FORM OF
SERIES B STOCK PURCHASE AGREEMENT
SERIES B STOCK PURCHASE AGREEMENT (the "AGREEMENT"), dated as of [ ],
2000, by and among Educational Video Conferencing, Inc., a Delaware corporation,
with headquarters located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (the "COMPANY"), and the investors listed on the Schedule of Buyers
attached hereto (individually, a "BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 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 "1933 ACT");
B. The Company has authorized the following series of Preferred Stock,
$.0001 par value per share (the "PREFERRED STOCK"): Series B 7% Convertible
Preferred Stock ("SERIES B PREFERRED STOCK") which shall be convertible into
shares of the Company's Common Stock, $.0001 par value per share (the "COMMON
STOCK") (as converted, the "CONVERSION SHARES"), in accordance with the terms of
the Company's Certificate of Designations, Preferences and Rights of the Series
B Preferred Stock, in the form attached hereto as EXHIBIT A (the "CERTIFICATE OF
DESIGNATIONS");
C. The Company shall authorize as of the Closing Date (as defined in
Section 1b.) the issuance of Common Stock Purchase Warrants to the Buyers (the
"WARRANTS") in the form attached hereto as EXHIBIT B, to acquire shares of
Common Stock at an exercise price equal to 150% of the Initial Conversion Price,
defined below, of the Series B Preferred Stock (such shares of Common Stock
issued upon exercise of the Warrants are hereinafter referred to as the "WARRANT
SHARES" and, together with the Series B Preferred Shares (defined below), the
Conversion Shares and the Warrants are referred to as the "SECURITIES").
D. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering an Amended and
Restated Registration Rights Agreement in the form attached hereto as EXHIBIT C
(the "REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has agreed
to provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF SERIES B PREFERRED SHARES.
a. PURCHASE OF SERIES B PREFERRED SHARES. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below,
the Company shall issue and sell to the Buyers and the Buyers shall purchase
from the Company an aggregate of [ ] shares of Series B Preferred Stock (the
"SERIES B PREFERRED SHARES"), in the respective amounts set forth opposite each
Buyer's name on the Schedule of Buyers (the "CLOSING"). The per share purchase
price (the "PURCHASE PRICE") of the Preferred Shares shall be $100 per share or
an
aggregate purchase price of $[ ]. On the Closing Date (as defined below) the
Company shall deliver to each Buyer a stock certificate representing such number
of Series B Preferred Shares which such Buyer is then purchasing (as indicated
opposite such Buyer's name on the Schedule of Buyers), duly executed on behalf
of the Company and registered in the name of such Buyer or its designee (the
"STOCK CERTIFICATES").
b. CLOSING DATE. The date and time of the Closing (the "CLOSING
DATE") shall be 10:00 a.m. Eastern Standard Time on [ ], 2000, subject to
notification of satisfaction (or waiver) of the conditions to the Closing set
forth in Sections 6 and 7 below (or such later date as is mutually agreed to in
writing by the Company and the Buyers). The Closing shall occur on the Closing
Date at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
c. FORM OF PAYMENT. On the Closing Date, each Buyer shall pay the
Purchase Price to the Company for the Series B Preferred Shares to be issued and
sold to such Buyer at the Closing, by wire transfer of immediately available
funds in accordance with the Company's written wire instructions provided to the
Buyers at least two days prior to the Closing Date.
d. WARRANTS. In consideration of the purchase of the Series B
Preferred Shares, the Company shall on the Closing Date issue and deliver to
each Buyer, Warrants to purchase in the aggregate the number of Warrant Shares
as equals the product of 75% and a fraction, the numerator of which is $[ ] and
the denominator of which is the Initial Conversion Price. Each Buyer will
receive Warrants to purchase the number of shares of Common Stock set forth in
the respective amounts set forth opposite such Buyer's name on the Schedule of
Buyers.
e. INITIAL CONVERSION PRICE. "INITIAL CONVERSION PRICE" means
$13.50.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
a. INVESTMENT PURPOSE. Such Buyer (i) is acquiring the Series B
Preferred Shares and the Warrants and (ii) upon conversion of the Series B
Preferred Shares and exercise of the Warrants, will acquire the Conversion
Shares and Warrant Shares, respectively, then issuable for its own account for
investment only and not with a view towards, or for resale in connection with,
the public sale or distribution thereof, except pursuant to sales registered or
exempted under the 1933 Act; provided, however, that by making the
representations herein, such Buyer does not agree to hold any Securities for any
minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act.
b. ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.
