FORM OF
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of May 14,
1999, by and among FaxSav Incorporated (d/b/a Net Moves), a Delaware corporation
(the "Corporation"), and the purchasers listed on Schedule A hereto (each, a
"Purchaser" and collectively, the "Purchasers").
The Corporation and the Purchasers hereby agree as follows:
SECTION 1
Authorization, Purchase and Sale of the Stock and the Warrants
1.1 Authorization of the Stock. The Corporation has authorized the
issuance and sale to the Purchasers of up to Two Million Five Hundred Thousand
(2,500,000) shares of the Corporation's common stock (the "Stock").
1.2 Sale and Purchase of the Stock. At the Closing (as defined herein),
subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, each Purchaser
agrees, severally, to purchase at the Closing and the Corporation agrees to sell
and issue to each Purchaser at the Closing, that number of shares of the Stock
set forth opposite such Purchaser's name on Schedule A hereto for the purchase
price set forth thereon.
SECTION 2
Closing, Payment and Delivery
2.1 Closing Date and Place of Closing. The purchase and sale of the Stock
shall take place at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 0000
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000 at 10:00 a.m., on May 19,
1999, or at such other time and place as the Corporation and Pacific Growth
Equities, Inc., as representative (the "Representative") of the Purchasers,
mutually agree upon orally or in writing (which time and place are designated as
the "Closing").
2.2 Payment and Delivery. At the Closing, the Corporation will deliver to
Purchasers' counsel a certificate representing that portion of the Stock that
each such Purchaser is purchasing against payment of the purchase price therefor
by check or wire transfer of same-day funds to the Corporation's bank account
listed on Exhibit A attached hereto.
2.3 Covenant of Best Efforts and Good Faith. The Corporation and each
Purchaser agree to use their respective best efforts and to act in good faith to
cause to occur all conditions to Closing which are in their respective control.
SECTION 3
Representations and Warranties of the Corporation
The Corporation hereby represents and warrants to each Purchaser that:
3.1 Incorporation. The Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is qualified to do business in each jurisdiction in which the character of
its properties or the nature of its business requires such qualification, except
where the failure to so qualify would not have a material adverse effect upon
the Corporation's financial condition, business, assets or results of operations
(hereafter, a "Material Adverse Effect"). The Corporation has all requisite
corporate power and authority to carry on its business as now conducted. The
Corporation has no subsidiaries.
3.2 Capitalization. The authorized capital stock of the Corporation
consists of (i) 40,000,000 shares of common stock, par value $0.01 per share,
and (ii) 1,000,000 shares of preferred stock, shares of each of which class of
the capital stock of the Corporation have been issued and are outstanding as set
forth in Schedule 3.2 hereto. The terms, preferences and privileges of the
outstanding shares of capital stock are set forth in the Corporation's Amended
and Restated Certificate of Incorporation (the "Restated Certificate"). Except
as set forth in Schedule 3.2 hereto, there are no existing options, warrants,
calls, preemptive (or similar) rights, subscriptions or other rights,
agreements, arrangements or commitments of any character obligating the
Corporation to issue, transfer or sell, or cause to be issued, transferred or
sold, any shares of the capital stock of the Corporation or other equity
interests in the Corporation or any securities convertible into or exchangeable
for such shares of capital stock or other equity interests (collectively,
"Securities"), and there are no outstanding contractual obligations of the
Corporation to repurchase, redeem or otherwise acquire any shares of its capital
stock or other equity interests. Schedule 3.2 sets forth the number of stock
options outstanding under the Corporation's stock incentive plans, and the
number of shares reserved for issuance under such plans that are not subject to
outstanding options. Except as set forth in Schedule 3.2 no holder of any
capital stock or Securities of the Corporation has any outstanding registration
rights.
3.3 Authorization. All corporate action on the part of the Corporation,
its officers, directors and stockholders necessary for the authorization,
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein has been taken. When executed and delivered
by the Corporation, this Agreement shall constitute the legal, valid and binding
obligation of the Corporation, enforceable against the Corporation in accordance
with its terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally and by
general equitable principles. The Corporation has all requisite corporate power
to enter into this Agreement and to carry out and perform its obligations under
the terms of this Agreement.
3.4 Valid Issuance of the Stock. The Stock being purchased by the
Purchasers hereunder will, upon issuance pursuant to the terms hereof, be duly
authorized and validly issued, fully paid, nonassessable and free of any liens
or encumbrances created by the Corporation and will,
assuming the accuracy of the representations and warranties made by each of the
Purchasers to the Corporation, be in compliance with applicable state and
federal securities laws.
