b. Each Purchaser agrees to the imprinting, so long as is required by
this Section 3.1(b), of the following legend on the Securities and the
Conversion Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION 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.
Neither the Securities nor the Conversion Shares shall contain
the legend set forth above (or any other legend) (i) at any time while a
registration statement is effective under the Securities Act covering
such security, (ii) if in the written opinion of counsel to the Company
experienced in the area of United States securities laws (the form and
substance of which opinion shall be customary for opinions of counsel in
comparable transactions), such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations
and pronouncements issued by the staff of the Commission) or (iii) if
such Securities or Conversion Shares may be sold pursuant to Rule 144(k).
The Company agrees that it will provide each Purchaser, upon request,
with a certificate or certificates representing Securities or Conversion
Shares, free from such legend at such time as such legend is no longer
required hereunder. If such certificate or certificates had previously
been issued with such a legend or any other legend, the Company shall,
upon request, receive such certificate or certificates free of any
legend.
3.2 Stop Transfer Instruction. The Company may not make any notation on
its records or give instructions to any transfer agent of the Company
which enlarge the restrictions on transfer set forth in Section 3.1.
3.3 Furnishing of Information. As long as any Purchaser owns the
Securities or the Conversion Shares, the Company will cause the Common
Stock to continue at all times to be registered under Section 12(g) of
the Exchange Act, will 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 Section 13,
14 or 15(d) of the Exchange Act and promptly furnish, but in no event
later than two (2) business days after the filing thereof with the
Commission, the Purchasers with true and complete copies of all such
filings, and will not take any action or file any document (whether or
not permitted by the Exchange Act or the rules thereunder) to terminate
or suspend such reporting and filing obligations. As long as any
Purchaser owns the Securities or the Conversion Shares, if the Company is
not required to file reports pursuant to Section 13(a) or 15(d) of the
Exchange Act, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and
substance substantially similar to those that would otherwise be required
to be included in reports required by Section 13(a) or 15(d) of the
Exchange Act, as well as any other information required thereby, in the
time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will take
such further action as any holder of the Securities or the Conversion
Shares may reasonably request, all to the extent required from time to
time to enable such Person to sell the Securities or the Conversion
Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including the legal opinion referenced above in Section
3.1(b), and that it will, as promptly as possible, but in no event later
than three (3) Business Days after the date of receipt or mailing, as the
case may be, provide the Holders true and complete copies of all
correspondence from and to the Commission relating to the Registration
Statement. 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 such requirements.
3.4 Blue Sky Laws. In accordance with the Registration Rights
Agreement, the Company shall (i) qualify the Conversion Shares under the
securities or "blue sky" laws of such jurisdictions as the Purchasers may
request (or to obtain an exemption from such qualification), (ii) shall
provide evidence of any such action so taken to each Purchaser on or
prior to the Closing Date and (iii) shall continue such qualification at
all times through the resale of all Conversion Shares, but in any event
not past the fourth anniversary of the Tranche A Closing Date.
3.5 Integration. The Company shall not 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 or the Conversion Shares in a manner
that would require the registration under the Securities Act of the sale
of the Securities or the Conversion Shares to any Purchaser or cause the
offering of such securities to be integrated with any other offering of
securities by the Company for the purpose of any stockholder approval
provision applicable to the Company or its securities.
3.6 Listing and Reservation of Conversion Shares.
a. The Company shall (i) not later than three (3) business days after
the Tranche A Closing Date and Tranche B Closing Date, as applicable,
prepare and file with Nasdaq (as well as any other national securities
exchange or market on which the Common Stock is then listed) an
additional shares listing application or a letter acceptable to Nasdaq
covering and listing a number of shares of Common Stock which is at least
equal to 100% of the maximum number of Underlying Shares then issuable,
assuming that the payment of all future dividends on such shares then
outstanding were made in shares of Common Stock, (ii) take all steps
necessary to cause the Underlying Shares to be approved for listing on
Nasdaq (as well as on any other national securities exchange or market on
which the Common Stock is then listed) as soon as possible thereafter,
(iii) maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all such Underlying Shares, and (iv) provide to
the Purchasers evidence of such listing. Neither the Company nor any of
its Subsidiaries shall take any action which may result in the delisting
or suspension of the Common Stock on Nasdaq. The Company shall promptly
provide to each Purchaser copies of any notices it receives from Nasdaq
regarding the continued eligibility of the Common Stock for listing on
such automated quotation system, so long as such notice does not include
material, nonpublic information. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section
3.6(a).
b. The Company at all times shall reserve a sufficient number of
shares of its authorized but unissued Common Stock to provide for 100% of
the full conversion of the outstanding Securities (including the payment
of all dividends thereon). Shares of Common Stock reserved for issuance
upon conversion of the Securities shall be allocated pro rata to each of
the Purchasers in accordance with the amount of Securities issued and
delivered to such Purchaser at the applicable Closing Date. If at any
time the number of shares of Common Stock authorized and reserved for
issuance is insufficient to cover 100% of the number of Conversion Shares
issuable upon conversion of the Securities (based on the Conversion Price
(as defined in the Certificate of Designation) in effect from time to
time) without regard to any limitation on conversions or exercises, the
Company will promptly take all corporate action necessary to authorize
and reserve 100% of such shares pursuant to Section 3(b) of the
Registration Rights Agreement, including, without limitation, calling a
special meeting of stockholders to authorize additional shares to meet
the Company's obligations under this Section 3.6(b), in the case of an
insufficient number of authorized shares, and using its best efforts to
obtain stockholder approval of an increase in such authorized number of
shares.
