EXHIBIT 10.2
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of August
27, 1999, by and among e4L, INC., a corporation organized under the laws of the
State of Delaware (the "COMPANY"), with headquarters located at 00000 Xxxxxxx
Xxxxxxxxx, 0xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 and each of the purchasers
(the "PURCHASERS") set forth on the execution pages hereof (the "EXECUTION
PAGES").
WHEREAS:
1. The Company and each Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of 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 "SECURITIES ACT");
2. Each Purchaser desires to purchase, upon the terms and conditions
stated in this Agreement, units (the "Units"), each Unit consisting of (i)
1,000 shares of the Company's Series F Convertible Preferred Stock, par value
$.01 per share (the "PREFERRED SHARES"), convertible into the Company's
common stock, par value $.01 per share (the "COMMON STOCK"), (ii) warrants
(the "BUYITNOW WARRANTS"), in the form attached hereto as EXHIBIT B to
acquire 20,000 common units of Xxxxxxxx.xxx, LLC (the "BUYITNOW COMMON
SHARES") presently owned by the Company and (iii) warrants (the "e4L
WARRANTS") in the form attached hereto as EXHIBIT C to acquire 10,000 shares
of Common Stock. The rights, preferences and privileges of the Preferred
Shares, including the terms upon which such Preferred Shares are convertible
into shares of Common Stock, are set forth in the form of Certificate of
Designations, Preferences and Rights attached hereto as EXHIBIT A (the
"CERTIFICATE OF DESIGNATION"). The shares of Common Stock issuable upon
conversion of the Preferred Shares or otherwise pursuant to the Certificate
of Designation are referred to herein as the "CONVERSION SHARES,"the shares
of Common Stock issuable upon exercise of or otherwise pursuant to the e4L
Warrants are referred to herein as the "e4L Warrant Shares," and the Buyitnow
Common Shares transferrable upon exercise of or otherwise pursuant to the
Buyitnow Warrants are referred to herein as the "BUYITNOW WARRANT SHARES."
3. 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 D (the "REGISTRATION
RIGHTS AGREEMENT"), pursuant to which the Company has agreed to provide
certain registration rights under the Securities Act and the rules and
regulations promulgated thereunder, and applicable state securities laws;
NOW, THEREFORE, the Company and the Purchasers hereby agree as
follows:
(a) PURCHASE AND SALE OF UNITS.
(i) PURCHASE OF UNITS. On the Closing Date (as defined below),
subject to the satisfaction (or waiver) of the conditions set forth in
Section 6 and Section 7 below, the Company shall issue and sell to each
Purchaser and each Purchaser severally agrees to purchase from the Company,
such number of Units as is set forth on such Purchaser's Execution Page
hereto. The purchase price (the "PURCHASE PRICE") per Unit shall be equal to
One Million Dollars ($1,000,000.00), and a minimum of one Unit must be
purchased. Each Purchaser's obligation to purchase Units hereunder is
distinct and separate from each other Purchaser's obligation to purchase
Units and no Purchaser shall be required to purchase hereunder more than the
number of Units set forth on such Purchaser's Execution Page hereto
notwithstanding any failure by any other Purchaser to purchase Units
hereunder.
(ii) FORM OF PAYMENT. On the Closing Date, each Purchaser shall pay
the aggregate Purchase Price for the Units being purchased by such Purchaser
on the Closing Date by wire transfer to the Company, in accordance with the
Company's written wiring instructions, against delivery of duly executed
certificates representing the Preferred Shares and Warrants being purchased
by such Purchaser and the Company shall deliver such certificates and
Warrants against delivery of such aggregate Purchase Price.
