EXHIBIT 99.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of October
15, 1996 by and among INTELLIGENT ELECTRONICS, INC., a Pennsylvania
corporation, with headquarters located at 000 Xxxxxxxxx Xxxxxxxxx, Xxxxx,
Xxxxxxxxxxxx 00000 (the "Company"), and the purchaser set forth on the
signature pages hereto (the "Buyer").
WHEREAS:
A. The Company and the Buyer are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506
under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "1933 Act");
B. The Company has authorized a new series of preferred stock, designated
as its Series B Convertible Preferred Stock (the "Preferred Stock"), having
the rights, preferences and privileges set forth in the Statement with
Respect to Shares attached hereto as Exhibit "A" (the "Statement with Respect
to Shares");
C. The Preferred Stock is convertible into shares of Common Stock, par
value $.01 per share, of the Company (the "Common Stock"), upon the terms and
subject to the limitations and conditions set forth in the Statement with
Respect to Shares;
D. The Buyer desires to purchase and the Company desires to issue and sell,
upon the terms and conditions set forth in this Agreement, (i) an aggregate
of Fifteen Thousand (15,000) shares of Preferred Stock, having a stated value
of One Thousand Dollars ($1,000) per share, upon the terms and subject to the
limitations and conditions set forth in the Statement with Respect to Shares,
(ii) warrants (the "First Warrants") in the form attached hereto as Exhibit
"B" to acquire 225,000 shares of Common Stock at the per share price provided
in Section 1(a)(ii) hereof and (iii) additional warrants (the "Second
Warrants" and, together with the First Warrants, the "Warrants") in the form
attached hereto as "Exhibit B" to acquire an additional 225,000 shares of
Common Stock at the per share price provided in Section 1(a)(iii) hereof, for
an aggregate purchase price, as determined in accordance with Section 1(d)
hereof (the "Aggregate Purchase Price"), of Fifteen Million Dollars
($15,000,000);
E. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement,
in the form attached hereto as Exhibit "C" (the "Registration Rights
Agreement"), pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations
promulgated thereunder, and applicable state securities laws.
NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS.
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a. Purchase of Preferred Shares and Warrants. On the terms and
subject to the conditions set forth herein, the Company shall issue and sell
to Buyer and Buyer shall purchase from the Company (i) 15,000 shares of
Series B Preferred Stock (collectively, together with any Preferred Stock
issued in replacement thereof or as a dividend thereon or otherwise with
respect thereto in accordance with the terms thereof, the "Preferred
Shares"), (ii) First Warrants to purchase shares of Common Stock at a price
per share equal to 125% of the average of the closing bid prices for the
Common Stock as reported by NASDAQ-NM (as defined herein), or on the
principal securities market on which the Common Stock is then being traded
(such closing bid price being hereinafter referred to as the "Closing Bid
Price"), for the five (5) consecutive Trading Days (as defined in the
Statement with Respect to Shares) ending on the last Trading Day immediately
prior to the Closing Date in respect of the First Closing and (iii) Second
Warrants to purchase shares of Common Stock at a price per share, subject to
the antidilution protections contained in Sections 4(a)-(f) of the Warrants
as if the Second Warrants had been issued at the First Closing, equal to 125%
of the average of the closing bid prices for the Common Stock as reported by
NASDAQ-NM, or on the principal securities exchange or other securities market
on which the Common Stock is then being traded, for the five (5) consecutive
Trading Days ending on the last Trading Day immediately prior to the Second
Warrant Issue Date (as defined below). The issuance, sale and purchase of the
Preferred Shares and Warrants shall take place in two (2) separate closings,
the first of which is hereinafter referred to as the "First Closing" and the
second of which is hereinafter referred to as the "Second Closing." Subject
to the satisfaction (or waiver) of the conditions thereto set forth in
Section 6 and Section 7 below (A) at the First Closing, the Company shall
issue and sell to the Buyer and the Buyer shall purchase from the Company
Five Thousand (5,000) Preferred Shares and the First Warrants for an
aggregate purchase price of Five Million Dollars ($5,000,000) and (B) at the
Second Closing, subject to the penultimate sentence of this paragraph 1(a),
the Company shall issue and sell to the Buyer and the Buyer shall purchase
from the Company Ten Thousand (10,000) Preferred Shares for an aggregate
purchase price of Ten Million Dollars ($10,000,000). On the later of (i) the
Second Closing and (ii) the ninetieth (90th) day following the Closing Date
(as defined below) in respect of the First Closing (such later date is
referred to herein as the "Second Warrant Issue Date"), the Company shall
issue to Buyer the Second Warrants. If the registration statement(s) (the
"Registration Statement") filed by the Company pursuant to Section 2(a) of
the Registration Rights Agreement covering the resale of the Registrable
Securities (as defined in the Registration Rights Agreement) has not been
declared effective within 165 days of the filing of such Registration
Statement, then, in such event, between 166 days after the filing of such
Registration Statement and 256 days after such filing, the Buyer shall have
the right, but shall not be obligated, to purchase the Ten Thousand (10,000)
Preferred Shares issuable at the Second Closing. Notwithstanding the
foregoing, if there shall occur any Mandatory Redemption Event (as defined in
the Statement with Respect to Shares) prior to the Second Closing, the
Company shall, on the date of such occurrence, issue to the Buyer, for no
additional consideration, the Second Warrants.
b. Form of Payment.