3.7 Notice of Breaches.
a. The Company and each Purchaser shall give prompt written notice to
the other of any breach by it of any representation, warranty or other
agreement contained in this Agreement or in the Transaction Documents, as
well as any events or occurrences arising after the date hereof and prior
to the applicable Closing Date, which would reasonably be likely to cause
any representation or warranty or other agreement of such party, as the
case may be, contained herein to be incorrect or breached as of the
applicable Closing Date provided such notice will not constitute material
non-public information. However, no disclosure by either party pursuant
to this Section 3.7 shall be deemed to cure any breach of any
representation, warranty or other agreement contained herein or in the
Transaction Documents.
b. Notwithstanding the generality of Section 3.7(a), the Company shall
promptly notify, provided such notification will not constitute material
non-public information, each Purchaser of any notice or claim (written or
oral) that it receives from any lender of the Company or any Subsidiary
to the effect that the consummation of the transactions contemplated
hereby and by the Registration Rights Agreement violates or would violate
any written agreement or understanding between such lender and the
Company or any Subsidiary, and the Company shall promptly furnish by
facsimile to the Purchasers a copy of any written statement in support of
or relating to such claim or notice.
c. The default by any Purchaser of any of its obligations,
representations or warranties under this Agreement or the Transaction
Documents shall not be imputed to, and shall have no effect upon, any
other Purchaser or affect the Company's obligations under this Agreement
or any Transaction Document to any non-defaulting Purchaser.
3.8 Form D. The Company agrees to file a Form D with respect to the
Securities as required by Rule 506 under Regulation D and to provide a
copy thereof to each Purchaser promptly after such filing.
3.9 Future Financings.
a. Except for (i) issuance of the Underlying Shares; (ii) shares of
Common Stock deemed to have been issued by the Company in connection with
any plan which has been approved by the Board of Directors of the Company
prior to the date hereof, pursuant to which the Company's securities may
be issued to any employee, officer, director or consultant of the
Company; (iii) shares of Common Stock issuable upon the exercise of any
options or warrants outstanding on the date hereof and listed in Schedule
2.1(c) hereto; or (iv) shares of Common Stock issued or deemed to have
been issued as consideration for an acquisition by the Company of a
division, assets or business (or stock constituting any portion thereof)
from another Person, if the Company agrees to issue shares of Common
Stock or other securities convertible into or exchangeable or exercisable
for Common Stock (the "New Security") while any Securities are
outstanding at (a) an effective price per share which is less or may be
less (including, without limitation, any security which is convertible
into or exchangeable or exercisable for Common Stock at a price which may
change with the market price of the Common Stock) than the Conversion
Price (as defined in the Certificate of Designation) of the Securities as
of the date thereof or (b) an effective price per share greater than the
Conversion Price but less than the Average Per Share Market Value (as
defined in the Certificate of Designation) on the date of such issuance
or sale (either of (a) or (b) a "Future Financing"), the Company shall
provide to the Purchasers by 5:00 p.m. (New York time) on or before the
third (3rd) Trading Day (as defined below) after the decision to issue
the New Security has been made, written notice of the Future Financing
containing in reasonable detail (i) the proposed terms of the Future
Financing, (ii) the amount of the proceeds that will be raised and (iii)
the Person with whom such Future Financing shall be effected, and
attached to which shall be a term sheet or similar document relating
thereto (the "Future Financing Notice"). Upon receiving the Future
Financing Notice, each Purchaser shall have the pro rata right (based on
the principal amount of the Securities held by such Purchaser relative to
the aggregate principal amount of Securities outstanding) to purchase, on
the same terms as the Future Financing, an amount of New Securities
having a purchase price which shall not exceed the sum of the then
outstanding principal amount of, and any dividends owing on, such
Purchaser's Securities (valued at the greater of the Conversion Price or
the Average Per Share Market Price (as such terms are defined in the
Certificate of Designation) on the date of the Future Financing Notice).
In the event a Purchaser desires to exercise the right granted under this
Section 3.9, such Purchaser must notify the Company on or prior to the
fifth (5th) Trading Day after such Purchaser has received the Future
Financing Notice. In the event the terms and conditions of a proposed
Future Financing are amended in any respect after delivery of the Future
Financing Notice but prior to the closing of the proposed Future
Financing to which such Future Financing Notice relates, the Company
shall deliver a new notice to each Purchaser describing the amended terms
and conditions of the proposed Future Financing and each Purchaser
thereafter shall have an option during the five (5) Trading Days period
following delivery of such new notice to purchase its pro rata share
(based on the Purchaser's percentage of the principal amount of the
outstanding Securities such Purchaser owns) of the New Securities being
offered on the same terms as contemplated by such proposed Future
Financing, as amended. The foregoing sentence shall apply to successive
amendments to the terms and conditions of any proposed Future Financing.
