EXHIBIT 10.3: CONVERSION AGREEMENT, DATED APRIL 12, 2001, BY AND BETWEEN
PURCHASESOFT, INC. AND L-R GLOBAL PARTNERS, L.P.
FINAL
PURCHASESOFT, INC.
This CONVERSION AGREEMENT (this "AGREEMENT"), made as of the 12th day
of April, 2001, between PURCHASESOFT, INC., a Delaware corporation (the
"COMPANY"), and L-R GLOBAL PARTNERS, L.P., a Delaware limited partnership
("INVESTOR").
WHEREAS, the Company issued on each of March 23, 2000 and January 30,
2001 a demand promissory note to the Investor in the principal amount of
$5,000,000.00 each (together, the "NOTES");
WHEREAS, the Investor desires to convert the aggregate principal amount
of $10,000,000.00 and interest accrued on the Notes (the "COMPANY DEBT") into
shares of the Company's common stock, $0.01 par value per share (the "COMMON
STOCK");
WHEREAS, the Notes are not by their terms convertible, but the Company
believes it is in its best interests to allow a conversion of the Notes into
Common Stock, thereby canceling its debt owing to the Investor under the Notes;
and
WHEREAS, the Company desires to permit the conversion of the Investor's
Notes into Common Stock, and the Company and Investor wish to enter into an
agreement setting forth the terms of the conversion of the Notes.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby expressly acknowledged, the parties
hereto agree as follows:
1. CONVERSION OF THE NOTES. Subject to the terms and conditions of this
agreement, on the date hereof, the Investor hereby irrevocably agrees to convert
the Company Debt into such number shares (the "SHARES") of the Company's Common
Stock as is equal to quotient obtained by dividing (a) the Company Debt by (b)
$0.88, which price was the last reported sale price of the Company's Common
Stock on April 12, 2001 (the "CONVERSION PRICE") and fulfil its obligations to
convert the Company Debt by exercise of its subscription rights, through
cancellation of the Company Debt as consideration, in a Rights Offering (as
hereinafter defined) as described in Section 3 hereof, such conversion to take
place in connection, and concurrently, with such Rights Offering, PROVIDED,
HOWEVER, that in the event that a Rights Offering has not occurred permitting
such conversion of the Company Debt to take place prior to June 30, 2001 in such
Rights Offering, then the Investor irrevocably agrees to convert the Company
Debt on June 30, 2001 in accordance with the foregoing formula outside of a
Rights Offering. Subject to and upon
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the issuance by the Company of the Shares to the Investor, the Company Debt
shall be deemed to have been discharged and paid in full by the Company and
the Company shall have no further obligation or liability of any kind
whatsoever to the Investor with respect to the Company Debt.
2. REPRESENTATION AND WARRANTY. This Agreement constitutes the valid
and binding agreement of each party hereto, enforceable against such party in
accordance with its terms, except to the extent enforcement thereof may be
limited by insolvency, bankruptcy and similar laws affecting generally the
enforcement of creditor's rights and by the discretionary nature of equitable
remedies.
3. RIGHTS OFFERING. The Company hereby covenants and agrees with
Investor that as promptly as practicable after the date hereof, the Company
shall conduct a "rights offering" providing to all of the Company's stockholders
the right to purchase shares of the Company's Common Stock at the Conversion
Price (a "RIGHTS OFFERING"), which Rights Offering and the shares issued in
connection therewith, shall be registered under the Securities Act of 1933, as
amended (the "1933 ACT").
3A. INVESTMENT REPRESENTATIONS. In the event that the conversion of the
Company Debt contemplated pursuant to Section 2 and the proviso therein occurs
on June 30, 2001 outside of a Rights Offering, the Investor understands and
agrees that:
This Agreement is made with Investor in reliance upon
Investor's representation to the Company, which by Investor's execution of this
Agreement Investor hereby confirms, that the shares issued upon conversion of
the Notes outside of a Rights Offering (as a such, the "RESTRICTED SHARES") will
be acquired for investment for Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, Investor further represents that Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to the
Restricted Shares. Investor is an "accredited investor" within the meaning of
Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as
presently in effect.
The Restricted Shares will be characterized as a "restricted
security" under the federal securities laws inasmuch as they will be acquired
from the Company in a transaction not involving a public offering and that under
such laws and applicable regulations neither the Restricted Shares may be resold
without registration under the 1933 Act only in certain limited circumstances.
In this connection, Investor represents that it is familiar with SEC Rule 144,
as presently in effect, and understands the resale limitations imposed thereby
and by the 1933 Act. Without in any way limiting the representations set forth
above, Investor further agrees not to make any disposition of the Restricted
Shares unless:
(a) There is then in effect a Registration Statement
under the 1933 Act covering such proposed disposition and such disposition is
made in accordance with such Registration Statement; or
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(b) (i) Investor shall have notified the Company of
the proposed disposition and (ii) if reasonably requested by the Company,
Investor shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
of Restricted Shares under the 1933 Act. It is understood that the Restricted
Shares may bear the following legend:
These securities have not been registered under the Securities
Act of 1933, as amended (the "ACT"). They may not be sold,
offered for sale, pledged or hypothecated in the absence of a
registration statement in effect with respect to the
securities under such Act or an opinion of counsel reasonably
satisfactory to the Company that such registration is not
required or unless sold pursuant to Rule 144 or Rule 144A of
such Act.
3B. REGISTRATION RIGHTS. In the event that the conversion of the
Company Debt contemplated pursuant to Section 2 and the proviso therein occurs
on June 30, 2001 outside of a Rights Offering, the Company hereby agrees to
enter into, at such time, a customary registration rights agreement with the
Investor, in form and substance mutually acceptable to the Company and the
Investor, providing for the registration under Act of the resale of such
Restricted Shares.
4. MISCELLANEOUS. The representations, warranties and covenants of the
Company and Investor contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement. Except as otherwise
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement. This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement. This Agreement shall be governed by and construed under the laws of
the State of Delaware applicable to agreements among residents of, and entered
into and to be performed entirely within, such state. Any term of this Agreement
may be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and Investor. If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement, as the
case may be, and the balance of the Agreement, as the case may be, shall be
interpreted as if such provision were so excluded and such agreement shall be
enforceable in accordance with its respective terms. This Agreement and the
documents referred to herein constitute the entire agreement among the parties
and no party shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth herein
or therein.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PURCHASESOFT, INC.
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
Title: Chief Financial Officer
L-R GLOBAL PARTNERS, L.P.
By: L-R Managers, LLC,
General Partner
By: /s/ X. Xxxxxx Xxxxx
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Title: Investment Manager
