1
EXHIBIT 99.34
AXCESS INC.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Amphion Ventures L.P. February 26, 1999
c/o Amphion Capital
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Preferred Stock Purchase Agreement
Ladies and Gentlemen:
On October 21, 1998, Amphion Ventures L.P., a Delaware limited
partnership (the "Purchaser"), committed to provide up to $6,300,000 of equity
financing to AXCESS Inc., a Delaware corporation (the "Company"), in connection
with the Company's 1998 plan of operations and to maintain the Company's
compliance with the net tangible asset requirement of the new Nasdaq listing
requirements (the "Commitment"). This letter sets forth the terms and conditions
on which the Company will issue and sell to Purchaser for an aggregate purchase
price of up to $6,300,000, payable as provided herein, shares of either its
Series G Voting Preferred Stock, Series H Non-Voting Preferred Stock or shares
of any new series of voting preferred stock or non-voting preferred stock of the
Company that may be authorized for issuance as of the date Purchaser advances
funds against the Commitment to the Company (collectively, the "Preferred
Stock"). Purchaser shall designate in writing to the Company what series of
preferred stock of the Company the Purchaser desires to purchase at the time it
advances funds against the Commitment to the Company. Although Amphion agreed to
make the Commitment to be effective as of October 21, 1998 (the "Effective
Date"), this letter sets forth in detail the terms on which the Purchaser agreed
to make the Commitment.
1. Advances; Purchase Price; Effectiveness. The Purchaser hereby agrees
to subscribe for and purchase from the Company, and the Company hereby agrees to
issue and sell to the Purchaser, up to $6,300,000 of shares of Preferred Stock
(the "Shares"). The purchase price for each Share shall be $10,000, payable in
cash. The purchase and sale of Shares hereunder shall be effective as of the
date the Company receives the purchase price for each Share from Purchaser
(subject to the filing of any Certificates of Designation of the Preferred Stock
in the office of the Secretary of State of the State of Delaware (the
"Certificates of Designation"), which filing may occur subsequently to the
Effective Date without effecting the rights and obligations of the parties
hereto).
2. Purchase and Delivery of Shares. Upon its receipt of the purchase
price for each Share, the Company shall issue and sell to Purchaser the number
of Shares, the stated value of which shall be $10,000 per share (the "Original
Preferred Stock Issue Price"). On and as of the Effective Date, the Company
shall execute and deliver to the Purchaser a stock certificate in proper form
representing the Shares.
3. Conversion of Preferred Stock to Voting or Non-Voting Common Stock.
Purchaser hereby agrees that it shall not, without the prior written consent of
the Company, convert any shares of Preferred Stock, other than Series G
Preferred Stock, to shares of either voting or non-voting common stock of the
Company, $0.01 par value per share (the "Common Stock"), as the case may be,
issuable to Purchaser upon its conversion of any Shares until the Company
receives stockholder approval to issue more than twenty
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AXCESS Inc.
February 26, 1999
Page 2
percent (20%) of the Company's outstanding voting or non-voting Common Stock, as
the case may be, at a per share price potentially less than the per share market
price of the Common Stock on the date of issuance to holders of Preferred Stock.
The Company hereby agrees to submit such a proposal to its stockholders for
approval at the Company's 1999 annual meeting of stockholders.
4. Conversion of Non-Voting Common Stock to Voting Common Stock.
Purchaser hereby agrees that it shall not, without the prior written consent of
the Company, which consent will not be unreasonably withheld, convert any shares
of the Company's non-voting Common Stock issuable to Purchaser upon its
conversion of any Shares to voting Common Stock of the Company.
5. Right to Exchange Shares. If the Company consummates an equity
financing with any third party at any time on or before December 31, 1999, which
equity financing raises at least $1,000,000 in cash (a "Qualified Equity
Financing"), the Purchaser will have the non-assignable right, exercisable by
written notice to the Company given at any time within thirty (30) days after
the date of the closing of a Qualified Equity Financing, to exchange the Shares
in whole or in part, for shares (the "Exchange Shares") of a new series of
preferred stock of the Company (the "Exchange Preferred"), on the following
basis:
A. If the securities issued in such Qualified Equity Financing
(the "New Securities") are convertible into voting or non-voting Common
Stock, the Exchange Preferred will be convertible into voting or
non-voting Common Stock, as the case may be, at a conversion price
equal to the lesser of (x) the conversion price then applicable under
the Preferred Stock and (y) the conversion price then applicable under
the New Securities.