(i) On the Closing Date in respect of the First Closing, (a)
Buyer shall pay Five Million Dollars ($5,000,000) for Five Thousand (5,000)
Preferred Shares and all of the First Warrants issuable hereunder by wire
transfer of immediately available funds to the Company, in accordance with
the Company's written wiring instructions, against delivery of duly executed
certificates representing such number of Preferred Shares and First Warrants
which the Buyer is then purchasing, and (b) the Company shall deliver such
certificates against delivery of such funds.
(ii) On the Closing Date in respect of the Second Closing, (a)
Buyer shall pay $10,000,000 (such amount herein referred to as the "Second
Closing Price") for (i) Ten Thousand (10,000) Preferred Shares and (ii) if
such date is the Second Warrant Issue Date, all of the Second Warrants
issuable hereunder by wire transfer of immediately available funds to the
Company, in accordance with the Company's written wiring instructions,
against delivery of duly executed certificates representing such number of
Preferred Shares and Second Warrants which the Buyer is then purchasing and
(b) the Company shall deliver such certificates against delivery of such
funds.
c. Closing Dates. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and
time of the issuance and sale of the Preferred Shares and Warrants pursuant
to this Agreement (the "Closing Dates") shall be (i) in the case of the First
Closing, 12:00 noon Eastern Time in Philadelphia, PA on October 16, 1996
(subject to a two (2) business day grace period at either party's option),
(ii) in the case of the Second Closing, 12:00 noon Eastern Time in
Philadelphia, PA on the fifth (5th) business day following notification of
satisfaction (or waiver) of the conditions to such closing set forth in
Sections 7(a) and 7(b) below or, in each case, such other mutually agreed
upon time. The closings shall occur on the Closing Dates at the offices of
Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx.
d. Aggregate Purchase Price. Subject to the terms and conditions
of Sections 1 and 7 of this Agreement, the Aggregate Purchase Price shall be
Fifteen Million Dollars ($15,000,000), which shall be allocated
$14,995,500.00 to the Preferred Stock and $4,500.00 to the Warrants.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
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Buyer represents and warrants (which representations and warranties
shall be true and correct on date hereof and on the date of each closing
hereunder as if made on each of such dates) to the Company that:
a. Organization. The Buyer is an unlimited liability company
duly organized and existing and in good standing under the laws of the Cayman
Islands, and has the requisite corporate power to own its properties and to
carry on its business as it is now being conducted.
b. Authorization; Enforcement. (i) The Buyer has the requisite
corporate power and authority to enter into and perform this Agreement and
the Registration Rights Agreement, (ii) the execution and delivery of this
Agreement and the Registration Rights Agreement by the Buyer and the
consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action required by the Buyer's Articles
of Association and Memorandum of Association, Certificate of Incorporation
and otherwise under applicable corporate (or equivalent) law, and no further
consent or authorization of the Buyer, its directors or members is required
with respect thereto, (iii) this Agreement has been duly executed and
delivered by the Buyer, and (iv) this Agreement constitutes, and upon
execution and delivery by the Buyer of the Registration Rights Agreement such
instrument will constitute, a valid and binding obligation of the Buyer
enforceable against the Buyer in accordance with its terms.
c. No Conflicts. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Buyer and the
consummation by the Buyer of the transactions contemplated hereby and thereby
will not result in a violation of the Buyer's Certificate of Incorporation,
Memorandum of Association or Articles of Association.
d. Investment Purpose. The Buyer is purchasing (i) the Preferred
Shares, (ii) the shares of Common Stock or other securities issuable upon
conversion thereof (including, without limitation, upon conversion of any
Premium Amount (as defined in the Statement with Respect to Shares) and such
additional shares, if any, as are issuable as a result of the events
described in Articles VI.E. and VI.F. of the Statement with Respect to
Shares) (collectively, the "Conversion Shares"), (iii) the Warrants and (iv)
the shares of Common Stock or other securities issuable upon exercise of the
Warrants (the "Warrant Shares") (collectively, the "Securities" and
individually, a "Security") for its own account for investment only and not
with a present view towards the public sale or distribution thereof, except
pursuant to sales registered under the 1933 Act.
e. Accredited Investor Status. The Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D.
f. Reliance on Exemptions. The Buyer understands that the
Securities are being offered and sold to it in reliance upon specific
exemptions from the registration requirements of United States federal and
state securities laws and that the Company is relying upon the truth and
accuracy of, and the Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the availability of such exemptions and
the eligibility of the Buyer to acquire the Preferred Shares and Warrants.
Upon each conversion of Preferred Shares which is not exempt from
registration under the 1933 Act pursuant to Section 3(a)(9) thereof, and upon
each exercise of Warrants, the Buyer shall be deemed to have restated the
representations and warranties set forth in paragraphs 2(a) through (f) of
this Agreement on and as of the date of each conversion or exercise.
g. Information. The Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by the Buyer or its advisors. The Buyer
and its advisors, if any, have been afforded the opportunity to ask questions
of the Company and have received what the Buyer believes to be satisfactory
answers to any such inquiries. Neither such inquiries nor any other due
diligence investigation conducted by Buyer or any of its advisors or
representatives shall modify, amend or affect Buyer's right to rely on the
Company's representations and warranties contained in Section 3 below. The
Buyer understands that its investment in the Securities involves a high
degree of risk.
h. Governmental Review. The Buyer 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.