(iii) CLOSING DATE. 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 Units to each of the Purchasers pursuant
to this Agreement (the "CLOSING") shall be 12:00 noon Eastern Daylight
Savings Time on August 27, 1999, subject to a two (2) business day grace
period at either party's option, but in any event not later than August 31,
1999, or such other time as may be mutually agreed upon by the Company and
the Purchasers (the "CLOSING DATE"). The closing shall occur at the offices
of Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx LLP, 000 X. Xxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
(b) PURCHASERS' REPRESENTATIONS AND WARRANTIES
Each Purchaser severally represents and warrants to the Company that:
(i) INVESTMENT PURPOSE. Purchaser is purchasing the Units, including
the Preferred Shares, the Buyitnow Warrants and the e4L Warrants, for
Purchaser's own account for investment purposes only and not with a present
view towards the public sale or distribution thereof, except pursuant to
sales that are exempt from the registration requirements of the Securities
Act and/or sales registered under the Securities Act. Purchaser understands
that Purchaser must bear the economic risk of this investment indefinitely,
unless the Securities are registered pursuant to the Securities Act and any
applicable state securities or blue sky laws or an exemption from such
registration is available, and that the Company has no present intention of
registering the resale of any such Securities other than as contemplated by
the Registration Rights Agreement.
(ii) ACCREDITED INVESTOR STATUS. Purchaser is an "ACCREDITED
INVESTOR" as that term is defined in Rule 501(a) of Regulation D.
(iii) RELIANCE ON EXEMPTIONS. Purchaser understands that the Units
are being offered and sold to Purchaser 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 Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of Purchaser set forth herein
in order to determine the availability of such exemptions and the eligibility
of Purchaser to acquire the Units.
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(iv) INFORMATION. Purchaser and its counsel, if any, have been
furnished all materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the Units which
have been specifically requested by Purchaser or its counsel. Purchaser and
its counsel have been afforded the opportunity to ask questions of the
Company and have received what Purchaser believes to be satisfactory answers
to any such inquiries. Neither such inquiries nor any other investigation
conducted by Purchaser or its counsel or any of its representatives shall
modify, amend or affect Purchaser's right to rely on the Company's
representations and warranties contained in Section 3 below. Purchaser
understands that Purchaser's investment in the Securities involves a high
degree of risk.
(v) GOVERNMENTAL REVIEW. Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
(vi) TRANSFER OR RESALE. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the sale or resale of the
securities being acquired hereunder have not been and are not being registered
under the Securities Act or any state securities laws, and such securities may
not be transferred unless (a) the resale of such securities has been registered;
(b) Purchaser shall have delivered to the Company an opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that such securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration or (c) sold under Rule 144 promulgated under the Securities Act (or
a successor rule) ("RULE 144"); and (ii) neither the Company nor any other
person is under any obligation to register such securities under the Securities
Act or any state securities laws (other than pursuant to the Registration Rights
Agreement).
(vii) LEGENDS. Purchaser understands that the Preferred Shares,
Buyitnow Warrants and e4L Warrants, and, until such time as the Conversion
Shares, the Buyitnow Warrant Shares and the e4L Warrant Shares have been
registered under the Securities Act (including registration pursuant to Rule 416
thereunder) or otherwise may be sold by Purchaser under Rule 144, the
certificates for the Conversion Shares, the Buyitnow Warrant Shares and the e4L
Warrant Shares will bear a restrictive legend in substantially the following
form:
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 for opinions of counsel in comparable transactions, that
registration is not required under said Act or unless sold under 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 Conversion Shares or e4L
Warrant Shares upon which it is stamped, if, unless otherwise required by state
securities laws, (a) the sale of such Conversion Shares or e4L Warrant Shares is
registered under the Securities Act (including registration pursuant to Rule 416
thereunder) as contemplated by the Registration Rights Agreement; (b) such
holder provides the Company with an opinion of counsel, in form, substance and
scope customary for opinions of counsel in comparable transactions, to the
effect that a public sale or transfer of such Conversion Shares or e4L Warrant
Shares may be made without registration under the Securities Act; or (c) such
holder provides the Company with reasonable assurances that such Conversion
Shares or e4L Warrant Shares can be sold under Rule 144. In the event the above
legend is removed from any Conversion Shares or e4L Warrant Shares and
thereafter the effectiveness of a registration statement covering such
Conversion Shares or e4L Warrant Shares is suspended or the Company determines
that a supplement or amendment thereto is required by applicable securities
laws, then upon reasonable advance notice to Purchaser the Company may require
that the above legend be placed on any such Conversion Shares or e4L Warrant
Shares that cannot then be sold pursuant
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to an effective registration statement or under Rule 144 and Purchaser shall
cooperate in the replacement of such legend. Such legend shall thereafter be
removed when such Conversion Shares or e4L Warrant Shares may again be sold
pursuant to an effective registration statement or under Rule 144.