B. All other terms of the Exchange Preferred will be
economically equivalent to the terms of the New Securities, determined
as if the New Securities had been issued on the date hereof. The
Exchange Preferred will be on parity with the New Securities for all
purposes, and will vote, if applicable, together with the New
Securities for all purposes, except as otherwise required by law.
C. If the Purchaser exchanges any Shares pursuant to this
paragraph 5, it shall be entitled to any additional rights with respect
to the Exchange Shares (including, without limitation, rights of first
refusal or payment of attorneys' fees) as the purchasers of New
Securities shall be entitled to under the Qualified Equity Financing.
D. The number of Exchange Shares issuable to the Purchaser
pursuant to any exchange of Shares hereunder will be the number of
shares of Exchange Preferred that the Purchaser could have purchased on
the date hereof for a purchase price equal to the aggregate purchase
price hereunder of the Shares to be exchanged therefor, payable in cash
(determined on a basis so that the cash purchase price of the Exchange
Shares and the cash purchase price of the New Securities are
economically equivalent).
E. If the Purchaser exchanges any Shares pursuant to this
paragraph 5, such exchange will not result in an increase in the
conversion price above $4.00 per share (as adjusted for any stock
splits, reverse stock splits, stock dividends or similar events after
the date of the Certificates of Designations).
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AXCESS Inc.
February 26, 1999
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(f) If the Company does not consummate a Qualified Equity
Financing on or before December 31, 1999, the $4.00 conversion price of
the Preferred Stock shall be reset to not less than the greater of (i)
$1.00 or (ii) one-half of the average closing bid price per share of
the Company's common stock on the Nasdaq SmallCap Market (or if the
Common Stock is not then included on Nasdaq, but is listed on any
national securities exchange, on the principal national securities
exchange on which the Common Stock is then listed) during the last
twenty (20) trading days of 1999 (the "Automatic Reset Right"). If the
automatic reset right is triggered, Purchaser hereby agrees to convert
or exchange a sufficient number of Shares to non-voting Common Stock
such that Purchaser shall not be deemed the beneficial owner of more
than fifty percent (50%) of the Company's voting Common Stock.
6. Mandatory Conversion of Preferred Stock. The Company shall have the
right to cause a mandatory conversion of the Preferred Stock into shares of the
Company's voting or non-voting Common Stock, as the case may be, if the closing
bid price of the Common Stock on the Nasdaq SmallCap Market is at least $10.00
per share for a period of at least ninety (90) consecutive trading days (the
"Mandatory Conversion Price"). The Company may exercise this mandatory
conversion right by providing written notice of the Company's election to
convert the Preferred Stock to Purchaser any time on or before the expiration of
thirty (30) days following the occurrence of the Mandatory Conversion Price.
7. Securities Act Legend; Registration Rights.
7.1 The Shares will not be registered under the Securities Act
of 1933, as amended (the "Securities Act"). Certificates representing the Shares
shall bear a restrictive legend substantially to the effect of the following:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, OR APPLICABLE STATE SECURITIES LAWS, OR THE
SECURITIES LAWS OF ANY OTHER JURISDICTION. THEY MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THOSE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION THEREFROM. ADDITIONAL
RESTRICTIONS REGARDING THE TERMS UNDER WHICH THE SHARES REPRESENTED BY
THIS CERTIFICATE MAY BE CONVERTED INTO VOTING OR NON-VOTING COMMON
STOCK OF THE COMPANY ARE SET FORTH IN THAT CERTAIN PREFERRED STOCK
PURCHASE AGREEMENT BY AND BETWEEN THE COMPANY AND THE HOLDER.