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c. RELIANCE ON EXEMPTIONS. Such Buyer understands that the Series B
Preferred Shares and Warrants are being offered and sold to it in reliance on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon the truth
and accuracy of, and such Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Buyer set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Buyer to acquire the Series B Preferred Shares and the
Warrants.
d. INFORMATION. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Series B
Preferred Shares and the Warrants which have been requested by such Buyer,
including, without limitation, the Company's Annual Report on Form 10-K for the
year ended December 31, 1999, its Quarterly Report on Form 10-Q for the periods
ended March 31, 2000 and June 30, 2000; its Current Reports on Form 8-K filed
with the SEC on January, 31, 2000, February 18, 2000, March 7, 2000 and March
28, 2000; the description of the Common Stock contained in the Company's Form
8-A filed with the SEC on February 10, 1999; and the Prospectus filed with the
SEC on February 24, 1999. Such Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company. Neither such inquiries
nor any other due diligence investigations conducted by such Buyer or its
advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
in Section 3 below.
e. NO GOVERNMENTAL REVIEW. Such Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Series B
Preferred Shares and the Warrants or the fairness or suitability of the
investment in the Securities nor have such authorities passed upon or endorsed
the merits of the offering of the Series B Preferred Shares and the Warrants.
f. TRANSFER OR RESALE. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall have delivered to the
Company an opinion of counsel, reasonably acceptable to the Company, to the
effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or (C)
such Securities can be sold, assigned or transferred pursuant to Rule 144
promulgated under the 1933 Act (or a successor rule thereto) ("RULE 144"); (ii)
any sale of such Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of such Securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the ▇▇▇▇ ▇▇▇) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder, except as set forth in the Registration Rights Agreement.
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g. LEGENDS. Such Buyer understands that the certificates or other
instruments representing the Series B Preferred Shares, the Warrants, the
Conversion Shares and the Warrant Shares shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Securities upon which it is
stamped, if (i) upon a resale, any such Securities are registered for sale under
the 1933 Act, (ii) in connection with a sale transaction, such holder provides
the Company with an opinion of counsel, reasonably acceptable to the Company, to
the effect that a public sale, assignment or transfer of any of the Securities
may be made without registration under the 1933 Act, or (iii) any of the
Securities can be sold pursuant to Rule 144 without any restriction as to the
number of securities acquired as of a particular date that can then be
immediately sold. Each Buyer acknowledges, covenants and agrees to sell any of
the Securities represented by a certificate(s) from which the legend has been
removed, only pursuant to (i) a registration statement effective under the 1933
Act, or (ii) advice of counsel that such sale is exempt from registration
required by Section 5 of the 1933 Act. In the event the above legend is removed
from any of the Securities, the Company may, upon reasonable advance notice to
the holder, require that the above legend be placed on any of the Securities
that cannot then be sold pursuant to an effective registration statement or Rule
144(k) under the 1933 Act (or any successor rule thereto).
h. AUTHORIZATION; ENFORCEMENT. This Agreement has been duly and
validly authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement of such Buyer enforceable in accordance with its
terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
i. RESIDENCY. Such Buyer is a resident of that country or state of
the United States specified in the Schedule of Buyers.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
a. ORGANIZATION AND QUALIFICATION. The Company and its subsidiaries
(a complete list of which is set forth in Schedule 3(a)) are corporations duly
organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated, and have the requisite corporate
power to own their properties and to carry on their business as now being
conducted. Each of the Company and 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, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect. "MATERIAL ADVERSE
Effect" means any material adverse effect on (i) the business, properties,
operations, condition (financial or otherwise), prospects or results of
operations of the Company and its subsidiaries, taken as a whole, (ii) on the
ability of the Company to perform its obligations hereunder, under the
Registration Rights Agreement, the Warrants or under the agreements or
instruments to be entered into or filed in connection herewith or therewith, or
(iii) the Securities.
b. AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.