3.5 SEC Documents. The Corporation has furnished to each Purchaser a true
and complete copy of the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1998 and the Company's Quarterly Report on Form 10-Q for the
three month period ended on March 31, 1999, and any other statement, report,
registration statement (other than registration statements on Form S-8) or
definitive proxy statement filed by the Corporation with the SEC during the
period commencing March 31, 1999 and ending on the date hereof. The Corporation
will, promptly upon the filing thereof, also furnish to each Purchaser all
statements, reports (including, without limitation, Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K), registration
statements and definitive proxy statements filed by the Corporation with the SEC
during the period commencing on the date hereof and ending on the Closing Date
(all such materials required to be furnished to each Purchaser pursuant to this
sentence or pursuant to the next preceding sentence of this Section 3.5 being
called, collectively, the "SEC Documents"). As of their respective filing dates,
the SEC Documents complied or will comply in all material respects with the
requirements of the Exchange Act or the Securities Act, as applicable, and none
of the SEC Documents 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 made therein, in light of the circumstances under
which they were made, not misleading, as of their respective filing dates,
except to the extent corrected by a subsequently filed SEC Document. The
Corporation has not filed any amendment to its Annual Report on Form 10-K for
the year ended December 31, 1998 or its Company's Quarterly Report on Form 10-Q
for the three month period ended on March 31, 1999. The Corporation has not
filed any Current Reports on Form 8-K with respect to any event occurring
between March 31, 1999 and the date hereof.
3.6 Financial Statements. The Corporation's audited Statements of Income,
Stockholders' Equity and Cash Flows for the fiscal year ended December 31, 1998
and the Corporation's audited Balance Sheet as of December 31, 1998 are included
in the Corporation's Annual Report on Form 10-K for the year ended December 31,
1998, a copy of which has been delivered to the Purchasers. The Company's
unaudited Statement of Income, Stockholders' Equity and Cash Flows for the three
month period ended March 31, 1999 and the Company's unaudited Balance Sheet as
of March 31, 1999 are included in the Company's Quarterly Reports on Form 10-Q
for the three month period ended on March 31, 1999, copies of which have been
delivered to the Purchasers. All of the financial statements referred to above
in this Section 3.6 are hereinafter referred to, collectively, as the "Financial
Statements". The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved, and fairly present, in all material respects, the
financial position of the Corporation and the results of its operations as of
the date and for the periods indicated thereon, except that those Financial
Statements that are unaudited may not have been prepared in accordance with
generally accepted accounting principles because of the absence of footnotes
normally contained therein and may be subject to normal year-end audit
adjustments which, individually, and in the aggregate, will not be material.
3.7 Consents. All consents, approvals, orders, authorizations,
registrations, qualifications, and filings required on the part of the
Corporation to be obtained or made prior to the Closing in connection with the
execution, delivery or performance of this Agreement, and the consummation of
the transactions contemplated herein have been obtained or made or will be
obtained or made, prior to the Closing.
3.8 No Conflict. The execution and delivery of this Agreement by the
Corporation and the consummation of the transactions contemplated hereby will
not conflict with or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit or give rise to an event which results in the creation of any lien,
charge or encumbrance upon any of the Corporation's properties or assets under
(i) any provision of the Restated Certificate or Bylaws of the Corporation or
(ii) any agreement or instrument, permit, franchise, license, judgment, order,
statute, law, ordinance, rule or regulations, applicable to the Corporation or
its respective properties or assets.
3.9 Absence of Litigation. There is no action, suit or proceeding or, to
the Corporation's knowledge, any investigation, pending, or to the Corporation's
knowledge, threatened against the Corporation and in which an unfavorable
outcome, ruling or finding in any said matter, or for all matters taken as a
whole, might have a Material Adverse Effect. The foregoing includes, without
limitation, any such action, suit, proceeding or investigation that questions
this Agreement or the Registration Rights Agreement or the right of the
Corporation to execute, deliver and perform under same.
3.10 Nasdaq National Market. The Common Stock is currently traded on the
Nasdaq National Market.
3.11 Brokers or Finders. Except for Pacific Growth Equities, Inc., the
Corporation has not dealt with any broker or finder in connection with the
transactions contemplated by this Agreement, and the Corporation has not
incurred, and shall not incur, directly or indirectly, any liability for any
brokerage or finders' fees or agents commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby. All fees
payable to Pacific Growth Equities, Inc. will be paid by the Corporation.