In the event one or more Purchasers elects not to exercise its rights
granted hereby, the Company shall permit those Purchasers electing to
exercise the right granted under this Section 3.9 to purchase, on a pro
rata basis equal to its percentage ownership of the then outstanding
principal amount of the Securities, the sum of the number of shares of
Common Stock that the other Purchaser(s) were eligible to purchase, if
they had exercised their right hereunder. Those Purchasers desiring to
purchase additional shares of Common Stock must notify the Company of
their intention to do so within five (5) Trading Days after the Company
has informed the Purchasers of their right to purchase additional shares
of Common Stock. Within five (5) Trading Days of the termination of the
final notice period, the transactions contemplated by this Section 3.9
shall close, subject to the completion of mutually satisfactory
documentation, and the Company shall tender to each Purchaser
certificates representing the New Securities that it agreed to purchase
and the Purchasers shall make payment for the entire purchase price in
immediately available funds at the closing of such sale. "Trading Day"
shall mean a day on which the Nasdaq (or in the event the Common Stock is
not traded on Nasdaq, such other securities market on which the Common
Stock is listed) is open for trading.
3.10 Use of Proceeds. The Company shall use the proceeds from the sale
of the Securities for general corporate purposes.
3.11 Transactions with Affiliates. So long as any Securities are
outstanding the Company shall not, and shall cause each of its
Subsidiaries not to, enter into, amend, modify or supplement, or permit
any Subsidiary to enter into, amend, modify or supplement, any agreement,
transaction, commitment or arrangement with any of its or any
Subsidiary's officers, directors or persons who were officers or
directors at any time during the previous two years, stockholders who
beneficially own 5% or more of the Common Stock, or Affiliates or any
individual related by blood, marriage or adoption to any such individual
or with any entity in which any such entity or individual owns a 5% or
more beneficial interest (each a "Related Party"), except for (a)
customary employment arrangements and benefit programs on reasonable
terms, (b) any agreement, transaction, commitment or arrangement on an
arms-length basis on terms no less favorable than terms which would have
been obtainable from a Person other than such Related Party or (c) any
agreement, transaction, commitment or arrangement which is approved by a
majority of the disinterested directors of the Company. For purposes
hereof, any director who is also an officer of the Company or any
Subsidiary of the Company shall not be a disinterested director with
respect to any such agreement, transaction, commitment or arrangement.
"Affiliate" for purposes of this section only means, with respect to any
person or entity, another person or entity that, directly or indirectly,
(i) has a 5% or more equity interest in that person or entity, (ii) has
5% or more common ownership with that person or entity, (iii) controls
that person or entity or (iv) shares common control with that person or
entity. "Control" or "Controls" for purposes of this section means that
a person or entity has the power, direct or indirect, to conduct or
govern the policies of another person or entity.
3.12 Transfer Agent Instructions. At the Closing the Company shall issue
irrevocable instructions to its transfer agent (and shall issue to any
subsequent transfer agent as required), to issue certificates, registered
in the name of each such Purchaser or its respective nominee(s), for the
Conversion Shares in such amounts as specified from time to time by each
Purchaser to the Company in a form acceptable to such Purchasers (the
"Irrevocable Transfer Agent Instructions"). So long as required pursuant
to Section 3.1(b), all such certificates shall bear the restrictive
legend specified in Section 3.1(b) of this Agreement. The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 3.12, and stop transfer
instructions to give effect to Section 3.1 hereof (in the case of the
Conversion Shares, prior to registration of the Conversion Shares under
the Securities Act) will be given by the Company to its transfer agent
and that the Securities and the Conversion Shares shall otherwise be
freely transferable on the books and records of the Company as and to the
extent provided in this Agreement and the Transaction Documents. If a
Purchaser provides the Company with an opinion of counsel, the form and
substance of which opinion shall be customary for opinions of counsel in
comparable transactions, to the effect that a public sale, assignment or
transfer of the Securities and the Conversion Shares may be made without
registration under the Securities Act or the Purchaser provides the
Company with reasonable assurances that the Conversion Shares can be sold
pursuant to Rule 144(k) without any restriction as to the number of
securities acquired as of a particular date that can then be immediately
sold, the Company shall permit the transfer, and, in the case of the
Conversion Shares, promptly instruct its transfer agent to issue one or
more certificates in such name and in such denominations as specified by
such Purchaser and without any restrictive legend. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Purchasers by violating the intent and purpose of
the transactions contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under
this Section 3.12 will be inadequate and agrees, in the event of a beach
or threatened breach by the Company of the provisions of this Section
3.12, that the Purchasers shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being
required.
3.13 Press Release; Filing of Form 8-K. Subject to the provisions of
Section 6.10 hereof, prior to the opening of Nasdaq on June 14, 1999, the
Company shall file a press release in form and substance acceptable to
the Purchasers. On or before the 3rd business day following the
applicable Closing Date, the Company shall file a Form 8-K with the
Commission describing the terms of the transaction contemplated by this
Agreement and the Transaction Documents in the form required by the
Exchange Act.