7.2 The Purchaser shall have the same registration rights with
regard to any shares of voting or non-voting Common Stock, as the case may be,
issuable upon conversion of the Shares as Amphion Ventures L.P. (formerly
Xxxxxxxxxx Associates L.P. was entitled to pursuant to the Stock Purchase
Agreement dated as of January 20, 1994 (the "Prior Agreement")), between the
Company and Amphion Ventures L.P. The Company shall have the same expense,
indemnification and other obligations to the Purchaser with respect to such
registration rights as the Company owed to Amphion Ventures L.P. under the Prior
Agreement. The Company and the Purchaser shall enter into a registration rights
agreement in customary form to confirm the registration rights provided for in
this paragraph, as soon as practicable after the date hereof.
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AXCESS Inc.
February 26, 1999
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8. Representations and Warranties by the Company. The Company hereby
represents and warrants to the Purchaser as follows:
8.1 The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
the corporate power and authority to execute and deliver this agreement, to
issue the Shares on the basis described herein and otherwise to perform its
obligations under this agreement.
8.2 The execution and delivery by the Company of this
Agreement, the issuance of the Shares, and the performance by the Company of its
obligations hereunder, have been duly authorized by all requisite corporate
action on the part of the Company (other than the filing of any Certificates of
Designation) and will not (i) violate any provision of law, statute, rule or
regulation or any order of any court or other agency of government, (ii)
conflict with or violate the Certificate of Incorporation or By-Laws of the
Company, in each case as amended, or (iii) violate, conflict with or constitute
(with due notice or lapse of time or both) a default under any indenture,
mortgage, lease, license, agreement or other contract or instrument or result in
the creation or imposition of any lien, charge or encumbrance of any nature upon
the properties or assets of the Company or any of its subsidiaries, in each case
if such violation, conflict, default, lien, charge or encumbrance would have a
material adverse effect on the Company.
8.3 This agreement has been duly executed and delivered by the
Company and constitutes the valid and legally binding obligation of the Company,
enforceable in accordance with its terms, except to the extent the
enforceability hereof may be limited by applicable bankruptcy, moratorium or
similar laws affecting the rights of creditors generally.
8.4 Based in part upon the representations and warranties of
the Purchaser contained in this agreement, no registration or filing with, or
consent or approval of, or other action by, any federal, state or other
governmental department, commission, board, bureau, agency or instrumentality or
any third party is or will be necessary for the execution and delivery of this
agreement by the Company and the issuance of the Shares hereunder, other than
(x) the filing of any Certificates of Designation and (y) the filing of a notice
of sale on Form D with the Securities and Exchange Commission in accordance with
the rules and regulations thereof under the Securities Act.
8.5 Subject only to the filing of any Certificates of
Designation, the Shares are duly authorized, validly issued, fully paid and
non-assessable shares of Preferred Stock, and are not subject to any preemptive
rights.
8.6 Attached hereto as Exhibit A is a true copy of the
Certificates of Designation covering the Shares to be issued to Purchaser
hereunder. On the Effective Date, the Board of Directors of the Company approved
and adopted resolutions, in the form of the resolutions set forth in Exhibit A,
creating the Preferred Stock and directing the proper officers of the Company to
file the same with the office of the Secretary of State of the State of
Delaware, in accordance with the applicable provisions of the Delaware General
Corporation Law. The Company hereby covenants and agrees, for the benefit of the
Purchaser, that the Company will cause the Certificates of Designation to be
filed with the office of the Secretary of State of the State of Delaware, in
accordance with the applicable provisions of the Delaware General Corporation
Law, within ten (10) days after the date hereof.
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AXCESS Inc.
February 26, 1999
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9. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company as follows:
9.1 The Purchaser is acquiring the Shares for its own account,
for investment and not with a view to the distribution thereof within the
meaning of the Securities Act.
9.2 The Purchaser understands that the Shares have not been
registered under the Securities Act, by reason of their issuance by the Company
in transactions exempt from the registration requirements of the Securities Act,
and that the Shares must be held by the Purchaser indefinitely unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from such registration.
9.3 The Purchaser further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to it)
promulgated under the Act depends on the satisfaction of various conditions, and
that, if applicable, Rule 144 may afford the basis for sales only in limited
amounts, after compliance with the holding periods and other provisions thereof.