3.12 Compliance With Charter, Laws, etc. The Corporation is in compliance
in all material respects with the terms of its Restated Certificate and By-laws
as currently in effect, true and complete copies of which have been delivered to
each Purchaser, and each of the Restated Certificate and By-laws of the
Corporation (in the form provided to the Purchasers), is in full force and
effect as of the Closing Date. The Corporation has complied, and is in
compliance with, all federal, state, county, local and foreign laws, rules,
regulations, ordinances, decrees and orders applicable to the operation of its
business or to the real property or personal property that it owns or leases
(including, without limitation, all such laws, rules, ordinances, decrees and
orders relating to antitrust, currency exchange, environmental protection,
occupational safety and health, equal opportunity, pension, securities and
trading-with-the enemy matters), except where any failure to comply could not
reasonably be expected to have a Material Adverse Effect.
3.13 Private Offering. During the six months preceding the date of this
Agreement, neither the Corporation nor any person acting on its behalf has,
directly or through any agent, sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of any security (as defined in the Securities
Act) that is or may be integrated with the sale of the Stock in a manner that
would require the registration of the issuance and sale by the Corporation of
the Stock under the Securities Act. During the six months preceding the date of
this Agreement, neither the Corporation nor any person acting on its behalf has
offered or sold any Stock by means of any general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act. Assuming
the accuracy of the Purchasers' representations in Section 4 hereof, the
offering and sale of the Stock will satisfy the requirements of Rule 506 under
the Securities Act.
3.14 Changes.
(a) Since March 31, 1999, except as set forth in Schedule 3.14,
there has not been:
(i) any damage, destruction or loss (whether or not covered by
insurance) to its assets which has had or is expected to have a Material Adverse
Effect;
(ii) any material change in the accounting methods or
practices followed by the Corporation;
(iii) any material debt, obligation or liability (whether
absolute or contingent) incurred by the Corporation (whether or not presently
outstanding) except (x) current liabilities incurred, and obligations under
agreements entered into, in the ordinary course of business and (y) obligations
or liabilities entered into or incurred in connection with the execution of this
Agreement;
(iv) any sale, lease, abandonment or other disposition by the
Corporation of any real property or, other than in the ordinary course of
business, of any equipment or other operating properties or, other than in the
ordinary course of business, any sale, assignment, transfer, license or other
disposition by the Corporation of any intellectual property or other intangible
asset;
(v) any dividends or other distributions of cash or other
property paid by the Corporation in respect of any of its capital stock (except
for the issuance of shares of the Corporation's Common Stock upon exercise of
rights under, or conversion of, the Corporation's other Securities);
(vi) any waivers or releases by the Corporation of any
material debt or obligation owed to the Corporation; or
(vii) to the best of the Corporation's knowledge, any other
event that could reasonably be expected to result in a Material Adverse Effect.
(b) Notwithstanding anything to the contrary in this Agreement, if,
after the date of this Agreement the Corporation discloses to the Purchasers or
the Purchasers otherwise become
aware of any information concerning an event that renders the representation and
warranty set forth in this Section 3.14 inaccurate, and such information is
material and not otherwise available to the public generally, the Purchasers
agree not to sell, assign or otherwise transfer any of the Stock based on such
material non-public information until such material non-public information is
made available to the public generally. In the event that the Closing
contemplated hereby actually occurs, the Corporation shall disclose such
material nonpublic information in the Registration Statement required to be
filed pursuant to the Registration Rights Agreement.
3.15 Material Contracts. Except as set forth on Schedule 3.15 hereto, the
contracts listed as exhibits to the Corporation's Annual Report on Form 10-K for
the year ended December 31, 1998 and the Corporation's Quarterly Report on Form
10-Q for the three month period ended on March 31, 1999 are all of the material
contracts (as defined in the Securities Exchange Act of 1934, as amended) to
which the Corporation is a party or by which it or its assets may be bound. The
Corporation is, and, to the best of the Corporation's knowledge, all other
parties to such material contracts are, in compliance in all material respects
with their obligations thereunder. Except as set forth in Schedule 3.15, none of
such material contracts have been amended or modified in any material respect.
3.16 Title to Properties and Assets, Liens, etc. The Corporation has good
and marketable title to its properties and assets, and good title to its
leasehold estates, in each case subject to no mortgage, pledge, lien, lease,
encumbrance, or charge, other than (i) those resulting from taxes which have not
yet become delinquent, (ii) minor liens and encumbrances which do not materially
detract from the value of the property subject thereto or have a Material
Adverse Effect, and (iii) those that have otherwise arisen in the ordinary
course of business.