(i) The Company has the requisite corporate power and authority to enter into
and perform this Agreement and the Registration Rights Agreement, to issue, sell
and perform its obligations with respect to the Series B Preferred Stock and the
Warrants in accordance with the terms hereof, the Certificate of Designations
and the Warrants, as applicable, and to issue the Conversion Shares and the
Warrant Shares upon conversion of the Series B Preferred Shares and the exercise
of the Warrants, respectively, in accordance with the Certificate of
Designations and the Warrants, respectively, (ii) the execution and delivery of
this Agreement 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 Series B Preferred Shares and
the Warrants and the reservation for issuance and the issuance of the Conversion
Shares issuable upon conversion of the Series B Preferred Shares and the Warrant
Shares upon exercise of the Warrants have been duly authorized by the Company's
Board of Directors and no further consent or authorization is required by the
Company, its Board of Directors or its stockholders, (iii) this Agreement, the
Registration Rights Agreement, the certificates for the Series B Preferred
Shares and the Warrants have been duly executed and delivered by the Company,
(iv) this Agreement, the Registration Rights Agreement, the Stock Certificates
and the Warrants constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors' rights and
remedies and except to the extent enforcement of the indemnification and
contribution provisions contained in the Registration Rights Agreement may be
limited by applicable securities laws, and (v) prior to the Closing, the
Certificate of Designations will have been filed with the Secretary of State of
the State of Delaware and will be in full force and effect, enforceable against
the Company in accordance with its terms.
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c. CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of 20,000,000 shares of Common Stock, of which as
of September 19, 2000, 4,443,523 shares were issued and outstanding, and
1,000,000 shares of Preferred Stock, of which as of September 19, 2000, 315,000
shares were issued and outstanding. All of such outstanding shares have been
validly issued and are fully paid and nonassessable. Except as disclosed in
Schedule 3(c) and except as provided in the Series B Stock Purchase Agreements
governing the issuance of other shares of Series B Preferred (the "Other
Agreements"), no shares of Common Stock or Preferred Stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company. Except as disclosed in Schedule 3(c) and
as provided in the Other Agreements, as of the date hereof, (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, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings 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 or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities and (iii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement). Except as disclosed in Schedule 3(c) and as
provided in the Other Agreements, there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of any of the Securities as described in this Agreement. The Company
has furnished to the Buyers true and correct copies of the Company's Certificate
of Incorporation, as amended and as in effect on the date hereof (the
"CERTIFICATE OF INCORPORATION"), and the Company's By-laws, as in effect on the
date hereof (the "BY-LAWS"), and the terms of all securities convertible into or
exercisable for Common Stock and the material rights of the holders thereof in
respect thereto.
d. ISSUANCE OF SECURITIES. The Series B Preferred Shares and
Warrants are duly authorized and, upon issuance in accordance with the terms
hereof, shall be (i) validly issued, fully paid and non-assessable, (ii) free
from all taxes, liens and charges with respect to the issue thereof and (iii)
entitled to the rights and preferences set forth in the Certificate of
Designations and the Warrants, respectively. Not less than 150% of the number of
shares of Common Stock necessary to provide for the issuance of the Conversion
Shares and the Warrant Shares (assuming such conversion or exercise took place
on the Closing Date) in accordance with the terms of this Agreement, the
Certificate of Designations and the Warrants have been duly authorized and
reserved for issuance upon conversion of the Series B Preferred Shares and
exercise of the Warrants. Upon conversion or exercise in accordance with the
Certificate of Designations and the Warrants, as applicable, the Conversion
Shares and Warrant Shares will be validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issue thereof,
with the holders being entitled to all rights accorded to a holder of Common
Stock.
e. NO CONFLICTS. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of this Agreement, the Registration Rights
Agreement and the Warrants by the Company, the performance by the Company of its
obligations under the Certificate of Designations and the Warrants and the
consummation by the Company of the
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transactions contemplated hereby and thereby will not (i) result in a violation
of the Certificate of Incorporation, any Certificate of Designations,
Preferences and Rights of any outstanding series of Preferred Stock of the
Company or By-laws or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the
Company or any of its subsidiaries is a party, or result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and the rules and regulations of the principal
market or exchange on which the Common Stock is traded or listed) 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 as disclosed in
Schedule 3(e), neither the Company nor its subsidiaries is in violation of any
term of or in default under its Certificate of Incorporation, any Certificate of
Designations, Preferences and Rights of any outstanding series of Preferred
Stock of the Company or By-laws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business of the
Company and its subsidiaries is not being conducted, and shall not be conducted,
in violation of any law, ordinance or regulation of any governmental entity.