3.14 Financial Information. The Company agrees to send the following to
each Purchaser prior to and during the Effectiveness Period (as defined
in the Registration Rights Agreement): (i) within three (3) business
days after the filing thereof with the Commission, a copy of its Annual
Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current
Reports on Form 8-K and any registration statements or amendments (other
than on Form S-8) filed pursuant to the Securities Act, (ii) on the same
day as the release thereof, facsimile copies of all press releases issued
by the Company or any of its Subsidiaries, and (iii) copies of any
notices and other information made available or given to the stockholders
of the Company generally, contemporaneously with the making available or
giving thereof to the stockholders.
3.15 Ordinary Course Brokerage and Trading. Subject to compliance with
all applicable securities laws and Nasdaq regulations, no Purchaser shall
be prohibited from engaging in its ordinary course brokerage and trading
activities in respect of the Company's Common Stock; provided that the
personnel engaged in such activities have not been involved with the
transactions contemplated hereby and have not been provided with
confidential information with respect to the Company.
3.16 Best Efforts. Each of the parties hereto shall use its best efforts
to satisfy each of the conditions to be satisfied by it as provided in
Article IV of this Agreement.
3.17 Corporate Existence. Until such time as all of the Purchasers
provide the Company with written notice that they do not beneficially own
any Securities, the Company shall maintain its corporate existence and
shall not sell all or substantially all of the Company's assets, except
in the event of a merger or consolidation or sale of all or substantially
all of the Company's assets, where the surviving or successor entity in
such transaction (i) assumes the Company's obligations hereunder and
under the agreements and instruments entered into in connection herewith
and (ii) is a publicly traded corporation whose common stock is listed
for trading on the Nasdaq, the New York Stock Exchange or the American
Stock Exchange.
3.18 No Violation of Applicable Law. Notwithstanding any provision of
this Agreement to the contrary, if the redemption of Securities or
Underlying Shares otherwise required under this Agreement, any applicable
Certificate of Designations or the Registration Rights Agreement would be
prohibited by the relevant provisions of the Business Corporation Law of
the State of Texas, such redemption shall be effected as soon as it is
permitted under such law; provided, however, that from the fifth (5th)
day after such redemption notice until such redemption price is paid in
full, interest on any such unpaid amount shall accrue and be payable at
the rate of 15% per annum in accordance with the applicable Certificate
of Designation.
3.19 Seniority; Exclusivity. No class of equity securities of the
Company will be senior to the Securities in right of dividends or other
payment, whether upon liquidation, dissolution or otherwise. The Company
shall not issue and sell any Securities, other than to the Purchasers
pursuant to this Agreement, without the prior written consent of each of
the Purchasers.
3.20 Conversion Obligations of the Company. The Company covenants to
convert the Securities and to deliver the Underlying Shares in accordance
with terms, conditions and time periods set forth in the respective
Certificate of Designation.
3.21 Subsequent Registrations. Other than Underlying Shares and other
Registrable Securities (as defined in the Registration Rights Agreement)
to be registered in accordance with the Registration Rights Agreement,
and except as shown on Schedule 2.1(r), the Company shall not, for a
period of not less than 90 Trading Days after the date that the
Registration Statement is declared effective by the Commission, without
the prior written consent of two-thirds of the Purchasers, (i) issue or
sell any of its or any of its Affiliates' equity or equity-equivalent
securities unless such issuance or sale is equal to or at a premium to
the Per Share Market Price (as defined in the Registration Rights
Agreement) on the date such issuance or sale, (ii) register for resale
any securities of the Company or (iii) have a registration statement
declared effective covering an issuance by the Company of any of its
securities. Any days that any Purchaser is unable to sell Underlying
Shares under a registration statement shall be added to such 90 Trading
Day period for the purposes of (i), (ii) and (iii) above.
ARTICLE IV.
CONDITIONS
4.1 Tranche A Closing Conditions.
a. Conditions Precedent to the Obligation of the Company to Sell the
Tranche A Preferred Stock. The obligation of the Company to sell the
Securities hereunder is subject to the satisfaction or waiver (with prior
written notice to each Purchaser) by the Company, at or before the
Tranche A Closing Date, of each of the following conditions:
(i) Accuracy of the Purchasers' Representations and Warranties. The
representations and warranties of each Purchaser in this Agreement shall
be true and correct in all material respects as of the date when made
(except for representations and warranties that speak as of a specific
date) and as of the Tranche A Closing Date;
(ii) Performance by the Purchasers. Each Purchaser shall have performed,
satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Purchaser at or prior to the Tranche A
Closing; and
(iii) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement or the Transaction Documents.