3.17 Patents and Trademarks. The Corporation owns or has rights to use
such trade names, copyrights, trade secrets, information, patents, trademarks,
service marks, rights and processes (including all applications therefor) as are
necessary for its business as now conducted and as proposed to be conducted,
without any conflict with or infringement of the rights of others, except where
any such conflict or infringement could not reasonably be expected to have a
Material Adverse Effect. Except as set forth on Schedule 3.17 hereto, there are
no material options, licenses, or agreements of any kind relating to the
foregoing, nor is the Corporation bound by or a party to any material options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, proprietary
rights and processes of any other person or entity. The Corporation has not
received any communications alleging that the Corporation has violated or, by
conducting its business as now conducted or proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity. The Corporation is not
aware that any of its employees is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
would interfere with the use of his or her best efforts to promote the interests
of the Corporation or that would conflict with the Corporation's business as now
conducted or proposed to be conducted. To the best of the Corporation's
knowledge, no person or entity is infringing or threatening to infringe the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of
the Corporation. All employees, officers, directors and consultants, other than
those employees or consultants who are not privy to any of the Corporation's
confidential information, are bound by confidentiality and assignment of
intellectual property and technology agreements and such agreements and
obligations do not confer on any such person any rights of the intellectual
property of the Corporation.
3.18 Labor Matters. The Corporation has no collective bargaining agreement
with any of its employees and, to the Corporation's knowledge, there is no labor
union organizing activity pending or threatened with respect to the Corporation.
There are no disputes pending or, to the knowledge of the Corporation,
threatened between the Corporation, on the one hand, and any of its employees,
on the other hand, other than employee grievances arising in the ordinary course
of business which would not, individually or in the aggregate, have a Material
Adverse Effect. Except as set forth on Schedule 3.18, the Corporation has no
agreements providing for the payment of severance with any of its officers,
directors or employees. The Corporation has complied in all materials respects
with the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and does not maintain any plans subject to the filing requirements of Section
302 of ERISA or the provisions of Title IV of ERISA.
SECTION 4
Representations and Warranties of the Purchasers
Each Purchaser hereby represents, warrants and covenants to the
Corporation that:
4.1 Authorization. Such Purchaser has full power and authority to enter
into this Agreement, and such agreement constitutes its valid and legally
binding obligation, enforceable in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies, and (iii) to the
extent the indemnification provisions contained in this Agreement may be limited
by applicable federal or state securities laws.
4.2 Purchase Entirely for Own Account. This Agreement is made with such
Purchaser in reliance upon such Purchaser's representation to the Corporation,
which by such Purchaser's execution of this Agreement such Purchaser hereby
confirms, that the Common Stock to be received by such Purchaser (the
"Securities") will be acquired for investment for such Purchaser'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 such Purchaser has no present intention of selling,
granting any participation in or otherwise distributing the same. By executing
this Agreement, such Purchaser further represents that such Purchaser does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Securities.
4.3 Disclosure of Information. Such Purchaser believes it has received all
the
information it considers necessary or appropriate for deciding whether to
purchase the Common Stock. Such Purchaser further represents that it has had an
opportunity to ask questions and receive answers from the Corporation regarding
the terms and conditions of the offering of the Common Stock and the business,
properties, prospects and financial condition of the Corporation.
4.4 Investment Experience. Such Purchaser is an investor in securities of
companies in the development stage and acknowledges that it can bear the
economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Common Stock. If other than an individual, such
Purchaser also represents it has not been organized for the purpose of acquiring
the Common Stock.
4.5 Accredited Investor. Such Investor is an "accredited investor" within
the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation
D, as presently in effect.
4.6 Restricted Securities. Such Purchaser understands that the Securities
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Corporation in a
transaction not involving a public offering and that under such laws and
applicable regulations such Securities may be resold without registration under
the Act only in certain limited circumstances. In the absence of an effective
registration statement covering the Securities or an available exemption from
registration under the Act, the Common Stock must be held indefinitely. In this
connection, such Purchaser represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act, including without limitation the Rule 144 condition that current
information about the Corporation be available to the public.
4.7 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, such Purchaser further agrees not to make any
disposition of all or any portion of the Securities unless and until:
(a) there is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or
(b)(i) the transferee has agreed in writing for the benefit of the
Corporation to be bound by this Section 4, (ii) such Purchaser shall have
notified the Corporation of the proposed disposition and shall have furnished
the Corporation with a detailed statement of the circumstances surrounding the
proposed disposition, and (iii) if requested by the Corporation, such Purchaser
shall have furnished the Corporation with an opinion of counsel, reasonably
satisfactory to the Corporation that such disposition will not require
registration of such shares under the Act. It is agreed that the Corporation
will not require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
4.8 Legends. It is understood that the certificates evidencing the
Securities may bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED."
4.9 Tax Advisors. Such Purchaser has reviewed with such Purchaser's own
tax advisors the federal, state and local tax consequences of this investment,
where applicable, and the transactions contemplated by this Agreement. With
respect to matters related to the tax consequences of the transactions
contemplated by this Agreement, each such Purchaser is relying solely on such
advisors and not on any statements or representations of the Corporation or any
of its agents and understands that each such Purchaser (and not the Corporation)
shall be responsible for such Purchaser's own tax liability that may arise as a
result of this investment or the transactions contemplated by this Agreement.