Except as specifically contemplated by this Agreement and as required under the
1933 Act, the Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental or
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by this Agreement, the
Registration Rights Agreement or the Warrants or perform its obligations under
the Certificate of Designations in accordance with the terms hereof or thereof.
Except as disclosed in Schedule 3(e), all consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior to the date
hereof. The Company is not in violation of the listing requirements of the
Nasdaq SmallCap Market. The Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing or to
delisting of the Common Stock by the Nasdaq SmallCap Market.
f. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since February 10, 1999, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 ACT") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC DOCUMENTS"). The
Company has agreed to deliver to the Buyers or their representative true and
complete copies of the SEC Documents upon request. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. As of their respective dates, the 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
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financial statements have been prepared in accordance with generally accepted
accounting principles, consistently applied during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of the
dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments). No other information provided by or on behalf of the Company
to the Buyers which is not included in the SEC Documents, including, without
limitation, information referred to in Section 2(d) of this Agreement, contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they are or were made, not misleading. After the
Closing, the Company will not provide to any Buyer any material non-public
information which, according to applicable law, rule or regulation should have
been disclosed publicly by the Company but which has not been so disclosed as of
the date hereof.
g. ABSENCE OF CERTAIN CHANGES. Except as expressly set forth in
Schedule 3(g), since June 30, 2000, there has been no material adverse change
and no material adverse development in the business, properties, operations,
financial condition, results of operations or prospects of the Company and its
subsidiaries taken as a whole. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does the Company or its subsidiaries have any knowledge or
reason to believe that its creditors intend to initiate involuntary bankruptcy
proceedings.
h. ABSENCE OF LITIGATION. Except as 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 or its subsidiaries or their
respective directors or officers, or the Common Stock, wherein an unfavorable
decision, ruling or finding could individually or in the aggregate have a
Material Adverse Effect. Schedule 3(h) contains a complete list and summary
description of any pending, or to the knowledge of the Company, threatened
litigation against or affecting the Company or any of its subsidiaries, without
regard to whether it could have a Material Adverse Effect.
i. ACKNOWLEDGMENT REGARDING BUYERS' PURCHASE OF THE SERIES B
PREFERRED SHARES. The Company acknowledges and agrees that each of the Buyers is
acting solely in the capacity of arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that each Buyer is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to this Agreement and
the transactions contemplated hereby and any advice given by any of the Buyers
or any of their respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely incidental to such
Buyer's purchase of the Series B Preferred Shares. The Company further
represents to each Buyer that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation by the Company and
its representatives.
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j. NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the ▇▇▇▇ ▇▇▇) in connection with the offer or sale of any of
the Securities offered hereby.
k. NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause the offering of any of the Securities
to be integrated with prior offerings by the Company for purposes of the 1933
Act or any applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of The Nasdaq Stock Market.
l. EMPLOYMENT MATTERS; ERISA MATTERS. The Company and its
subsidiaries are in compliance with all federal, state, local and foreign laws
and regulations respecting employment and employment practices, terms and
conditions of employment and wages and hours except where failure to be in
compliance would not have a Material Adverse Effect. There are no pending
investigations involving the Company or any of its subsidiaries by the U.S.
Department of Labor or any other governmental agency responsible for the
enforcement of such federal, state, local or foreign laws and regulations. There
is no unfair labor practice charge or complaint against the Company or any of
its subsidiaries pending before the National Labor Relations Board or any
strike, picketing, boycott, dispute, slowdown or stoppage pending or to the
Company's knowledge threatened against or involving the Company or any of its
subsidiaries. Except as set forth in Schedule 3(l), no representation question
exists respecting the employees of the Company or any of its subsidiaries, and
no collective bargaining agreement or modification thereof is currently being
negotiated by the Company or any of its subsidiaries. No grievance or
arbitration proceeding is pending under any expired or existing collective
bargaining agreements of the Company or any of its subsidiaries. No material
labor dispute with the employees of the Company or any of its subsidiaries
exists or, to the knowledge of the Company, is imminent. Except as set forth on
Schedule 3(l), the Company has no employee benefit plans subject to the Employee
Retirement Income Security Act of 1974, as amended.
m. INTELLECTUAL PROPERTY RIGHTS. The Company and its subsidiaries
own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service ▇▇▇▇ registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights (collectively "INTELLECTUAL PROPERTY
RIGHTS") necessary to conduct their respective businesses as now conducted.