b. Conditions Precedent to the Obligation of the Purchasers to Purchase
the Tranche A Preferred Stock. The obligation of each Purchaser
hereunder to acquire and pay for the Securities is subject to the
satisfaction or waiver (with prior written notice to the Company and each
other Purchaser) by such Purchaser, at or before the Tranche A Closing,
of each of the following conditions:
(i) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company set forth in this Agreement
shall be true and correct in all respects as of the date when made and as
of the Tranche A Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date);
(ii) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Tranche A
Closing;
(iii) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement and the Transaction
Documents;
(iv) No Suspensions of Trading in Common Stock. The trading in the
Common Stock shall not have been suspended by the Commission or on Nasdaq
(except for any suspension of trading of limited duration solely to
permit dissemination of material information regarding the Company);
(v) Listing of Common Stock. The Common Stock shall be listed for
trading on Nasdaq;
(vi) Required Approvals. All Required Approvals shall have been obtained
and copies thereof delivered to such Purchaser other than those relating
solely to the Tranche B Preferred Stock;
(vii) Shares of Common Stock. The Company shall have duly reserved
the number of Underlying Shares required by this Agreement and the
Transaction Documents to be reserved for issuance upon conversion of the
Securities;
(viii) Change of Control. No Change of Control shall have occurred
between the date hereof and the Closing Date. "Change of Control" means
the occurrence of any of (i) an acquisition after the date hereof by an
individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act), other than the Purchasers or any of
their Affiliates, of in excess of 33% of the voting securities of the
Company, (ii) a replacement of more than one-half of the members of the
Company's Board of Directors which is not approved by those individuals
who are members of the Board of Directors on the date hereof in one or a
series of related transactions, (iii) the merger of the Company with or
into another entity, (iv) the consolidation or sale of all or
substantially all of the assets of the Company in one or a series of
related transactions, or (v) the execution by the Company of an agreement
to which the Company is a party or by which it is bound, providing for
any of the events set forth above in (i), (ii) , (iii), (iv) or (v);
(ix) Transfer Agent Instructions. The Irrevocable Transfer Agent
Instructions, in a form acceptable to the Purchasers, shall have been
delivered to and acknowledged in writing by the Company's transfer agent
with a copy forwarded to each Purchaser; and
(x) Resolutions. The Board of Directors of the Company shall have
adopted resolutions consistent with Section 2.1(b) and in a form
reasonably acceptable to each Purchaser (the "Resolutions").
c. Documents and Certificates. At the Tranche A Closing, the Company
shall have delivered to the Purchasers the following in form and
substance reasonably satisfactory to the Purchasers:
(i) Opinion. An opinion of the Company's legal counsel in the form
attached hereto as Exhibit C dated as of the Tranche A Closing Date;
(ii) Security. A Security(ies) representing the principal amount of
Securities purchased by such Purchaser as set forth next to such
Purchaser's name on Schedule I, registered in the name of such Purchaser,
each in form satisfactory to the Purchaser;
(iii) Registration Rights. The Company shall have executed and
delivered the Registration Rights Agreement;
(iv) Officer's Certificate. An Officer's Certificate dated the Tranche A
Closing Date and signed by an executive officer of the Company confirming
the accuracy of the Company's representations, warranties and covenants
as of the Closing Date and confirming the compliance by the Company with
the conditions precedent set forth in this Section 4.1 as of the Tranche
A Closing Date;
(v) Secretary's Certificate. Within ten (10) Business Days of the
Closing, a Secretary's Certificate dated the Tranche A Closing Date and
signed by the Secretary or Assistant Secretary of the Company certifying
(A) that attached thereto is a true and complete copy of the Certificate
of Incorporation of the Company, as in effect on the Tranche A Closing
Date, (B) that attached thereto is a true and complete copy of the By-
laws of the Company, as in effect on the Closing Date and (C) that
attached thereto is a true and complete copy of the Resolutions duly
adopted by the Board of Directors of the Company authorizing the
execution, delivery and performance of this Agreement and of the
Transaction Documents, and that such Resolutions have not been modified,
rescinded or revoked;
(vi) Certificates of Incorporation. Within ten (10) Business Days of the
Closing, the Company shall deliver to each of the Purchasers a copy of a
certificate evidencing the incorporation and good standing of the Company
and each Subsidiary, in such corporation's state of incorporation issued
by the Secretary of State of such state of incorporation as of a date
within ten days of the Closing Date. The Company shall have delivered to
each of the Purchasers a copy of its Certificate of Incorporation as
certified by the Secretary of State of the State of Texas within ten days
of the Tranche A Closing Date;
(vii) Certificates of Designation. The Certificate of Designation
covering the Tranche A Preferred Stock shall have been duly approved by
the Company's Board of Directors and filed with the Secretary of State of
Texas, and the Company shall have delivered a copy thereof to the
Purchaser certified as filed by the office of the Secretary of State of
Texas;
(viii) Transfer Agent Letter. The Company shall have delivered to
each Purchaser a letter from the Company's transfer agent certifying the
number of shares of Common Stock outstanding as of a date within five
days of the Closing Date;
(ix) Lockup Letters. Each of the directors and executive officers of the
Company shall have delivered to the Purchasers a letter in the form of
Exhibit D hereto pursuant to which he or she agrees not to offer or sell
shares of Common Stock he or she beneficially owns during any time period
when any Purchaser is unable to freely offer for sale or to sell any
Underlying shares pursuant to an effective registration statement; and
(x) Other Documents. The Company shall have delivered to each Purchaser
such other documents relating to the transactions contemplated by the
Transaction Documents as the Purchasers or its counsel may reasonably
request.