4.10 Purchaser Counsel. Such Purchaser acknowledges that such Purchaser
has had the opportunity to review this Agreement, the exhibits and the schedules
attached hereto and the transactions contemplated by this Agreement with such
Purchaser's own legal counsel. Each such Purchaser is relying solely on such
Purchaser's legal counsel and not on Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, for legal
advice with respect to this investment or the transactions contemplated by this
Agreement.
SECTION 5
Conditions to Obligations of the Purchasers
The obligation of the Purchasers to purchase the Stock is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
5.1 Representations and Warranties. The representations and warranties of
the Corporation shall be true and correct in all material respects on the
Closing Date.
5.2 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Corporation on or prior
to the Closing Date shall have been performed or complied with in all material
respects.
5.3 Opinion of Corporation's Counsel. The Purchasers shall have received
from counsel to the Corporation an opinion with respect to the representations
set forth in the first sentence of Section 3.3 hereof, and on the basis of such
counsel's review of the Other Agreements and certificates of officers of the
Corporation as to factual matters, with respect to the representations set forth
in the second sentence and clause (ii) of the third sentence relating to
pre-emptive rights of Section 3.3 hereof.
5.4 Legal Issuance. At the time of the Closing, the issuance and purchase
of the
Stock shall be legally permitted by all laws and regulations to which the
Purchasers and the Corporation are subject.
5.5 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in form and
substance to the Purchasers and their counsel.
SECTION 6
Conditions to Obligations of the Corporation
The Corporation's obligation to sell the Stock is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
6.1 Representations and Warranties. The representations and warranties
made by the Purchasers shall be true and correct in all material respects on the
Closing Date.
6.2 Legal Issuance. At the time of the Closing, the issuance and purchase
of the Stock shall be legally permitted by all laws and regulations to which the
Purchasers and the Corporation are subject.
6.3 Payment. The Corporation shall concurrently receive payment for the
Stock as provided in Section 2.
SECTION 7
Covenant to Register
7.1 For purposes of this Section 7, the following definitions shall apply:
(i) The terms "register", "registered", and "registration" refer to
a registration under the Securities Act of 1933, as amended (the "Act") effected
by preparing and filing a registration statement or similar documents in
compliance with the Act or an amendment thereto, and the declaration or ordering
of effectiveness of such registration statement, document or amendment thereto.
(ii) The term "Registrable Securities" means the Stock and any
securities of the Corporation or securities of any successor corporation issued
as, or issuable upon the conversion or exercise of any warrant, right or other
security that is issued as, a dividend or other distribution with respect to, or
in exchange for or in replacement of, such Stock.
7.2 The Corporation agrees to file within ten (10) days of the Closing, a
registration statement on Form S-3 in order to register the resale of the
Registrable Securities and use its best efforts to cause such registration
statement to be declared effective as soon as possible after Closing.
7.3 If the Corporation proposes to register (including for this purpose a
registration effected by the Corporation for shareholders other than the
Purchaser) any of its stock or other securities under the Act in connection with
a public offering of such securities (other than a registration on Form X-0,
Xxxx X-0 or other limited purpose form or a registration effected pursuant to
agreements to register in effect on the date hereof) and the Registrable
Securities have not heretofore been included in a registration statement under
Subsection 7.2, which remains effective, the Corporation shall, at such time,
promptly give the Purchasers written notice of such registration. Upon the
written request of any Purchaser given within ten (10) days after receipt of
such notice by such Purchaser, the Corporation shall cause to be registered
under the Act all of the Registrable Securities that such Purchaser has
requested to be registered. However, the Corporation shall have no obligation
under this Subsection 7.3 to the extent that, with respect to a public offering
registration, any underwriter of such public offering reasonably requests that
the Registrable Securities or a portion thereof be excluded therefrom.
Notwithstanding the foregoing, nothing in this Section 7.3 shall limit the
Corporation's obligations under Section 7.2 above, and any such registration
(other than a registration on Form X-0, Xxxx X-0 or other limited purpose form
or a registration effected pursuant to agreements to register in effect on the
date hereof) shall first be approved by the Representative.
7.4 Whenever required under this Section 7 to effect the registration of
any Registrable Securities, the Corporation shall, as expeditiously as
reasonably possible:
(i) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration to become effective and, upon the request of any Purchaser, keep
such registration statement effective for so long as such Purchaser desires to
dispose of the securities covered by such registration statement or, if earlier,
at such time as such Purchaser could sell all of such Registrable Securities
under Rule 144(k). The registration statement (and each amendment or supplement
thereto, and each request for acceleration of effectiveness thereof) shall be
provided to (and subject to the approval of) the holders of the Registrable
Securities and their counsel at least 5 days prior to its filing or other
submission, which approval shall be promptly provided and shall not be
unreasonably withheld.