i. Transfer or Resale. The Buyer understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not been
and are not being registered under the 1933 Act or any state securities laws,
and may not be transferred unless (a) subsequently registered thereunder, or
(b) the Buyer shall have delivered to the Company an opinion of counsel, in
form, substance and scope customary to opinions typically delivered in
transactions of this nature, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration or (c) sold pursuant to Rule 144 promulgated under the 1933 Act
(or a successor rule); (ii) any sale of such Securities made in reliance on
Rule 144 may be made only in accordance with the terms of said Rule and
further, if said Rule is not applicable, any resale of such Securities under
circumstances in which the seller (or the person through whom the sale is
made) may be deemed to be an underwriter (as that term is defined in the 0000
Xxx) may require compliance with some other exemption under the 1933 Act or
the rules and regulations of the SEC thereunder; and (iii) neither the
Company nor any other person is under any obligation to register such
Securities under the 1933 Act or any state securities laws or to comply with
the terms and conditions of any exemption thereunder (in each case, other
than pursuant to the Registration Rights Agreement).
j. Legends. The Buyer understands that the certificates for the
Preferred Shares, Warrants and, until such time as the Conversion Shares and
Warrant Shares have been registered under the 1933 Act as contemplated by the
Registration Rights Agreement, the Conversion Shares and Warrant Shares, may
bear a restrictive legend in substantially the following form (and a stop-
transfer order may be placed against transfer of the certificates for such
Securities):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities have been acquired for investment and may not be sold,
transferred or assigned in the absence of an effective registration
statement for the securities under said Act, or an opinion of
counsel, in form, substance and scope customary to opinions
typically delivered in transactions of this nature, that
registration is not required under said Act or unless sold pursuant
to Rule 144 under said Act."
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Security upon which it
is stamped, if, unless otherwise required by state securities laws, (a) the
sale of such Security is registered under the 1933 Act, or (b) such holder
provides the Company with an opinion of counsel, in form, substance and scope
customary to opinions typically delivered in transactions of this nature, to
the effect that (i) a public sale or transfer of such Security may be made
without registration under the 1933 Act or (ii) such Security can be sold
pursuant to Rule 144 under the 1933 Act (or a successor rule thereto) without
any restriction as to the number of Securities acquired as of a particular
date that can then be immediately sold. The Buyer agrees to sell all
Securities, including those represented by a certificate(s) from which the
legend has been removed, in compliance with applicable securities law.
k. Authorization; Enforcement. This Agreement and the
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of the Buyer and are valid and binding agreements of
the Buyer enforceable in accordance with their terms.
l. Residency. The Buyer is a resident of the Cayman Islands.
m. Hedged Position. The Buyer has not established, and prior to
the Closing Date in respect of the First Closing, the Buyer will not
establish, a hedged position in anticipation of the transactions provided for
herein.
n. Compliance with Laws. The Buyer represents and warrants to
the Company that it has complied, and the Buyer covenants that it will
comply, with all applicable laws and regulations with respect to the
acquisition, holding and disposition of the Securities.
o. No Brokers. The Buyer has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments relating to this Agreement or the transactions contemplated
hereby, except for dealings with Susquehanna Financial Group, Inc. ("SFG")
and Xxxxxx Xxxxxxxxxx Xxxxx, Inc. ("JMS"), whose commissions and fees will be
paid by the Company as contemplated by Section 3(l) hereof.
p. Balance Sheet. The Buyer has delivered to the Company a true
and complete copy of its July 31, 1996 balance sheet. Such balance sheet
fairly presents in all material respects the consolidated financial position
of the Buyer as of the date thereof. The Buyer's financial position as of
the date of the First Closing has not materially deteriorated from its
financial position as of July 31, 1996.
q. Other Information. The Buyer has delivered to the Company a
true and complete copy of item 2 to the Schedule 13D filed by the Buyer with
the SEC with respect to its beneficial ownership of SC&T International, Inc.
Common Stock and the information provided therein is true and correct in all
material respects as of the date hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents and warrants (which representations and
warranties shall be true and correct on date hereof and on the date of each
closing hereunder as if made on each of such dates) to Buyer that:
a. Organization and Qualification. The Company and each of its
subsidiaries is a corporation duly organized and existing in good standing
under the laws of the jurisdiction in which it is incorporated, and has the
requisite corporate power to own its properties and to carry on its business
as now being conducted. The Company and each of its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary and where the failure so to qualify would have
a Material Adverse Effect. "Material Adverse Effect" means any material
adverse effect on the operations, properties, condition (financial or
otherwise) or prospects of the Company and its subsidiaries, taken as a
whole, or on the transactions contemplated hereby.
b. Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Statement with Respect to Shares, the Registration Rights Agreement and the
Warrants, and to issue the Securities, in accordance with the terms hereof
and thereof, (ii) the execution and delivery of this Agreement, the
Registration Rights Agreement and the Warrants by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including without limitation the issuance of the Preferred Shares and the
Warrants and the issuance and reservation for issuance of the Conversion
Shares and Warrant Shares issuable upon conversion or exercise thereof) have
been duly authorized by the Company's Board of Directors and no further
consent or authorization of the Company, its Board or Directors, or its
stockholders is required with respect thereto, (iii) this Agreement has been
duly executed and delivered by the Company, and (iv) this Agreement
constitutes, and upon execution and delivery by the Company of the
Registration Rights Agreement and the Warrants, each of such instruments will
constitute, a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.
c. Capitalization. As of September 30, 1996, the authorized
capital stock of the Company consists of (i) 100,000,000 shares of Common
Stock of which 34,789,062 shares are issued and outstanding, 9,020,786 shares
are reserved for issuance pursuant to the Company's stock option plans, no
shares are reserved for issuance pursuant to securities (other than the
Preferred Shares and the Warrants) exercisable for, or convertible into or
exchangeable for shares of Common Stock and 6,000,000 shares are reserved for
issuance upon conversion of the Preferred Shares and exercise of the Warrants
(subject to adjustment pursuant to the Company's covenant set forth in
Section 4(h) below); and (ii) 15,000,000 shares of preferred stock, of which
no shares are issued and outstanding (exclusive of the Preferred Shares).