4.2 Tranche B Closing Conditions.
a. Conditions Precedent to the Obligation of the Company to Sell the
Tranche B Preferred Stock. The obligation of the Company to sell the
Tranche B Preferred Stock hereunder is subject to the satisfaction or
waiver (with prior written notice to each Purchaser) by the Company, at
or before the Tranche B Closing, of each of the following conditions:
(i) Accuracy of the Purchasers' Representations and Warranties. The
representations and warranties of each Purchaser in this Agreement shall
be true and correct in all material respects as of the date when made and
as of the Tranche B Closing Date (except for representations and
warranties that speak as of a specific date);
(ii) Performance by the Purchasers. Each Purchaser shall have performed,
satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Purchaser at or prior to the Tranche B
Closing; and
(iii) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement and the Transaction
Documents.
b. Conditions Precedent to the Obligation of the Purchasers to Purchase
the Tranche B Preferred Stock. The obligation of each Purchaser
hereunder to acquire and pay for the Tranche B Preferred Stock is subject
to the satisfaction or waiver by each Purchaser, at or before the Tranche
B Closing, of each of the following conditions:
(i) Tranche A. The Tranche A Closing shall have occurred;
(ii) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company contained herein and in the
Registration Rights Agreement shall be true and correct in all respects
as of the date when made and as of the Tranche B Closing Date (except for
representations and warranties that speak as of a specific date);
(iii) Performance by the Company. The Company shall have performed,
satisfied and complied in all respects with all covenants, agreements and
conditions required by this Agreement and the Transfer Documents to be
performed, satisfied or complied with by the Company at or prior to the
Tranche B Closing Date;
(iv) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court of governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement and the Transfer Documents;
(v) Registration Statement for Tranche A Preferred Stock. The
Registration Statement covering the Underlying Shares of the Tranche A
Preferred Stock shall have been declared effective under the Securities
Act by the Commission, and on the Tranche B Closing such Registration
Statement shall be effective, not subject to any stop order and not be
subject to any suspension pursuant to Section 3(p) of the Registration
Rights Agreement, and shall have been effective and shall not have been
subject to any stop order for the thirty (30) business days prior to such
Closing Date and no stop order shall be pending or threatened as at such
Closing Date;
(vi) Adverse Changes. Since the date of the financial statements included
in the Company's Quarterly Report on Form 10-Q or Annual Report on Form
10-K, whichever is more recent, last filed prior to the date of this
Agreement, no event which had a Material Adverse Effect shall have
occurred which is not disclosed on any Schedule hereto or otherwise in
writing to each of the Purchasers;
(vii) Litigation. No litigation shall have been instituted or
threatened against the Company which could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect;
(viii) Management. There shall have been no substantial changes in
the position or responsibilities of the Chief Executive Officer and the
Chief Financial Officer of the Company;
(ix) No Suspensions of Trading in Common Stock. The trading in the Common
Stock shall not have been suspended by the Commission or on Nasdaq
(except for any suspension of trading of limited duration solely to
permit dissemination of material information regarding the Company);
(x) Listing of Common Stock. The Underlying Shares shall be listed for
trading on Nasdaq, or other exchange acceptable to Purchasers, on the
Tranche B Closing Date;
(xi) Required Approvals. All Required Approvals shall have been obtained;
(xii) Shares of Common Stock. The Company shall have duly reserved
the number of Underlying Shares required by this Agreement to be reserved
for issuance upon the conversion of the Tranche B Preferred Stock.;
(xiii) Certificate of Designation. The Company shall have filed with
the Secretary of State of the State of Texas the Certificate of
Designation with respect to the Tranche B Preferred Stock;
(xiv) Performance of Conversion/Exercise Obligations. The Company
shall have delivered Underlying Shares upon conversion of the Tranche A
Preferred Stock and otherwise performed its obligations in accordance
with the terms, conditions and timing requirements of the Certificate of
Designation and the other Transaction Documents;
(xv) Change of Control. No Change of Control in the Company shall have
occurred; and
(xvi) Transfer Agent Instructions. The Irrevocable Transfer Agent
Instructions, in a form acceptable to the Purchasers, shall have been
delivered to and acknowledged in writing by the Company's transfer agent
with a copy forwarded to each Purchaser.
c. Documents and Certificates. At the Tranche B Closing, the Company
shall have delivered to the Purchasers, the following in form and
substance reasonably satisfactory to the Purchasers:
(i) Opinion. An opinion of the Company's legal counsel, in substantially
the form attached hereto as Exhibit D dated as of the Tranche
B Closing Date;
(ii) Securities. A Security(ies) representing the principal amount of
Securities purchased by such Purchaser as set forth next to such
Purchaser's name on Schedule I, registered in the name of such Purchaser,
each in form satisfactory to the Purchaser;
(iii) Officer's Certificate. The Company shall deliver to the
Purchasers an Officer's Certificate dated the Tranche B Closing Date and
signed by an executive officer of the Company confirming the accuracy of
the Company's representations, warranties and covenants as of the Tranche
B Closing Date and confirming the compliance by the Company with the
conditions precedent set forth in this Section 4.2(b) as of the Tranche B
Closing Date; and
(iv) Secretary's Certificate. A Secretary's Certificate dated the
Tranche B Closing Date and signed by the Secretary or Assistant Secretary
of the Company certifying (A) that attached thereto is a true and
complete copy of the Certificate of Incorporation of the Company, as in
effect on the Tranche B Closing Date, (B) that attached thereto is a true
and complete copy of the bylaws of the Company, as in effect on the
Tranche B Closing Date and (C) that attached thereto is a true and
complete copy of the resolutions duly adopted by the Board of Directors
of the Company authorizing the execution, delivery and performance of the
Agreement and the Transaction Documents and that such resolutions have
not been modified, rescinded or revoked;
ARTICLE V.