(ii) Prepare and file with the SEC such amendments and supplements
to such registration statements and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(iii) Furnish to the Purchasers such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as the Purchasers may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by the Purchasers.
(iv) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by Purchasers,
provided that the Corporation shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a general
consent to service and process in any such states or jurisdictions.
(v) Notify Purchasers of the happening of any event as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing.
(vi) Furnish, at the request of any Purchaser, an opinion of counsel
of the Corporation, dated the effective date of the registration statement, as
to the due authorization and issuance of the securities being registered and
compliance with securities laws by the Corporation in connection with the
authorization and issuance thereof.
7.5 Each Purchaser will furnish to the Corporation in connection with any
registration under this Section 7 such information regarding itself, the
Registrable Securities and other securities of the Corporation held by it, and
the intended method of disposition of such securities as shall be required to
effect the registration of the Registrable Securities held by such Purchaser.
7.6 (i) The Corporation shall indemnify, defend and hold harmless each
holder of Registrable Securities which are included in a registration statement
pursuant to the provisions of this Section 7, any underwriter (as defined in the
Act) for such holder, and the directors, officers and controlling persons of
such holder or underwriter from and against, and shall reimburse all of them
with respect to, any and all claims, suits, demands, causes of action, losses,
damages, liabilities, costs or expenses ("Liabilities") to which any of them may
become subject under the Act or otherwise, arising from or relating to (A) any
untrue statement or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein or any amendment
or supplement thereto, or (B) the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements herein, in light of the circumstances in which they were made, not
misleading; provided, however, that the Corporation shall not be liable in any
such case to the extent that any such Liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by such person in writing
specifically for use in the preparation thereof.
(ii) Each holder of Registrable Securities included in a
registration pursuant to the provision of this Section 7 shall indemnify,
defend, and hold harmless the Corporation, its directors and officers, and shall
reimburse the Corporation its directors and officers with respect to, any and
all Liabilities to which any of them may become subject under the Act or
otherwise, arising from or relating to (A) any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, or (B)
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
strict conformity with written information furnished by or on behalf of such
holder specifically for use in the preparation thereof.
(iii) Promptly after receipt by an indemnified party pursuant to the
provisions of Subsection 7.6(i) or 7.6(ii) of notice of the commencement of any
action involving the subject matter of the foregoing indemnity provisions, such
indemnified party shall, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of Subsection 7.6(i) or 7.6(ii),
promptly notify the indemnifying party of the commencement thereof; provided,
however, that the failure to so notify the indemnifying party shall not relieve
it from its indemnification obligations hereunder except to the extent that the
indemnifying party is materially prejudiced by such failure. If such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party; provided, however, if the
defendants in any action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that there may
be legal defenses different from or in addition to those available to the
indemnifying party, or if there is conflict of interest which would prevent
counsel for the indemnifying party from also representing the indemnified party,
the indemnified party shall have the right to select separate counsel to
participate in the defense of such action on behalf of such indemnified party.
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party pursuant to Subsection 7.6(i) or 7.6(ii) for
any expense of counsel subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (A) the indemnified party shall have employed counsel in
accordance with the provisions of the preceding sentence, or (B) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after the notice of the commencement of the action. An indemnifying party shall
not be responsible for amounts paid in settlement without its consent, provided
that its consent may not be unreasonably withheld. No indemnifying party shall,
without the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any indemnified party.
7.7 (i) With respect to the inclusion of Registrable Securities in a
registration statement pursuant to this Section 7, all fees, costs and expenses
of and incidental to such registration, inclusion and public offering shall be
borne by the Corporation; provided, however, that any securityholders
participating in such registration shall bear their pro rata share of the
underwriting discounts and commissions, if any.
(ii) The fees, costs and expenses of registration to be borne by the
Corporation
as provided in this Subsection 7.7 shall include, without limitation, all
registration, filing and NASD fees, printing expenses, fees and disbursements of
counsel and accountants for the Corporation, and all legal fees and
disbursements and other expenses of complying with state securities or Blue Sky
laws of any jurisdiction or jurisdictions in which securities to be offered are
to be registered and qualified.
7.8 The rights to cause the Corporation to register all or any portion of
Registrable Securities pursuant to this Section 7 may be assigned by the
Purchasers to a transferee or assignee of the Registrable Securities. Within a
reasonable time after such transfer the Purchasers shall notify the Corporation
of the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned. Such assignment
shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted under
the Act. Any transferee asserting registration rights hereunder shall be bound
by the provision of this Section 7.