The Company shall further provide reasonable cooperation to the
Purchasers to assist with the removal of the legend on the Buyitnow Warrant
Shares in accordance with the requirements imposed by Xxxxxxxx.xxx, LLC with
respect to such legend removal.
(viii) AUTHORIZATION; ENFORCEMENT. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of Purchaser and are valid and binding agreements of Purchaser
enforceable in accordance with their terms.
(ix) RESIDENCY. Purchaser is a resident of the jurisdiction set forth
under such Purchaser's name on the Execution Page hereto executed by such
Purchaser.
(c) REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Purchaser that:
(i) ORGANIZATION AND QUALIFICATION. Except as set forth on SCHEDULE
3(a), the Company and each of its consolidated subsidiaries (each, a
"Subsidiary," and collectively, the "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 (i) the Securities, (ii) the
ability of the Company to perform its obligations hereunder or under the
Certificate of Designation, the Warrants or the Registration Rights Agreement or
(iii) the business, operations, properties or financial condition of the Company
and its Subsidiaries, taken as a whole.
(ii) AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Buyitnow Warrants, the e4L Warrants and the Registration Rights Agreement, to
issue and sell the Units in accordance with the terms hereof, to issue the
Conversion Shares upon conversion of the Preferred Shares in accordance with the
terms of the Certificate of Designation, to sell to the Purchaser the Buyitnow
Warrant Shares upon exercise and in accordance with the terms of the Buyitnow
Warrants and to issue and sell the e4L Warrant Shares upon exercise of the e4L
Warrants in accordance with the terms thereof; (ii) except as set forth in the
last sentence of this Section 3(b), the execution, delivery and performance of
this Agreement, the Buyitnow Warrants, the e4L Warrants and the Registration
Rights Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including without limitation the issuance of
the Preferred Shares, the Buyitnow Warrants and the e4L Warrants, the issuance
and reservation for issuance of the Conversion Shares and the e4L Warrant Shares
and the sale of the Buyitnow Warrant Shares) have been duly authorized by the
Company's Board of Directors and no further consent or authorization of the
Company, its Board of Directors, or its stockholders is required; (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
Buyitnow Warrants, the e4L Warrants and the Registration Rights Agreement, such
agreements will constitute, valid and binding obligations of the Company
enforceable against the Company in accordance with their terms.
(iii) CAPITALIZATION. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares issuable and
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reserved for issuance pursuant to the Company's stock option plans, the number
of shares issuable and reserved for issuance pursuant to securities (other than
the Preferred Shares) exercisable or exchangeable for, or convertible into, any
shares of Common Stock and the number of shares to be reserved for issuance upon
conversion of the Preferred Shares and upon exercise of the e4L Warrants is set
forth on SCHEDULE 3(c). All of such outstanding shares of capital stock have
been, or upon issuance in accordance with the terms of any such warrants,
options or preferred stock, will be, validly issued, fully paid and
nonassessable. No shares of capital stock of the Company (including the
Preferred Shares, the Conversion Shares and the e4L Warrant Shares) are subject
to preemptive rights or any other similar rights of the stockholders of the
Company or any liens or encumbrances. Except for the Securities and as set forth
on SCHEDULE 3(c), as of the date of this Agreement, (i) 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
exercisable 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 may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries, and (ii) 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 Securities Act
(except the Registration Rights Agreement). Except as set forth on SCHEDULE
3(c), there are no securities or instruments containing antidilution or similar
provisions that will be triggered by the issuance of the securities in
accordance with the terms of this Agreement, the Certificate of Designation or
the e4L Warrants. The Company has furnished or made available to the Purchasers
true and correct copies of the Company's Certificate of Incorporation as in
effect on the date hereof ("CERTIFICATE OF INCORPORATION"), the Company's
By-laws as in effect on the date hereof (the "BY-LAWS"), and all other
instruments and agreements governing securities convertible into or exercisable
or exchangeable for Common Stock of the Company. The Certificate of Designation,
in the form attached hereto, will be duly filed prior to Closing with the
Secretary of State of the State of Delaware and, upon the issuance of the
Preferred Shares in accordance with the terms hereof, each Purchaser shall be
entitled to the rights set forth therein.