All of such outstanding shares of capital stock have been, or upon issuance
will be, validly issued, fully paid and nonassessable. No shares of capital
stock of the Company are subject to (x) preemptive rights or any other
similar rights of the securityholders of the Company under any statute to
which the Company is subject or pursuant to the Company's Articles of
Incorporation (as defined below) or By-laws (as defined below) or through any
action or failure to act of the Company or (y) any liens or encumbrances
imposed through the actions or failure to act of the Company. Except as
disclosed in Schedule 3(c), as of September 30, 1996, 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 any shares of capital stock of the
Company or any of its subsidiaries, or arrangements by which the Company or
any of its subsidiaries is or will become bound to issue additional shares of
capital stock of the Company or any of its subsidiaries. Except as disclosed
in Schedule 3(c), there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any
of its or their securities under the 1933 Act (except the Registration Rights
Agreement). Since September 30, 1996, except as disclosed in Schedule 3(c),
neither the Company nor any of its subsidiaries has issued any shares of
capital stock (other than shares of Common Stock issuable upon exercise of
stock options) or any options, warrants, scrip or rights convertible into or
exchangeable for any shares of capital stock of the Company or any of its
subsidiaries (other than options issued under stock option plans). The
Company has furnished to the Buyer true and correct copies of the Company's
Articles of Incorporation as in effect on the date hereof ("Articles of
Incorporation"), the Company's By-laws, as in effect on the date hereof (the
"By-laws"). The Company shall provide the Buyer with a written update of
this representation signed by the Company's Chief Executive, President or
Chief Financial Officer on behalf of the Company as of each Closing Date.
d. Issuance of Shares. The Preferred Shares, Conversion Shares
and Warrant Shares are duly authorized and, upon issuance in accordance with
the terms of this Agreement or the Statement with Respect to Shares, upon
conversion of the Preferred Shares and upon proper exercise of the Warrants,
as applicable, the Preferred Shares, Conversion Shares and Warrant Shares
shall be validly issued, fully paid and non-assessable, and free from all
taxes, liens and charges with respect to the issue thereof and shall not be
subject to preemptive rights or other similar rights of securityholders of
the Company (other than any such rights created by Buyer).
e. No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement and the Warrants by the Company
and the consummation by the Company of the transactions contemplated hereby
and thereby (including, without limitation, the issuance and reservation for
issuance of the Preferred Shares, Conversion Shares and Warrant Shares) will
not (i) result in a violation of the Articles of Incorporation or By-laws or
(ii) 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, or
otherwise result in an adverse change in the terms currently in effect under,
any agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries or
by which any property or asset of the Company or any of its subsidiaries is
bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations, changes and violations as would
not, individually or in the aggregate, have a Material Adverse Effect).
Neither the Company nor any of its subsidiaries is in violation of its
Articles of Incorporation, By-laws or other organizational documents and
neither the Company nor any of its subsidiaries is in default (and no event
has occurred which with notice or lapse of time or both would put the Company
or any of its subsidiaries in default) under, and neither the Company nor
any of its subsidiaries has taken any action or failed to take any action
that would give to others any rights of termination, amendment, acceleration
or cancellation of, or otherwise result in an adverse change in the terms
currently in effect under, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, except for possible
defaults as would not, individually or in the aggregate, have a Material
Adverse Effect. The businesses of the Company and its subsidiaries are not
being conducted, and shall not be conducted so long as a Buyer owns any of
the Securities, in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations which either singly or in
the aggregate do not have a Material Adverse Effect. Except as specifically
contemplated by this Agreement or as required under the 1933 Act and any
applicable state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with,
any court or governmental agency or any regulatory or self regulatory agency
or any other person in order for it to execute, deliver or perform any of its
obligations under this Agreement, the Registration Rights Agreement or the
Warrants in accordance with the terms hereof or thereof, other than the
filing of the Statement with Respect to Shares with the Pennsylvania
Department of State.
f. SEC Documents, Financial Statements. Since August 1, 1994,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act of 1934, as amended (the "1934 Act") on a
timely basis (all of the foregoing filed prior to the date hereof, together
with all reports, schedules, forms, statements and other documents filed by
the Company's subsidiaries with the SEC prior to the date hereof, and all
exhibits included therein and financial statements and schedules thereto and
documents (other than exhibits) incorporated by reference therein, being
hereinafter referred to herein as the "SEC Documents"). The Company has
delivered to Buyer true and complete copies of its August 3, 1996 financial
statements, and the SEC Documents, except for such exhibits, schedules and
incorporated documents. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and
the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, 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. As of their respective dates, the consolidated
financial statements of the Company dated as of August 3, 1996 which were
included in the SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth or disclosed in the financial statements
of the Company dated as of August 3, 1996 or in the SEC Documents, the
Company has no material liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to August
3, 1996 and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted
accounting principles to be reflected in such financial statements, which,
individually or in the aggregate, are not material to the financial condition
or operating results of the Company.