7.9 From and after the date of this Agreement, the Corporation shall not
agree to allow the holders of any securities of the Corporation to include any
of their securities in any registration statement filed by the Corporation
pursuant to Subsection 7.2 unless the inclusion of such securities will not
reduce the amount of the Registrable Securities included therein.
7.10 Omitted.
7.11 In connection with any primary offering involving an underwriting of
shares of the Corporation's common stock, the Corporation shall not be required
under this Section 7 to include any Purchaser's securities in such underwriting
unless such Purchaser accepts the terms of the underwriting as agreed upon
between the Corporation and the underwriters selected by it, and then only in
such quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Corporation.
7.12 The Corporation may suspend the effectiveness of a registration
statement required by this Section 7.12 for a period of not more than thirty
(30) days if the Corporation is engaged in confidential negotiations or other
confidential business activities the disclosure of which (in the reasonable
opinion of outside counsel to the Corporation) would be required in such
registration statement and would not be required if such registration statement
were not filed and effective, and the Board of Directors of the Corporation
determines in good faith that such disclosure would be materially detrimental to
the Corporation and its stockholders, provided, however, that the Corporation
shall not utilize this right more than once in any twelve-month period.
SECTION 8
Affirmative Covenants of the Corporation
The Corporation hereby covenants that, during such time as any Purchaser
(or one of such Purchaer's affiliates) owns any shares of Stock totaling in
excess of 50,000 shares, or for
four years, whichever period is shorter:
8.1 Reports and Financial Statements.
(a) The Corporation will cause its common stock to continue to be
registered under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934,
will comply in all respects with its reporting and filing obligations under said
Act, and will not take any action or file any document (whether or not permitted
by said Act or the rules thereunder) to terminate or suspend such registration
or to terminate or suspend its reporting and filing obligations under said Act.
The Corporation will take all action necessary to continue the listing or
trading of its common stock on any national securities exchange or the Automated
Quotation System of the National Association of Securities Dealers on which such
common stock is listed or traded, and will comply in all respects with its
reporting, filing and other obligations under the bylaws or rules of said
exchange or Association.
(b) The Corporation will furnish to such Purchaser, concurrently
with the distribution or filing thereof, each annual and quarterly report to its
shareholders, its reports on Form 10K and 10Q, and each other report,
registration statement, definitive proxy statement or other document filed with
the S.E.C., and each press release or other public announcement issued by the
Corporation.
8.2 Maintenance of Office. The Corporation will maintain an office or
agency in the United States at such address as may be designated in writing from
time to time to the registered holders of the Stock, where notices,
presentations and demands to or upon the Corporation in respect of the Stock may
be given or made. Unless or until another office or agency is designated by the
Corporation, such office shall be at the address set forth adjacent to the name
of the Corporation at the foot of this Agreement.
8.3 Maintenance and Compliance. The Corporation will (i) maintain its
corporate existence, rights, powers and privileges in good standing, (ii) comply
in all material respects with all laws and governmental regulations and
restrictions applicable to its business or properties, (iii) keep records and
books of account and maintain a system of internal accounting controls in
accordance with generally accepted accounting principles and in compliance with
Section 13(b)(2) of the Securities Exchange Act of 1934, and (iv) retain
independent public accountants of recognized national standing as auditors of
the Corporation's annual financial statements.
8.4 Assignment of Rights. The rights of such Purchaser hereunder may be
assigned by such Purchaser in connection with the transfer or assignment. Such
rights may be further reassigned by such transferee to another such transferee
to another such transferee. Any transferee asserting rights under this Agreement
shall be bound by its provisions.
8.5 Effect of Covenants. The covenants in Sections 8.1 and 8.3 shall not
be deemed to prohibit a merger, sale of all assets or other corporate
reorganization if (i) the entity surviving or succeeding to the Corporation is
bound by this Agreement with respect to its securities issued in exchange for or
replacement of the Stock, or (ii) the consideration received in exchange for or
replacement of the Stock is cash.
SECTION 9
Legend on Stock
Until the registration contemplated by Section 7 above is declared
effective with respect to the stock, each certificate representing the Stock
shall be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under any applicable state
securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
Upon request of a holder of Stock the Corporation shall remove the
foregoing legend or issue to such holder a new certificate therefor free of any
such legend, if the Corporation shall have received either an opinion of counsel
or a "no-action" letter of the S.E.C., in either case reasonably satisfactory in
substance to the Corporation and its counsel, to the effect that such legend is
no longer required.