(iv) ISSUANCE OF SHARES. The Preferred Shares are duly authorized and,
upon issuance in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances and will not be subject to preemptive rights or other similar
rights of stockholders of the Company and will not impose personal liability on
the holders thereof. The Conversion Shares and e4L Warrant Shares are duly
authorized and reserved for issuance, and, upon conversion of the Preferred
Shares or exercise of the e4L Warrants, as the case may be, will be validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances and will not be subject to preemptive rights or other similar
rights of stockholders of the Company and will not impose personal liability
upon the holder thereof. To the Company's knowledge, the Buyitnow Warrant
Shares, when sold to the Purchasers in accordance with the terms of the Buyitnow
Warrants, will be free from all taxes, liens, claims and encumbrances.
(v) NO CONFLICTS. The execution, delivery and performance of this
Agreement, the Buyitnow Warrants, the e4L Warrants and the Registration Rights
Agreement by the Company, the performance by the Company of its obligations
under the Certificate of Designation, and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance or sale, as the case may be, and reservation for issuance or sale and
sale, as applicable, of the Preferred Shares, Xxxxxxxx Xxxxxxxx, x0X Warrants,
Conversion Shares, Buyitnow Warrant Shares and e4L Warrant Shares) will not (i)
result in a violation of the Certificate of Incorporation or By-laws or (ii)
except as set forth on Schedule 3(e) hereof, 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
(including, without limitation, the triggering of any anti-dilution provisions),
acceleration or cancellation of, 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 U.S. federal and
state securities laws and regulations and rules or regulations of any
self-regulatory organizations to which either
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the Company or its securities are subject) 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, with respect to clause (ii), for such
conflicts, defaults, terminations, amendments, accelerations, cancellations 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 Certificate 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, nor has there occurred any event
giving others (with notice or lapse of time or both) any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, except 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 Purchaser owns any of the Preferred Shares,
e4L Warrants, Conversion Shares or e4L Warrant Shares, in violation of any law,
ordinance or regulation of any governmental entity, except for possible
violations the sanctions for which either singly or in the aggregate would not
have a Material Adverse Effect. Except as specifically contemplated by this
Agreement and the Registration Rights Agreement, the Company is not, except as
set forth on Schedule 3(e), 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 in order for it to execute,
deliver or perform any of its obligations under this Agreement, the Buyitnow
Warrants, the e4L Warrants or the Registration Rights Agreement or to perform
its obligations under the Certificate of Designation, in each case in accordance
with the terms hereof or thereof.
(vi) SEC DOCUMENTS, FINANCIAL STATEMENTS. Since March 31, 1996, the
Company has timely filed (within applicable extension periods) all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") (all of the foregoing, filed prior to the
date hereof and after March 31, 1999, and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein, being hereinafter referred to herein as the "SEC DOCUMENTS").
The Company has delivered or made available to the Purchasers true and complete
copies of such SEC Documents as the Purchasers have requested. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act or the Securities Act, as the case may be, 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 financial statements of the
Company 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 U.S. 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 not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the consolidated financial position of the Company and its
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
in the financial statements of the Company included in the SEC Documents filed
prior to the date hereof, the Company has no liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to the date of such financial statements, (ii) liabilities
not required by generally accepted accounting principles ("GAAP") to be
disclosed on a balance sheet prepared in accordance with GAAP, and (iii)
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
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liabilities and obligations referred to in clauses (i), (ii) and (iii)
individually or in the aggregate, are not material to the financial condition or
operating results of the Company.