g. Absence of Certain Changes. Since February 3, 1996, there has
been no (and no event has occurred which could reasonably be expected to have
a future) material adverse change and no material adverse development in the
business, properties, operations, financial condition, results of operations
of the Company and its subsidiaries, taken as a whole, except as disclosed in
Schedule 3(g), the SEC Documents or the August 3, 1996 financial statements
of the Company.
h. Absence of Litigation. Other than as disclosed in the SEC
Documents, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company or any of
its subsidiaries, threatened against or affecting the Company or any of its
subsidiaries, of a nature which would be required to be disclosed in the SEC
Documents pursuant to applicable securities laws and regulations.
i. Disclosure. All information relating to or concerning the
Company set forth in this Agreement and provided to the Buyer pursuant to
Section 2(d) hereof and otherwise in connection with the transactions
contemplated hereby is true and correct in all material respects and the
Company has not omitted to state any material fact necessary in order to make
the statements made herein or therein, in light of the circumstances under
which they were made, not misleading.
j. Acknowledgment Regarding Buyer's Purchase of Preferred Shares
and Warrants. The Company acknowledges and agrees that the Buyer is acting
solely in the capacity of an arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that Buyer is not 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 advice given by the Buyer or any
of its representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to the Buyer's purchase
of the Preferred Shares and Warrants. The Company further represents to each
Buyer that the Company's decision to enter into this Agreement has been based
solely on the independent evaluation of the Company and its representatives.
k. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offer to
buy any security under circumstances that would require registration under
the 1933 Act of the issuance of the Securities to the Buyer.
l. No Brokers. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments relating to this Agreement or the transactions contemplated
hereby, except for dealings with SFG and JMS, whose commissions and fees will
be paid for by the Company. At the First Closing, the Company shall pay SFG
a fee equal to $200,000. At the Second Closing, or if this Agreement is
terminated at any time prior to the Second Closing (other than because of a
breach by the Buyer of any of its representations, warranties or covenants
set forth herein), the Company shall pay SFG and JMS, in the aggregate, a fee
equal to $400,000, of which amount $300,000 shall be paid to JMS and $100,000
shall be paid to SFG.
m. Listing. The Common Stock is authorized for quotation on
NASDAQ-NM and trading in the Common Stock (or on NASDAQ-NM generally) is not
currently suspended by the SEC or NASDAQ. Further, after reasonable
investigation of the NASDAQ-NM listing requirements, the Company does not
have any knowledge, reason to know or notice that the Common Stock may not be
listed on NASDAQ-NM or that the SEC or NASDAQ plans to suspend or is
considering suspending trading in the Common Stock (or in NASDAQ-NM
generally).
4. COVENANTS.
---------
a. Best Efforts. The parties shall use their best efforts to
satisfy timely each of the conditions described in Section 6 and 7 of this
Agreement.
b. Form D; Blue Sky Laws. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to provide
a copy thereof to the Buyer promptly after such filing. The Company shall,
on or before each Closing Date, use it best efforts to take such action as
the Company shall reasonably determine is necessary to qualify the Securities
for, or obtain exemption for the Securities for, sale to the Buyer at the
applicable closing pursuant to this Agreement under applicable securities or
"blue sky" laws of the states of the United States, and shall provide
evidence of any such action so taken to the Buyer on or prior to such Closing
Date.
c. Reporting Status. So long as the Buyer beneficially owns any
of the Securities, the Company shall use its best efforts to timely file all
reports required to be filed with the SEC pursuant to the 1934 Act, and the
Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would permit such termination.
d. Use of Proceeds. The Company shall use the proceeds from the
sale of the Preferred Shares for working capital and general corporate
purposes and shall not, directly or indirectly, use such proceeds for any
loan to or investment in any other corporation, partnership, enterprise or
other person (except in connection with its direct or indirect subsidiaries).
e. Additional Equity Capital; Right of First Offer. The Company
will not conduct any equity financing (including debt with an equity
component) during the period beginning on the date hereof and ending two
hundred seventy (270) calendar days from the date hereof (the "Offer Period")
unless it shall have first conducted good faith negotiations with the Buyer
for at least twenty-one (21) days to sell to the Buyer securities on such
terms and in such amounts that it intends to otherwise offer to a third party
(the "Offered Securities"). The Company shall have no obligation to sell the
Offered Securities to the Buyer except pursuant to definitive purchase
documentation mutually acceptable to the Company and the Buyer in their sole
discretion. If the Company and the Buyer fail to reach an agreement with
respect to the sale of all of the Offered Securities within such twenty-one
(21) day period, the Company shall have forty-five (45) days from the
expiration of such twenty-one (21) day period to sell or enter into an
agreement (pursuant to which the sale of the remaining securities covered
thereby shall be closed, if at all, within seventy-five (75) days (or up to
105 days with the consent of the Buyer, which consent will not be
unreasonably withheld) from the date of said agreement) to sell an aggregate
amount of securities not to exceed the amount of Offered Securities offered
to the Buyer at a price and upon general terms no more favorable in any
material respect to the purchaser(s) of such securities than those last
offered to the Buyer by the Company. If the Company has not so sold such
securities or entered into an agreement to sell such securities within said
forty-five (45) day period (or sold and issued such remaining securities in
accordance with the foregoing within seventy-five (75) days from the date of
said agreement), the Company shall not thereafter conduct any equity
financing (including debt with an equity component) during the Offer Period
without first conducting good faith negotiations with the Buyer as provided
above (the transactions and limitations referred to in this and the
immediately preceding sentences in this Section 4(e) are each collectively
referred to as the "Capital Raising Transactions" and "Capital Raising
Limitations," respectively).