Except as set forth on Schedule 3(m), none of the Intellectual Property Rights
or other intellectual property rights have expired or terminated, or are
expected to expire or terminate in the near future. The Company and its
subsidiaries do not have any knowledge of any event, fact or circumstance
relating to (i) any infringement by the Company or its subsidiaries of any
trademarks, trade names, service marks, service ▇▇▇▇ registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets or other similar rights of others, or
of any such development of similar or identical trade secrets or technical
information by others or (ii) any person or entity now infringing any
Intellectual Property Rights or other similar rights or any such development of
similar or identical trade secrets or technical information owned or used by the
Company or any of its subsidiaries and,
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except as set forth on Schedule 3(m), there is no claim, action or proceeding
being made or brought against, or to the Company's knowledge, being threatened
against, the Company or its subsidiaries regarding any trademarks, trade names,
service marks, service ▇▇▇▇ registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets or other similar rights of others, or of any such
development of similar or identical trade secrets or technical information by
others or (ii) any person or entity now infringing any Intellectual Property
Rights or other similar rights or any such development of similar or identical
trade secrets or other infringement; and the Company and its subsidiaries are
unaware of any facts or circumstances which might give rise to any of the
foregoing. The Company and its subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
Intellectual Property Rights.
n. ENVIRONMENTAL LAWS. The Company and its subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
o. TITLE. The Company and its subsidiaries have good and marketable
title in fee simple to all real property and 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 Schedule 3(o) or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries. 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 interfere with the
use made and proposed to be made of such property and buildings by the Company
and its subsidiaries.
p. INSURANCE. The Company and each of its subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as is prudent and customary in the businesses in which the
Company and its subsidiaries are engaged. Neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
q. REGULATORY PERMITS; COMPLIANCE. The Company and its subsidiaries
possess all franchises, grants, authorizations, licenses permits, easements,
consents, certificates, approvals and orders necessary to own, lease and operate
its properties and to conduct their respective businesses as currently being
conducted (collectively, the "COMPANY PERMITS"). There is no action pending, or
to the knowledge of the Company, threatened regarding the suspension or
cancellation of any of the Company Permits. Neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of, any of the
Company Permits, except where such conflicts, default or violations would not
individually or in the
10
aggregate have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries has received any notification with respect to possible conflicts,
defaults, or violations of applicable laws.
r. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment of the Company's board of directors, to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
s. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company nor any
of its subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which has or is
expected in the future individually or in the aggregate to have a Material
Adverse Effect. Neither the Company nor any of its subsidiaries is a party to
any contract or agreement which has or is expected to have a Material Adverse
Effect.
t. TAX STATUS. Except as set forth on Schedule 3(t), the Company and
each of its subsidiaries has made or filed all federal and state income and all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.
u. CERTAIN TRANSACTIONS. Except as set forth on Schedule 3(u) and
except for arm's length transactions pursuant to which the Company makes
payments in the ordinary course of business upon terms no less favorable than
the Company could obtain from third parties and other than the grant of stock
options disclosed on Schedule 3(c), none of the officers, directors or employees
of the Company is presently a party to any transaction with the Company (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director or any such employee has a substantial interest or
is an officer, director, trustee or partner.
11
v. S-3 REGISTRATION. The Company is currently eligible to register
the resale of securities, including the resale of the Conversion Shares and the
Warrant Shares, on a registration statement on Form S-3 under the 1933 Act.
w. DISCLOSURE. All information relating to or concerning the Company
or any of its subsidiaries set forth in this Agreement and provided to the Buyer
pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
information exists with respect to the Company or any of its subsidiaries or its
or their business, properties, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed
(assuming for this purpose that the Company's reports filed under the 1934 Act
are being incorporated into an effective registration statement filed by the
Company under the 1933 Act).
x. INVESTMENT COMPANY STATUS. The Company is not and upon
consummation of the sale of the Securities will not be an "investment company,"
a company controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
y. FOREIGN CORRUPT PRACTICES. To the Company's knowledge, 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.