(vii) ABSENCE OF CERTAIN CHANGES. Since MARCH 31, 1999, there has been
no material adverse change and no material adverse development in the business,
properties, operations, prospects, financial condition or results of operations
of the Company and its Subsidiaries, taken as a whole, except as disclosed in
SCHEDULE 3(g) or in the SEC Documents filed prior to the date hereof.
(viii) ABSENCE OF LITIGATION. Except as disclosed in the SEC Documents
filed prior to the date hereof, or as otherwise disclosed on SCHEDULE 3(h),
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, any of its Subsidiaries, or any of
their respective directors or officers in their capacities as such, which could
reasonably be expected to have a Material Adverse Effect.
(ix) INTELLECTUAL PROPERTY. Except as set forth on SCHEDULE 3(i), each
of the Company and its Subsidiaries owns or is licensed to use all material
patents, patent applications, trademarks, trademark applications, trade names,
service marks, copyrights, copyright applications, licenses, permits, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) and other similar rights and
proprietary knowledge (collectively, "INTANGIBLES") necessary for the conduct of
its business as now being conducted and as described in the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1999. To the best
knowledge of the Company, neither the Company nor any Subsidiary of the Company
infringes or is in conflict with any right of any other person with respect to
any Intangibles which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect.
Except as disclosed in the SEC Documents, neither the Company nor any of its
Subsidiaries has received written notice of any pending conflict with or
infringement upon such third party Intangibles, which alleged pending conflict
or alleged infringement, if adversely determined, would result in a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has entered into
any consent agreement, indemnification agreement outside the ordinary course of
business of the Company, forbearance to xxx or settlement agreement with respect
to the validity of the Company's or its Subsidiaries' ownership or right to use
its Intangibles and, to the best knowledge of the Company, there is no
reasonable basis for any such claim to be successful. The Intangibles are valid
and enforceable and no registration relating thereto has lapsed, expired or been
abandoned or canceled or is the subject of cancellation or other adversarial
proceedings, and all applications therefor are pending and are in good standing.
The Company and its Subsidiaries have complied, in all material respects, with
their respective contractual obligations relating to the protection of the
Intangibles used pursuant to licenses. To the best knowledge of the Company, no
person is infringing on or violating the Intangibles owned or used by the
Company or its Subsidiaries.
(x) FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any Subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977;
or made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.
(xi) DISCLOSURE. All information relating to or concerning the Company
set forth in this Agreement or provided to the Purchasers 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
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of the circumstances under which they were made, not misleading. No event or
circumstance has occurred or exists with respect to the Company or its
Subsidiaries or their respective businesses, properties, operations or financial
conditions, which has not been publicly disclosed but, under applicable law,
rule or regulation, would be required to be disclosed by the Company in a
registration statement filed on the date hereof by the Company under the
Securities Act with respect to the primary issuance of the Company's securities.
(xii) FORM S-3 ELIGIBILITY. The Company is currently eligible to
register the resale of its Common Stock on a registration statement on Form S-3
under the Securities Act.
(xiii) NO GENERAL SOLICITATION. The Company has not conducted any
"GENERAL SOLICITATION," as such term is defined in Regulation D, with respect to
any of the Securities being offered hereby.
(xiv) NO INTEGRATED OFFERING. Neither the Company, nor to the Company's
knowledge, any of its affiliates, nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would require
registration of the Securities being offered hereby under the Securities Act or
cause this offering of Securities to be integrated with any prior offering of
securities of the Company for purposes of the Securities Act or any applicable
stockholder approval provisions.
(xv) NO BROKERS. Except as disclosed on SCHEDULE 3(o), 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 by any Purchaser relating to this
Agreement or the transactions contemplated hereby.
(xvi) TITLE. The Company and its Subsidiaries have good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the SEC Documents or
SCHEDULE 3(p) or such as do not materially affect the value of such property and
do not materially interfere with the use made and proposed to be made of such
property by the Company and its Subsidiaries. The Company does not own any real
property. Any real property and facilities held under lease by the Company and
its Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not materially interfere with
the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
(d) COVENANTS.
(i) BEST EFFORTS. The parties shall use their best efforts timely to
satisfy each of the conditions described in Section 6 and 7 of this Agreement.