The Capital Raising Transactions and Limitations shall not apply to any
transaction involving the Company's commercial banking or vendor financing
arrangements or issuances of securities in connection with a merger,
consolidation or sale or acquisition of assets, or in connection with any
strategic partnership or joint venture (the primary purpose of which is not
to raise equity capital), or in connection with the disposition or
acquisition of a business, product or license by the Company or exercise of
options by current or former employees, consultants, franchisees, customers
or directors. The Capital Raising Transactions and Limitations also shall
not apply to the issuance of securities in underwritten public offerings or
the issuance of securities or the incurrence of indebtedness by a subsidiary
of the Company or upon exercise or conversion of the Company's options,
warrants or other convertible securities outstanding as of the date hereof or
to the grant of options, warrants or other securities to employees, former
employees, consultants, franchisees, customers, directors and affiliates
under any Company stock option or restricted stock plan.
f. Expenses. SFG acknowledges the receipt of the sum of Fifty
Thousand Dollars ($50,000) from the Company, as a non-accountable expense
allowance to be applied by SFG against all expenses incurred by it and the
Buyer in connection with the due diligence investigation with respect to the
Company and the negotiation, preparation, execution, delivery and performance
of this Agreement and the other agreements to be executed in connection
herewith, including, without limitation, the Buyer's and SFG's attorneys'
fees and expenses. The Company shall have no further obligation to SFG, JMS
or Buyer on account of any expenses incurred by any of them under or in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the other agreements to be executed in
connection herewith or that certain document captioned "Term Sheet" dated
July 29, 1996 by and between the Company and SFG.
g. Financial Information. The Company agrees to send the
following reports to the Buyer until the Buyer transfers, assigns, or sells
all of the Securities: (i) within ten (10) days after the filing with the
SEC, a copy of its Annual Report on Form 10-K, its Quarterly Reports on Form
10-Q and any Current Reports on Form 8-K; and (ii) within one (1) day after
release, copies of all press releases issued by the Company or any of its
subsidiaries. The Buyer agrees to notify the Company promptly upon the
transfer, assignment or sale of all of the Securities.
h. Reservation of Shares. The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full conversion of the outstanding
Preferred Shares and the Preferred Shares then issuable hereunder and
issuance of the Conversion Shares in connection therewith and the full
exercise of the Warrants then outstanding and then issuable hereunder and the
issuance of the Warrant Shares in connection therewith (based on the
Conversion Price of the Preferred Shares and the exercise price of the
Warrants in effect from time to time). The Company shall use its best
efforts to ensure that at the end of each fiscal quarter commencing with the
fiscal quarter in which this Agreement is executed, the number of shares of
Common Stock so reserved for issuance shall be no less than two (2) times the
number that is actually issuable upon full conversion of the Preferred Shares
then outstanding plus one (1) times the number that is actually issuable upon
full exercise of the Warrants then outstanding (based on the Conversion Price
of the Preferred Shares and the exercise price of the Warrants in effect on
the last Trading Day of such fiscal quarter); provided, however, that, so
long as the Preferred Shares or Warrants are outstanding, the Company shall
not (except in relation to a reduction in the number of shares of Common
Stock required to be reserved as a result of the conversion or exercise of
Preferred Stock or Warrants, respectively) (x) effectuate any reduction in
the number of shares of Common Stock so reserved for issuance below such
number that the Company would have been required to reserve for issuance
pursuant to this sentence based on the lowest daily Closing Bid Price of the
Common Stock during the ten (10) Trading Day Period ending on the last
Trading Day immediately preceding the effective date of such reduction or (y)
remove from reserved status any of the 6,000,000 shares of Common Stock
initially reserved for issuance upon conversion of the Preferred Shares and
full exercise of the Warrants.
i. Listing. The Company shall promptly secure the listing of the
Conversion Shares and Warrant Shares upon each national securities exchange
or automated quotation system, if any, upon which shares of Common Stock are
then listed (subject to official notice of issuance) and shall use its best
efforts to maintain, until no Preferred Shares or Warrants are outstanding
and so long as any other shares of Common Stock shall be so listed (or, if
earlier, until such time as the outstanding Common Stock is acquired or
converted pursuant to a merger, going private transaction, or other
transaction which results in the deregistration of the Common Stock under
Section 12 of the Securities Exchange Act of 1934), such listing of all
Conversion Shares from time to time issuable upon conversion of the Preferred
Shares and Warrant Shares issuable upon exercise of the Warrants. The
Company will use its best efforts to take all action necessary to continue
the listing and trading of its Common Stock on the NASDAQ National Market
("NASDAQ-NM"), the New York Stock Exchange ("NYSE") or the American Stock
Exchange ("AMEX") and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the NASD
and such exchanges, as applicable.
j. Corporate Existence. So long as the Buyer beneficially owns
any Preferred Shares or Warrants, the Company shall use its best efforts to
maintain its corporate existence, except in the event of a merger,
consolidation or sale of all or substantially all of the Company's assets, as
long as 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 NASDAQ-NM, NYSE or AMEX, and
except in the event of a liquidation or dissolution of the Company.