4. COVENANTS AND AGREEMENTS.
a. BEST EFFORTS. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.
b. FORM D. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to each
Buyer 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, or obtain exemption for the Securities for, sale to
the Buyers at the Closing pursuant to this Agreement under applicable securities
or "Blue Sky" laws of the states of the United States, and shall provide
evidence of any such action so taken to the Buyers on or prior to the Closing
Date.
12
c. REPORTING STATUS. Until the earlier of (i) six months after the
date as of which the Investors (as that term is defined in the Registration
Rights Agreement) may sell all of the Conversion Shares and Warrant Shares
without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto) or (ii) the date which is six months after the date on which
none of the Series B Preferred Shares or Warrants are outstanding (the
"REGISTRATION PERIOD"), the Company (x) shall timely file all reports required
to be filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would otherwise
permit such termination and (y) will use its best efforts to maintain its
ability and eligibility to register securities on Form S-3.
d. USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Series B Preferred Shares and Warrants for capital expenditures and
general corporate purposes.
e. FINANCIAL INFORMATION. The Company agrees to send the following
to each Investor (as that term is defined in the Registration Rights Agreement)
during the Registration Period: (i) within five (5) days after the filing
thereof with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly
Reports on Form 10-Q, any Current Reports on Form 8-K and any registration
statements or amendments filed pursuant to the 1933 Act; (ii) within one (1) day
after release thereof, copies of all press releases issued by the Company or any
of its subsidiaries; and (iii) copies of any notices and other information made
available or given to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders.
f. RESERVATION OF SHARES. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 150% of the number of shares of Common Stock needed to
provide for the issuance of the Conversion Shares and Warrant Shares, in the
aggregate, upon conversion of the Series B Preferred Shares and the exercise of
the Warrants, respectively, in accordance with the terms of this Agreement and
the Certificate of Designations.
g. LISTING. The Company shall promptly secure the listing of the
Conversion Shares and Warrant Shares upon the Nasdaq SmallCap (subject to
official notice of issuance) and shall maintain, so long as any other shares of
Common Stock shall be so listed, the listing of all Conversion Shares and
Warrant Shares from time to time issuable under the terms of this Agreement, the
Certificate of Designations and the Warrants on each national securities
exchange and automated quotation system (including the Nasdaq National Market
System and Nasdaq SmallCap), if any, upon which shares of Common Stock are then
listed. The Company shall promptly provide to each Buyer copies of any notices
it receives from NASDAQ regarding the continued eligibility of the Common Stock
for listing on the Nasdaq SmallCap. The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section 4(g).
h. EXPENSES. The Company and the Buyers shall each pay its
respective costs and expenses incurred by such party in connection with the
negotiation,
13
investigation, preparation, execution, delivery and performance of this
Agreement, the Certificate of Designations, the Warrants and the Registration
Rights Agreement.
i CERTAIN RESTRICTIONS. Neither a Buyer nor its affiliates shall
sell shares of Common Stock in the over-the-counter market or on any national
securities exchange (i) during the 10 Trading Days prior to the first
anniversary of the Closing Date, at prices that are between 50% and 100% of the
Initial Conversion Price (as defined in the Certificate of Designations), and
(ii) during the 10 Trading Days prior to the third anniversary of the Closing
Date, at prices that are between 50% and 100% of the Reset Conversion Price (as
defined in the Certificate of Designations).
j. DILUTIVE EFFECT. The Company understands and acknowledges that
the number of Conversion Shares and Warrant Shares issuable upon conversion of
the Series B Preferred Shares and exercise of the Warrants, respectively, will
increase in certain circumstances. The Company further acknowledges and agrees
that its obligation to issue Conversion Shares and Warrant Shares upon
conversion of the Series B Preferred Shares and exercise of the Warrants,
respectively, in accordance with this Agreement, the Certificate of
Designations, and the Warrants, as applicable, is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.