(ii) FORM D: BLUE SKY LAWS. The Company agrees to file a Form D with
respect to the securities purchased by the Purchasers hereunder as required
under Regulation D and to provide a copy thereof to each Purchaser promptly
after such filing. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary to qualify the
Securities for sale to the Purchasers pursuant to this Agreement under
applicable securities or "blue sky" laws of the states of the United States or
obtain exemption therefrom, and shall provide evidence of any such action so
taken to the Purchasers on or prior to the Closing Date.
(iii) REPORTING STATUS. So long as any Purchaser beneficially owns any
of the Preferred Shares, e4L Warrants, Conversion Shares or e4L Warrant Shares,
the Company shall timely file all reports required
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to be filed with the SEC pursuant to the Exchange Act, and the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination other than a termination occurring in connection with an
acquisition of the Company by a third party or pursuant to some other form of
business combination.
(iv) USE OF PROCEEDS. The Company shall use the proceeds from the sale
of the Preferred Shares as set forth in SCHEDULE 4(d).
(v) EXPENSES. Except as otherwise provided in the Registration Rights
Agreement, each party hereto shall be responsible for its own expenses incurred
in connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the other agreements to be executed in
connection herewith.
(vi) FINANCIAL INFORMATION. The Company agrees to send to each
Purchaser those reports which it generally sends to holders of its Common Stock
until such Purchaser transfers, assigns or sells all of its Preferred Shares and
e4L Warrants.
(vii) 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 (i) the full conversion of the outstanding
Preferred Shares and issuance of the Conversion Shares in connection therewith
and (ii) the full exercise of the outstanding e4L Warrants and issuance of the
e4L Warrant Shares in connection therewith.
(viii) LISTING. The Company shall promptly secure the listing of the
Conversion Shares and e4L Warrant Shares upon the NYSE and each other 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
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all Conversion Shares and e4L Warrant Shares from time to time
issuable upon conversion of the Preferred Shares or exercise of the e4L
Warrants, as applicable. Until such time as the Company has been acquired by a
third person or is otherwise involved in a business transaction resulting in the
Company no longer being publicly held (in conformity with Section 4(i) hereof),
the Company will use its best efforts to continue the listing and trading of its
Common Stock on the NYSE, the American Stock Exchange ("AMEX") or the Nasdaq
National Market ("NASDAQ") and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the NYSE,
such other exchanges or the National Association of Securities Dealers ("NASD"),
as applicable.
(ix) NO INTEGRATED OFFERINGS. The Company shall not make any offers or
sales of any security (other than the Preferred Shares, the e4L Warrants, the
Conversion Shares and the e4L Warrant Shares) under circumstances that would
require registration of the Preferred Shares, Conversion Shares, e4L Warrants or
e4L Warrant Shares being offered or sold hereunder under the Securities Act.
(x) SHORT SALES. So long as a Purchaser beneficially owns any Preferred
Shares, except as otherwise provided herein, such Purchaser shall not create a
"short position" in the Common Stock. For purposes hereof, a "short position"
shall be deemed to have been created by a Purchaser if such Purchaser (i) enters
into a "short sale" (as such term is defined in Rule 3b-3 under the Exchange
Act), (ii) purchases a put option to sell shares of Common Stock or (iii) enters
into any other agreement or arrangement designed to achieve the same purposes or
effects as those to be derived from the transactions enumerated in clauses (i)
or (ii) of this sentence.
-9-
(xi) LEGAL COMPLIANCE. The Company shall conduct its business and the
business of its Subsidiaries in compliance with all laws, ordinances or
regulations of governmental entities applicable to such businesses, except where
the failure to do so would not have a Material Adverse Effect.
(e) TRANSFER AGENT INSTRUCTIONS.
(i) The Company shall instruct its transfer agent to issue
certificates, registered in the name of each Purchaser or its nominee, for the
Conversion Shares or the e4L Warrant Shares in such amounts as specified from
time to time by such Purchaser to the Company upon conversion of the Preferred
Shares or exercise of the e4L Warrants. To the extent and during the periods
provided in Section 2(f) and 2(g) of this Agreement, all such certificates shall
bear the restrictive legend specified in Section 2(g) of this Agreement.