5. TRANSFER AGENT INSTRUCTIONS.
---------------------------
The Company shall instruct its transfer agent to issue certificates,
registered in the name of the Buyer or its nominee, for the Conversion Shares
and Warrant Shares in such denominations as specified from time to time by
the Buyer to the Company upon conversion of the Preferred Shares or exercise
of the Warrants. Prior to registration of the Conversion Shares and Warrant
Shares for resale under the 1933 Act, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The Company
warrants that no instruction other than such instructions referred to in this
Section 5, and stop transfer instructions to give effect to Section 2(f)
hereof, in the case of the Conversion Shares and Warrant Shares, prior to
registration of the Conversion Shares and Warrant Shares for resale under the
1933 Act, will be given by the Company to its transfer agent and that the
Securities shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement and the
Registration Rights Agreement. Nothing in this Section shall affect in any
way the Buyer's obligations and agreement set forth in Section 2(g) hereof
to comply with all applicable securities laws upon resale of the Securities.
If the Buyer provides the Company with an opinion of counsel, in form,
substance and scope customary to opinions typically delivered in transactions
of this nature, that registration of a resale by such Buyer of any of the
Securities is not required under the 1933 Act, the Company shall permit the
transfer, and, in the case of the Conversion Shares and Warrant Shares
promptly instruct its transfer agent to issue one or more certificates in
such name and in such denominations as specified by the Buyer.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
The obligation of the Company hereunder to issue and sell the Preferred
Shares and the First Warrants to the Buyer at the First Closing, to issue and
sell the Preferred Shares and, under certain circumstances, the Second
Warrants at the Second Closing, as applicable, is subject to the
satisfaction, at or before the Closing Date in respect of such closing, of
each of the following conditions thereto, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion.
With respect to the First Closing and the Second Closing:
(i) The Buyer shall have executed this Agreement and the
Registration Rights Agreement and a mutual release in form reasonably
satisfactory to Buyer (the "Mutual Release"), and delivered the same to the
Company.
(ii) The Buyer shall have delivered the applicable Purchase Price
in accordance with Section 1(b) above.
(iii) The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date when made and as of
each Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date which is other than the Closing
Date), and the Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Buyer at or
prior to each Closing Date.
(iv) SFG shall have delivered a letter to the Company at the First
Closing, in form and substance reasonably satisfactory to the Company, with
respect to certain matters relating to the financial condition of the Buyer.
7. CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE.
--------------------------------------------
The obligation of the Buyer hereunder to purchase the Preferred Shares
and the First Warrants at the First Closing, to purchase the Preferred Shares
and, under certain circumstances, the Second Warrants at the Second Closing,
as applicable, is subject to the satisfaction, at or before the Closing Date
in respect of such closing of each of the following conditions, provided that
these conditions are for the Buyer's sole benefit and may be waived by the
Buyer at any time in its sole discretion:
a. With respect to the First Closing and the Second Closing:
(i) The Company shall have executed this Agreement and the
Registration Rights Agreement and the Mutual Release, and delivered the same
to the Buyer.
(ii) The Statement with Respect to Shares shall have been
accepted for filing with the Secretary of State of the Commonwealth of
Pennsylvania.
(iii) The Company shall have delivered to the Buyer duly
executed certificates (in such denominations as the Buyer shall request)
representing the Preferred Shares and First Warrants (with respect to the
First Closing) or, under certain circumstances, Second Warrants (with respect
to the Second Closing) being so purchased in accordance with Section 1(b)
above.
(iv) The Common Stock shall be authorized for quotation on
NASDAQ-NM, and trading in the Common Stock (or on NASDAQ-NM generally) shall
not have been suspended by the SEC or NASDAQ. Further, the Company shall,
after reasonable investigation of the NASDAQ-NM listing requirements, have no
knowledge, reason to know or notice that the Common Stock may not be listed
on NASDAQ-NM or that the SEC or NASDAQ plans to suspend or is considering
suspending trading in the Common Stock (or on NASDAQ-NM generally).
(v) The representations and warranties of the Company shall
be true and correct in all material respects as of the date when made and as
of each Closing Date as though made at such time (except for representations
and warranties that speak as of a specific date which is other than the
Closing Date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by the Company
at or prior to each Closing Date. The Buyer shall have received a
certificate, executed by the chief financial officer of the Company, dated as
of each Closing Date, to the foregoing effect and as to such other matters as
may be reasonably requested by the Buyer.
(vi) The Buyer shall have received an opinion of the Company's
counsel, dated as of each Closing Date, in substantially the same form as
Exhibit "D" attached hereto.
(vii) The Buyer shall have received an officer's
certificate described in Section 3(c) above, dated as of each Closing Date.
(viii) The Company shall have permitted inspection by
Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx, at least two (2) business days
prior to the applicable Closing Date, of the certificates representing the
Preferred Shares to be issued on such Closing Date.
b. With respect to the Second Closing:
(i) The Registration Statement registering (i) the Conversion
Shares issuable upon conversion of the Preferred Shares issued or issuable at
the First Closing and the Second Closing, (ii) the Warrant Shares issuable
upon exercise of the First Warrants issued at the First Closing and (iii) the
Warrant Shares issuable upon exercise of the Second Warrants issuable on the
Second Warrant Issue Date, shall be effective within 165 days of the filing
of such Registration Statement and no stop order shall have been issued in
respect thereof.