k. OPINION ON REMOVAL OF LEGEND. The Company will cause its counsel
to deliver an opinion, in the form attached hereto as EXHIBIT D, on the
effective date of a registration statement covering the resale of the Conversion
Shares and the Warrant Shares to the effect that the restrictive legend set
forth in Section 2(g) of this Agreement may be removed upon the sale, assignment
or other transfer of any and all such Conversion Shares and Warrant Shares sold
pursuant to such registration statement and accompanied by the prospectus
contained in such registration statement.
l. DISCLOSURE. From and after the date hereof, the Company shall not
disclose nonpublic information to any Buyer, advisors to or representatives of
such Buyer of which the Company has actual knowledge unless prior to disclosure
of such information the Company identifies such information as being nonpublic
information and provides the Buyer, such advisors and representatives of which
the Company has actual knowledge with the opportunity to accept or refuse to
accept such nonpublic information for review.
m. CORPORATE EXISTENCE. So long as any Buyer beneficially owns any
Securities, the Company shall maintain its corporate existence in good standing
under the laws of the jurisdiction in which it is incorporated.
n. SOLVENCY. The Company individually and together with the
Subsidiaries on a consolidated basis (both before and after giving effect to the
transactions contemplated by this Agreement) is solvent (i.e., its assets have a
fair market value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured) and
currently the Company has no information that would lead it to reasonably
conclude that the Company would not have, nor does it intend to take any action
that would
14
impair, its ability to pay its debts from time to time incurred in connection
therewith as such debts mature.
o. INSURANCE. The Company shall maintain liability, casualty and
other insurance (subject to customary deductions and retentions) with
responsible insurance companies against such risk of the types and in the
amounts customarily maintained by companies of comparable size to the Company.
p. NO INTEGRATION. The Company will not conduct any future offering
that will be integrated with the issuance of the Securities for purposes of the
rules promulgated by the SEC or NASDAQ.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its transfer agent
(in the form attached hereto as EXHIBIT E) (the "IRREVOCABLE TRANSFER AGENT
INSTRUCTIONS"). The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop
transfer instructions to give effect to Section 2(f) hereof (in the case of the
Conversion Shares and Warrant Shares, prior to registration of the Conversion
Shares and Warrant Shares under the ▇▇▇▇ ▇▇▇) will be given by the Company to
its transfer agent and that the Securities shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement, the Registration Rights Agreement, the Certificate
of Designations and the Warrants. Nothing in this Section 5 shall affect in any
way each Buyer's obligations and agreement to comply with all applicable
securities laws upon resale of any of the Securities. If a Buyer provides the
Company with an opinion of counsel, reasonably satisfactory in form and
substance to the Company, that registration of a resale by such Buyer of any of
the Securities is not required under the 1933 Act, the Company shall permit the
transfer, and, in the case of the Conversion Shares or Warrant Shares, promptly
instruct its transfer agent to issue one or more certificates in such name and
in such denominations as specified by such Buyer. The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the
Buyers by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 5 will be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the provisions of
this Section 5, that the Buyers shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Series B
Preferred Shares and Warrants to each Buyer 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 the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:
a. Such Buyer shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
15
b. Such Buyer shall have delivered to the Company the Purchase Price
for the Series B Preferred Shares being purchased by such Buyer at the Closing
by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
c. The representations and warranties of such Buyer shall be true
and correct in all material respects 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), and such Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Buyer at or prior to the Closing Date.
d. The transactions contemplated hereby shall not violate any law,
regulation or order then in effect and applicable to Buyers or the Company.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Series B
Preferred Shares 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 each Buyer's sole benefit and may be waived by such Buyer at
any time in its sole discretion:
a. The Company shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to such Buyer.
b. The Certificate of Designations shall have been executed by the
Company and filed with the Secretary of State of the State of Delaware and
evidence of such filing shall have been provided to the Buyers (with a copy of
such filing being provided to Buyers as soon as practicable thereafter).
c. The Common Stock shall be authorized for trading on the Nasdaq
SmallCap and trading in the Common Stock issuable upon conversion of the Series
B Preferred Shares and exercise of the Warrants to be traded on the Nasdaq
SmallCap shall not have been suspended by the SEC or the Nasdaq SmallCap.
d. The representations and warranties of the Company shall be true
and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case such representations and warranties shall be true and
correct without further qualification) 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) 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 Buyer
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 Buyer including,
without limitation, an update as of the Closing Date regarding the
representation contained in Section 3(c) above.