(ii) 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 transfer of the Conversion
Shares or e4L Warrant Shares prior to registration of the Conversion Shares and
e4L Warrant Shares under the Securities Act or without an exemption therefrom,
will be given by the Company to its transfer agent and that the Conversion
Shares and e4L Warrant Shares shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this Agreement
and the Registration Rights Agreement. Nothing in this Section shall affect in
any way each Purchaser's obligations and agreement set forth in Section 2(g)
hereof to resell the Preferred Shares, e4L Warrants, the Conversion Shares or
the e4L Warrant Shares pursuant to an effective registration statement or in
compliance with an exemption from the registration requirements of applicable
securities law.
(iii) If a Purchaser provides the Company and the transfer agent with
an opinion of counsel, which opinion of counsel shall be in form, substance and
scope customary for opinions of counsel in comparable transactions, to the
effect that the Preferred Shares, e4L Warrants, the Conversion Shares or e4L
Warrant Shares to be sold or transferred may be sold or transferred pursuant to
an exemption from registration, or a Purchaser provides the Company with
reasonable assurances (including an opinion of counsel if requested by the
Company) that such Preferred Shares, e4L Warrants, Conversion Shares and e4L
Warrant Shares may be sold under Rule 144, the Company shall permit the
transfer, and, in the case of the Conversion Shares and e4L Warrant Shares,
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by a Purchaser.
(f) CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Units to
a Purchaser hereunder is subject to the satisfaction, at or before the Closing
Date, 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.
(i) Each Purchaser shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Company.
(ii) Each Purchaser shall have delivered the Purchase Price for the
Units in accordance with Section 1(b) above.
-10-
(iii) The representations and warranties of each Purchaser shall be
true and correct as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date, which representations and warranties shall be true and correct as
of such date), and such Purchaser 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 such Purchaser
at or prior to the Closing Date.
(iv) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(v) The aggregate number of Units being purchased hereunder by all
Purchasers hereunder shall be 20.
(g) CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE.
The obligation of each Purchaser hereunder to purchase the Units to be
purchased by it at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for such Purchaser's sole benefit and may be waived by such
Purchaser at any time in the Purchaser's sole discretion:
(i) The Company shall have executed this Agreement, the Buyitnow
Warrants, the e4L Warrants and the Registration Rights Agreement, and delivered
the same to such Purchaser.
(ii) The Certificate of Designation shall have been accepted for filing
with the Secretary of State of the State of Delaware and a copy thereof
certified by the Secretary of State of Delaware shall have been delivered to
such Purchaser.
(iii) The Company shall have delivered to such Purchaser duly executed
Xxxxxxxx Xxxxxxxx, x0X Warrants and certificates (in such denominations as such
Purchaser shall reasonably request) representing the Preferred Shares being so
purchased by such Purchaser in accordance with Section 1(b) above.
(iv) The Common Stock shall be listed on the NYSE and trading in the
Common Stock (or the NYSE generally) shall not have been suspended by the SEC or
the NYSE.
(v) The representations and warranties of the Company shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date, which representations and warranties shall be true and correct as of such
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 the Closing Date. Such Purchaser shall have received a certificate, executed
by the Chief Executive Officer of the Company, dated as of the Closing Date to
the foregoing effect and as to such other matters as may be reasonably requested
by such Purchaser.
(vi) No statute, rule, regulation, executive order, decree, ruling,
injunction, action or proceeding shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent jurisdiction or
any self-regulatory organization having authority over the matters contemplated
-11-
hereby which questions the validity of, challenges or prohibits the consummation
of any of the transactions contemplated by this Agreement.
(vii) The Company shall have delivered evidence reasonably satisfactory
to the Purchasers that the Company's transfer agent has agreed to act in
accordance with irrevocable instructions in the form attached hereto as EXHIBIT
D.