INDEMNIFICATION
5.1 Indemnification. Except to the extent that matters which could be
covered by this Section 5 are covered by Section 5 of the Registration
Rights Agreement, in consideration of the Purchasers execution and
delivery of this Agreement and the Transaction Documents and acquiring
the Securities and the Conversion Shares thereunder and in addition to
all of the Company's other obligations under this Agreement and the
Transaction Documents, the Company shall defend, protect, indemnify and
hold harmless each Purchaser, its past and present Affiliates and their
successors and assigns (in accordance with the provisions of Section 6.5
hereof), each other holder of the Underlying Shares and all of their
stockholders, officers, directors, employees and direct or indirect
investors and any of the foregoing Person's agents or other
representatives (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all actions,
causes of action, suits, claims, losses, proceedings, costs (as
incurred), penalties, fees (including legal fees and expenses),
liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for
which indemnification hereunder is sought), and including interest,
penalties and attorneys' fees and disbursements (the "Indemnified
Liabilities"), incurred by any Indemnitee as a result of, or arising out
of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in this Agreement or in
the Transaction Documents, or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in this Agreement or the
Transaction Documents, or any other certificate, instrument or document
contemplated hereby or thereby, or (c) any cause of action, suit or claim
brought or made, other than by the Company, against such Indemnitee and
arising out of or resulting from (i) the execution, delivery, performance
or enforcement of this Agreement or the Transaction Documents, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or (iii)
solely the status of such Purchasers or holder of the Securities or the
Conversion Shares as an investor in the Company. The indemnification
obligations of the Company under this paragraph shall be in addition to
any liability which the Company may otherwise have, shall extend upon the
same terms and conditions to any Affiliate of the Purchasers and
partners, directors, agents, employees and controlling Persons (if any),
as the case may be, of the Purchasers and any such Affiliate, and shall
be binding upon and inure to the benefit of any successors, assigns,
heirs and personal representatives of the Company, the Purchasers and any
such Affiliate and any such Person. The Company also agrees that neither
the Purchasers nor any such Affiliates, partners, directors, agents,
employees or controlling Persons shall have any liability to the Company
or any Person asserting claims on behalf of or in right of the Company in
connection with or as a result of the consummation of this Agreement or
any of the Transaction Documents except to the extent that any losses,
claims, damages, liabilities or expenses incurred by the Company result
from the gross negligence or willful misconduct of such Purchaser or
entity in connection with the transactions contemplated by this Agreement
or the Transaction Documents. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
ARTICLE VI.
MISCELLANEOUS
6.1 Entire Agreement. This Agreement, together with the Exhibits and
Schedules hereto and the Transaction Documents 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.
6.2 Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered (i) upon receipt,
when delivered personally; (ii) upon receipt, when sent by facsimile,
provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party (if received by 7:00 p.m.
EST where such notice is received) or the first business day following
such delivery (if received after 7:00 p.m. EST where such notice is
received); or (iii) one business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to
the party to receive the same. The addresses and facsimile numbers for
such communications shall be:
If to the Company:
UniView Technologies Corp.
00000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxx Xxxxxx
With a copy to:
UniView Technologies Corp.
00000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, General Counsel
If to the Transfer Agent:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx
If to Xxxxx Xxxxxxx Strategic Growth Fund, Ltd. to:
________________________________
________________________________
________________________________
Attn: ____________________________
Phone: __________________________
Fax: ____________________________
If to Xxxxx Xxxxxxx Strategic Growth Fund, L.P. to:
________________________________
________________________________
________________________________
Attn: ____________________________
Phone: __________________________
Fax: ____________________________
With a copy, in the case of Notice to Xxxxx Xxxxxxx Strategic
Growth Fund, Ltd. or Xxxxx Xxxxxxx Strategic Growth Fund, L.P. to:
________________________________
________________________________
________________________________
Attn: ____________________________
Phone: __________________________
Fax: ____________________________
Each party shall provide written notice to the other party of any change
in address or facsimile number in accordance with the provisions hereof.
6.3 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 both 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 other provision,
condition or requirement 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 accruing to it thereafter. Notwithstanding
the foregoing, no such amendment shall be effective to the extent that it
applies to less than all of the holders of the Securities outstanding.
The Company shall not offer or pay any consideration to a Purchaser for
consenting to such an amendment or waiver unless the same consideration
is offered to each Purchaser and the same consideration is paid to each
Purchaser which consents to such amendment or waiver.