9.4 The Purchaser understands that its investment hereunder
involves substantial risks and represents and warrants that it has made such
independent examinations and investigations of the Company as it has deemed
necessary in making its investment decision, and the Purchaser further
represents and warrants that it has had sufficient access to the officers,
directors, books and records of the Company as it has deemed necessary to
conduct such examination and investigation and make such investment decision.
9.5 The Purchaser is able to bear the economic risk of the
investment contemplated by this agreement and has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of the investment contemplated by this agreement.
10. Reaffirmation of Representations and Warranties. The date Shares
are purchased shall constitute a reaffirmation of each and every one of the
representations and warranties of the Company set forth in Section 8 of this
agreement and those of the Purchaser set forth in Section 9 of this agreement as
if made as of each Effective Date, unless otherwise restated or corrected by
either the Purchaser or the Company, as the case may be.
11. Miscellaneous.
11.1 This agreement constitutes our entire agreement with
respect to the subject matter hereof. This agreement may not be modified or
amended or any provision hereof waived except by an instrument in writing signed
by the Company and the Purchaser.
11.2 This agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. The rights of the Purchaser hereunder shall be assignable to any holder
of the Shares. Except as provided in the immediately preceding sentence, this
agreement and the rights of the Purchaser hereunder shall not be assignable, and
any purported assignment hereof or thereof shall be void.
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AXCESS Inc.
February 26, 1999
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11.3 This Agreement may be executed in any number of
counterparts and on separate counterparts, each of which shall be an original
instrument, but all of which together shall constitute a single agreement. One
or more signature pages from any counterpart of this Agreement may be attached
to any other counterpart of this Agreement without in any way changing the
effect thereof. This Agreement shall be effective when executed and delivered by
the Company and the Purchaser.
11.4 All notices, requests, demands, consents, waivers, or
other communications made hereunder to any party or holder of Shares shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by nationally-recognized overnight courier, facsimile or by first class
registered or certified mail, return receipt requested, postage prepaid,
addressed to such party at the address set forth below:
if to the Company, to:
AXCESS Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
with a copy to:
Xxxxxx & Lidji, P.C.
4400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.; and
if to the Purchaser, to the Purchaser at its address
first set forth above,
or to such other address as the party to whom such communication is to be given
may have furnished to the other party in writing in accordance herewith. All
such notices, requests, demands, consents, waivers or other communications shall
be deemed to have been delivered (i) in the case of personal delivery, on the
date of delivery, (ii) if sent by facsimile, on the date sender receives a
confirmation confirming receipt, (iii) if sent by overnight courier, on the next
business day following the date sent and (iv) in the case of mailing, on the
third business day following such mailing.
11.5 All representations, warranties and agreements contained
herein shall survive the execution and delivery of this Agreement and the sale
of the Shares hereunder.
11.6 This agreement, and all rights, obligations and
liabilities hereunder, shall be construed according to the laws of the State of
New York applicable to contracts made and to be performed wholly therein. Any
judicial proceeding brought against the Company to enforce, or otherwise in
connection with, this agreement may be brought in any court of competent
jurisdiction in the City of New York, and, by execution and delivery of this
agreement, the Company (i) accepts, generally and unconditionally, the
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AXCESS Inc.
February 26, 1999
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nonexclusive jurisdiction of such courts and any related appellate court and
irrevocably agrees to be bound by any final judgment rendered thereby in
connection with this agreement and (ii) irrevocably waives any objection it may
now or hereafter have as to the venue of any such proceeding brought in such a
court or that such a court is an inconvenient forum.
**Remainder Intentionally Left Blank**
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AXCESS Inc.
February 26, 1999
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If the foregoing correctly sets forth your understanding of our
agreement, please so indicate by signing and returning to the Company the
enclosed counterpart of this Agreement.
Very truly yours,
AXCESS INC.
By: /s/ Xxxxx X. Hair
----------------------------------------------
Xxxxx X. Hair, Executive Vice President, Chief
Financial Officer and Secretary
The undersigned agrees with and
accepts the foregoing terms and
provisions as of the date first
above written.
AMPHION VENTURES L.P.
By Amphion Partners L.L.C., its general partner
By: /s/ Xxxxxxx X.X. Xxxxxx
----------------------------------------------
Xxxxxxx X.X. Xxxxxx, A Managing Member
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