(viii) There shall have been no material adverse changes and no
material adverse developments in the business, properties, operations,
prospects, financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole, since the date hereof, and no information, of
which the Purchasers are not currently aware, shall come to the attention of the
Purchasers that is materially adverse to the Company.
(h) GOVERNING LAW; MISCELLANEOUS.
(i) GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. The Company and the
Purchasers irrevocably consent to the jurisdiction of the United States federal
courts and the state courts located in the State of Delaware in any suit or
proceeding based on or arising under this Agreement and irrevocably agrees that
all claims in respect of such suit or proceeding may be determined in such
courts. The Company irrevocably waives the defense of an inconvenient forum to
the maintenance of such suit or proceeding. Service of process on the Company
mailed by first class mail shall be deemed in every respect effective service of
process upon the Company in any such suit or proceeding. Nothing herein shall
affect the right of any Purchaser to serve process in any other manner permitted
by law. The Company agrees that a final non-appealable judgment in any such suit
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
(ii) 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. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
In the event any signature is delivered by facsimile transmission, the party
using such means of delivery shall cause the manually executed Execution Page(s)
to be physically delivered to the other party within five (5) business days of
the execution hereof.
(iii) HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(iv) 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.
(v) 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. No provision of this Agreement may be
waived other than by an instrument in writing signed by the party to be charged
with enforcement and no provision of this Agreement may be amended other than by
an instrument in writing signed by the Company and each Purchaser.
-12-
(vi) 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 or by confirmed
telecopy, 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 or confirmed telecopy, in each case addressed to a party. The addresses
for such communications shall be:
If to the Company:
e4L, Inc.
00000 Xxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attn: Chief Financial Officer
If to any Purchaser, to such address set forth under such Purchaser's
name on the Execution Page hereto executed by such Purchaser.
Each party shall provide notice to the other parties of any change in
address.
(vii) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Except as
provided herein or therein, neither the Company nor any Purchaser shall assign
this Agreement, the Registration Rights Agreement or any rights or obligations
hereunder or thereunder.
(viii) 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.
(ix) SURVIVAL. The representations and warranties of the Company and
the agreements and covenants set forth in Sections 3, 4, 5 and 8 and the
representations and warranties of the Purchasers set forth in Section 2 shall
survive the closing hereunder notwithstanding any investigation conducted by or
on behalf of any Purchasers. Moreover, none of the representations and
warranties made by the Company herein shall act as a waiver of any rights or
remedies a Purchaser may have under applicable federal or state securities laws.
(x) FURTHER ASSURANCES. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(xi) TERMINATION. In the event that the Closing Date shall not have
occurred on or before August 31, 1999, unless the parties agree otherwise, this
Agreement shall terminate at the close of business on such date. Notwithstanding
any termination of this Agreement, any party not in breach of this Agreement
shall preserve all rights and remedies it may have against another party hereto
for a breach of this Agreement prior to or relating to the termination hereof.
(xii) JOINT PARTICIPATION IN DRAFTING. Each party to this Agreement has
participated in the negotiation and drafting of this Agreement. As such, the
language used herein shall be deemed to be the
-13-
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction will be applied against any party to this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
e4L, INC.
By: /s/
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
PURCHASER:
RS PACIFIC PARTNERS
By: /s/
--------------------------------------------------
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
RESIDENCE:
-------------------------------------------
ADDRESS:
----------------------------------------------------
AGGREGATE SUBSCRIPTION AMOUNT: $2,312,215
-15-
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
e4L, INC.
By: /s/
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
PURCHASER:
RS EMERGING GROWTH PARTNERS LP
By: /s/
--------------------------------------------------
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
RESIDENCE:
-------------------------------------------
ADDRESS:
----------------------------------------------------
AGGREGATE SUBSCRIPTION AMOUNT: $1,188,726
-16-
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
e4L, INC.
By: /s/
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
PURCHASER:
RS PREMIUM PARTNERS LP
By: /s/
--------------------------------------------------
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
RESIDENCE:
-------------------------------------------
ADDRESS:
----------------------------------------------------
AGGREGATE SUBSCRIPTION AMOUNT: $1,499,059
-17-