SECTION 10
Arbitration
10. Arbitration.
10.1 Scope. Resolution of any and all dispute arising from or in
connection with this Agreement, whether based on contract, tort, common law,
equity, statute, regulation, order or otherwise ("Disputes"), including disputes
arising in connection with claims by third persons, shall be exclusively
governed by and settled in accordance with the provisions of this Section 10;
provided, that the foregoing shall not preclude equitable or other judicial
relief to enforce the provisions hereof or to preserve the status quo pending
resolution of Disputes hereunder.
10.2. Binding Arbitration. The parties hereby agree to submit all Disputes
to arbitration for final and binding resolution. Any party may initiate such
arbitration by delivery of a demand therefor (the "Arbitration Demand") to the
other parties. The arbitration shall be conducted in New York, New York by a
sole arbitrator selected by agreement of the parties not later than 10 days
after delivery of the Arbitration Demand, or, failing such agreement, appointed
pursuant to the Commercial Arbitration Rules of the America Arbitration
Association, as amended from time to time (the "AAA Rules"). If the arbitrator
becomes unable to serve, his successor(s) shall be similarly selected or
appointed.
10.3. Procedure. The arbitration shall be conducted pursuant to the
Federal Arbitration Act and such procedures as the parties may agree or, in the
absence of or failing such agreement, pursuant to the AAA Rules. Notwithstanding
the foregoing, (a) each party shall have the right to audit the books and
records of the other parties that are reasonably related to the Dispute; (b)
each party shall provide to the other, reasonably in advance of any hearing,
copies of all documents that a party intends to present in such hearing; (c) all
hearings shall be conducted on an expedited schedule; and (d) all proceedings
shall be confidential, except that either party may at its expense make a
stenographic record thereof.
10.4. Timing. The arbitrator shall complete all hearings not later than 90
days after his or her selection or appointment, and shall make a final award not
later than 30 days thereafter. The arbitrator shall apportion all costs and
expenses of the arbitration, including the arbitrator's fees and expenses, and
fees and expenses of experts ("Arbitration Costs") between the prevailing and
non-prevailing party as the arbitrator shall deem fair and reasonable. In
circumstances where a Dispute has been asserted or defended against on grounds
that the arbitrator deems manifestly unreasonable, the arbitrator may assess all
Arbitration Costs against the non-prevailing party and may include in the award
the prevailing party's attorney's fees and expenses in connection with any and
all proceedings under this Section 10. Notwithstanding the foregoing, in no
event may the arbitrator award multiple or punitive damages.
SECTION 11
Miscellaneous
11.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Any action or proceeding
relating to this Agreement may be brought in the courts of New York sitting in
New York City, or in the United States courts located in New York, and each of
the parties irrevocably consents to the jurisdiction of such courts in any such
action or proceeding.
11.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of and be binding upon
the successors and assigns of the parties.
11.3 Entire Agreement; Amendment. This Agreement (including any Exhibits
hereto) and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated except by a written instrument signed
by the Corporation and holders of a majority of the Stock.
11.4 Notices, etc. All notices and other communications required or
permitted hereunder shall be mailed by internationally recognized courier
service and facsimile addressed (a) if to the Purchaser, as indicated below the
Purchaser's signature with a copy to the designated entity or at such other
address as the Purchaser shall have furnished to the Corporation in writing, or
(b) if to any other holder of any Stock at the address of such holder as shown
on the records of
the Corporation, or (c) if to the Corporation, at its address set forth below or
at such other address as the Corporation shall have furnished to the Purchaser
and each such other holder in writing. All such notices or communications shall
be deemed given when delivered personally, by internationally recognized courier
or by facsimile.
11.5 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement (including any holder of
Stock), upon any breach or default of another party under this Agreement, shall
impair any such right, power or remedy of such party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and
not alternative.
11.6 Severability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
11.7 Titles and Subtitles. The titles of the Sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
11.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
11.9 Public Statements. Any press release or other publicity concerning
this Agreement or the transactions contemplated by this Agreement shall be
submitted to the Representative for comment at least two (2) business days prior
to issuance.
11.10 Fees and Expenses. The parties hereto shall pay their own costs and
expenses in connection herewith, except that the Corporation shall pay to the
Representative up to $40,000 as and for all reasonable out-of-pocket expenses
incurred by such Representative in connection herewith, including the reasonable
fees and expenses of the Representative's counsel.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the day and year first
written above.
FAXSAV INCORPORATED
By:
Xxxxx X. Xxxxxxxx, Vice President
and Chief Financial Officer
Address: 000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
[CORPORATION'S SIGNATURE PAGE TO THE STOCK PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the day and year first
written above.
PURCHASER
By:
Title:
Address:
Facsimile:
Number of Shares:
Price: $___________ per Share
[SIGNATURE PAGE TO THE STOCK PURCHASE AGREEMENT]