(ii) The Company shall not have failed, and shall not have
announced that it will refuse, to issue shares of Common Stock to any holder
of Preferred Stock upon exercise by a holder of its conversion rights in
accordance with the Statement with Respect to Shares.
(iii) The Company or any subsidiary of the Company shall
not have made an assignment for the benefit of creditors, or applied for or
consented to the appointment of a receiver or trustee for it or for all or
substantially all of its property or business; or such a receiver or trustee
shall not otherwise have been appointed.
(iv) Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under bankruptcy law or any law
for relief of debtors shall not have been instituted by or against the
Company or any subsidiary of the Company.
8. GOVERNING LAW; MISCELLANEOUS.
----------------------------
a. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Pennsylvania
without regard to the principles of conflict of laws. The parties hereto
hereby submit to the exclusive jurisdiction of the United States Federal
Courts located in Philadelphia, Pennsylvania with respect to any dispute
arising under this Agreement, the agreements entered into in connection
herewith or the transactions contemplated hereby or thereby.
b. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party.
c. Headings. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation of,
this Agreement.
d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this
Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be waived or amended other
than by an instrument in writing signed by the party to be charged with
enforcement.
f. Notices. Any notices required or permitted to be given under
the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier and shall be
effective five days after being placed in the mail, if mailed, or upon
receipt or refusal of receipt, if delivered personally or by courier, in each
case addressed to a party. Any such notice may be sent by facsimile, but
shall in such case be subsequently confirmed by a writing personally
delivered or sent by certified or registered mail or by recognized overnight
mail courier, in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Intelligent Electronics, Inc.
000 Xxxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
With copy to:
Pepper, Xxxxxxxx & Xxxxxxx
3000 Two Xxxxx Square
00xx xxx Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attn: Xxxxx X. Xxxxxxx, Esquire
With copy to:
Xxxxxx X. Xxxxxxxx
General Counsel
Intelligent Electronics, Inc.
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
If to the Buyer:
Capital Ventures International
c/o Bala International, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxx
With copy to:
Xxxx Xxxxxxxxx, Esq.
000 Xxxx Xxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
And:
Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esquire
Each party shall provide notice to the other party of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights
or obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, the Buyer may assign its rights hereunder to
any of its "affiliates," as that term is defined under the 1934 Act, (and any
such assignment prior to the Second Closing, shall require the prior written
consent of the Company), provided, that no assignment shall be valid unless
such assignee joins in this Agreement and agrees to be treated as the "Buyer"
for all purposes of this Agreement; provided, further, that any such
assignment by the Buyer shall not relieve the Buyer of any liability under
this Agreement.
h. 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.
i. Survival. The representations and warranties of the Company
and the Buyer and their respective agreements and covenants set forth in
Sections 2, 3, 4, 5 and 8 shall survive the closings hereunder for a period
of three (3) years and shall not be affected by any due diligence
investigation conducted by or on behalf of the Buyer or the Company,
provided, however, that the Company's covenants contained in Sections 4(c)
and 4(h)-(j) shall survive such closings indefinitely and the Buyer's
representations contained in Section 2(f) shall survive such closings until
such time as none of the Preferred Shares or Warrant are outstanding. The
Company agrees to indemnify and hold harmless the Buyer for loss or damage
arising as a result of or related to any breach by the Company of any of its
representations or covenants set forth in Section 3, 4, or 5 hereof,
including advancement of expenses (including attorneys fees and expenses) as
they are incurred. The Buyer agrees to indemnify and hold harmless the
Company for loss or damage arising as a result of or related to any breach by
the Buyer of its obligation set forth in Section 1(b) hereof, including
advancement of expenses (including attorneys fees and expenses) as they are
incurred.
j. Publicity. The Company and the Buyer shall have the right to
review and approve before issuance any press releases, SEC, NASDAQ or NASD
filings, or any other public statements with respect to the issuance of the
Preferred Stock and the Warrants hereunder. The obligations under this
paragraph (j) shall expire and be of no further force or effect from and
after 30 days following the Second Warrant Issuance Date.
k. Further Assurances. Each party shall use its best efforts do
and perform, or cause to be done and performed, all such further acts and
things, and shall use its best efforts 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.
l. Termination. In the event that the First Closing shall not
have occurred on or before fifteen (15) business days from the date hereof,
unless the parties agree otherwise, this Agreement shall terminate at the
close of business on such date, and neither party shall have any further
obligations to the other pursuant to this Agreement. If the Second Closing
shall not have occurred on or before 260 days after the initial filing of the
Registration Statement, unless the parties agree otherwise, this Agreement
shall terminate on the close of business on such date, and neither party
shall have any further obligations to the other with respect to the shares of
Preferred Stock and the Second Warrants to be issued and sold at the Second
Closing.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused
this Agreement to be duly executed as of the date first above written.
INTELLIGENT ELECTRONICS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Its: Sr. V.P. and CFO
BUYER:
CAPITAL VENTURES INTERNATIONAL
By: Bala International, Inc., as authorized agent
By: /s/ Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxx
Its: Director