6.4 Headings. 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.
6.5 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 each of the
Purchasers. The Purchasers may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Company,
provided, that any assignees must make the representations and warranties
set forth in Section 2.2 and otherwise comply with the terms of this
Agreement otherwise applicable to its assignor. This provision shall not
limit a Purchaser's right to transfer securities in accordance with all
of the terms of this Agreement or the Transaction Documents.
6.6 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof
be enforced by, any other Person.
6.7 Governing Law. 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 hereby irrevocably submits to the nonexclusive 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,
and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
improper. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
6.8 Survival. The representations and warranties of the Company and the
Purchasers contained in Sections 2.1 and 2.2, the agreements and
covenants set forth in Section 3, and the indemnification provisions set
forth in Section 5, shall survive the Closing and any conversion of the
Securities regardless of any investigation made by or on behalf of the
such Purchaser or by or on behalf of the Company, except that, in the
case of representations and warranties such survival shall be limited to
the period of six (6) years following the Closing Date on which they were
made or deemed to have been made (other than with respect to any claim by
a third party against the party to this Agreement who seeks to assert a
claim based on such representations and warranties). This section shall
have no effect on the survival of the indemnification provisions of the
Registration Rights Agreement.
6.9 Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party, 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) the same with
the same force and effect as if such facsimile signature page were an
original thereof.
6.10 Publicity. The Company and the Purchasers shall consult with each
other in issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby and neither party
shall issue any such press release or otherwise make any such public
statement without the prior written consent of the other, which consent
shall not be unreasonably withheld or delayed, except that no prior
consent shall be required if such disclosure is required by law, in which
such case the disclosing party shall provide the other party with prior
notice of such public statement. The Company shall not publicly or
otherwise disclose the names of any of the Purchasers without each such
Purchaser's prior written consent. The Purchasers and their affiliated
companies shall, without further cost, have the right to use in its
advertising, marketing or other similar materials, the Company's logo and
trademarks and all or parts of the Company's press releases that focus on
the Transaction forming the subject matter of this Agreement or which
make reference to the Transaction. The Purchasers understand that this
grant by the Company only waives objections that the Company might have
to the use of such materials by the Purchasers and in no way constitutes
a representation by the Company that references in such materials to the
activities of third-parties have been cleared or constitute a fair use.
6.11 Severability. In case any one or more of the provisions of this
Agreement shall 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
which shall be a reasonable substitute therefor, and upon so agreeing,
shall incorporate such substitute provision in this Agreement.
6.12 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the
Purchasers will be entitled to specific performance of the obligations of
the Company under this Agreement or the Transaction Documents without the
showing of economic loss and without any bond or other security being
required. Each of the Company and the Purchasers (severally and not
jointly) agree that monetary damages would not be adequate compensation
for any loss incurred by reason of any breach of its obligations
described in the foregoing sentence and hereby agree to waive in any
action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
6.13 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any
other Purchaser hereunder. Nothing contained herein or in any other
agreement or document delivered at any closing, and no action taken by
any Purchaser pursuant hereto or 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 with respect to such obligations or the
transactions contemplated by this Agreement. Each Purchaser shall be
entitled to protect and enforce its rights, including without limitation
the rights arising out of this Agreement or out of the 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.
6.14 Payment Set Aside. To the extent that the Company makes a payment
or payments to the Purchasers hereunder or pursuant to the Transaction
Documents or the Purchasers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared 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.
6.15 Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
6.16 Fees and Expenses. Except as set forth 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 Agreement; provided, however,
that the Company shall pay to Xxxxx Xxxxxxx Asset Management $45,000, of
which $15,000 shall have been paid upon execution of the term sheet and
$30,000 of which shall be paid upon execution of this Agreement. The
Company shall pay all stamp and other taxes and duties levied in
connection with the issuance of the Conversion Shares pursuant hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
persons as of the date first indicated above.
UNIVIEW TECHNOLOGIES CORP.
By:
Name: Xxxxxxx X. Xxxxxx
Title: President
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, LTD.
By: Xxxxx Xxxxxxx Asset Management, LLC
By:
Name:
Title:
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, L.P.
By: Xxxxx Xxxxxxx Capital, LLC
its general partner
By:
Name:
Title:
Schedule I
Name of Purchaser Purchase Price of Number of Securities
Securities
Xxxxx Xxxxxxx $11,525,000 461
Strategic Growth
Fund, Ltd.
Xxxxx Xxxxxxx $6,475,000 259
Strategic Growth
Fund, L.P.
Schedule II
Name of Purchaser Address
Xxxxx Xxxxxxx Strategic Growth 000 Xxxx 00xx Xxxxxx, 00xx
Fund, Ltd. Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Residence: Grand Cayman,
Cayman Islands
Xxxxx Xxxxxxx Strategic Growth 000 Xxxx 00xx Xxxxxx, 00xx
Fund, X.X. Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Residence: New York, New York
Exhibit A
[Form of Certificate of Designation]
Exhibit B
[Registration Rights Agreement]
Exhibit C
[Company's Legal Opinion]
Exhibit D
[Form of Lockup Letter]