16
e. Each Buyer shall have received the opinion of the Company's
counsel dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to such Buyer and in substantially the form of EXHIBIT F attached
hereto.
f. The Company shall have executed and delivered to such Buyer the
Stock Certificates (in such denominations as such Buyer shall request) for the
Series B Preferred Shares being purchased by such Buyer at the Closing and the
Warrants.
g. The Board of Directors of the Company shall have adopted the
resolutions in substantially the form of EXHIBIT G attached hereto.
h. As of the Closing Date, the Company shall have reserved out of
its authorized and unissued Common Stock, solely for the purpose of effecting
the conversion of the Series B Preferred Shares and the exercise of the
Warrants, at least 150% of the number of shares of Common Stock necessary to
provide for the issuance of the Conversion Shares and Warrant Shares in
accordance with the terms of this Agreement, the Certificate of Designations and
the Warrants.
i. The Irrevocable Transfer Agent Instructions, in the form of
EXHIBIT E attached hereto, shall have been delivered to and acknowledged in
writing by the Company's transfer agent. j. The transactions contemplated hereby
shall not violate any law, regulation or order then in effect and applicable to
Buyers or the Company. k. Each stockholder who is a member of the Company's
management and holds in excess of 10% of the outstanding capital stock of the
Company as of the date hereof, and the Company, shall have executed and
delivered to the Buyers an Amended and Restated Co-Sale Agreement in the form of
EXHIBIT H attached hereto (the "CO-SALE AGREEMENT"). l. Each Buyer shall have
received the letter, countersigned by the holder of the Series A Preferred, in
substantially the form of EXHIBIT I attached hereto.
8. INDEMNIFICATION.
a. COMPANY INDEMNIFICATION. The Company hereby agrees to indemnify
and hold harmless each Buyer and each holder of the Securities and all of their
respective officers, directors, partners, members, affiliates and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "BUYER
INDEMNITEES") from and against any and all actions, causes of action suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (collectively, "LOSSES") and agrees to reimburse each Buyer
Indemnitee for all out-of-pocket expenses (including the fees and expenses of
legal counsel), in each case promptly as incurred by the Buyer Indemnitee and to
the extent arising out of or in connection with:
1. subject to Section 9(i), any misrepresentation or breach of
any representation or warranty made by the Company in this Agreement, the
Certificate
17
of Designations, the Warrants, the Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or thereby,
2. any breach of any covenant, agreement or obligation of the
Company contained in this Agreement, the Certificate of Designations, the
Warrants or the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby, or
3. any cause of action, suit or claim brought or made against
such Buyer Indemnitee and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement or any other
instrument, document or agreement executed pursuant hereto by any of the
Buyer Indemnitees or any transaction financed or to be financed in whole or
in part, directly or indirectly, with the proceeds of the issuance of the
Series B Preferred Shares and Warrants.
b. BUYER INDEMNIFICATION. Each Buyer, severally and not jointly,
hereby agrees to indemnify and hold harmless the Company, its affiliates and
their respective officers, directors, partners, members and agents
(collectively, the "COMPANY INDEMNITEES") from and against any and all Losses,
and agrees to reimburse Company Indemnitee for all out-of-pocket expenses
(including the fees and expenses of legal counsel) in each case promptly as
incurred by Company Indemnitee and to the extent arising out of or in connection
with:
1. subject to Section 9(i), any misrepresentation or breach of
any representation or warranty made by such Buyer in this Agreement, the
Warrants, the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby, or
2. any breach of the covenant, contained in Section 4(i) of this
Agreement.
c. THIRD PARTY CLAIMS. Promptly after receipt by either party hereto
seeking indemnification pursuant to this Section 8 (an "INDEMNIFIED PARTY") of
written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a "CLAIM"), the
Indemnified Party promptly shall notify the party against whom indemnification
pursuant to this Section 8 is being sought (the "INDEMNIFYING PARTY") of the
commencement thereof; but the omission so to notify the Indemnifying Party shall
not relieve it from any liability that it otherwise may have to the Indemnified
Party except to the extent that the Indemnifying Party is materially prejudiced
and forfeits substantive rights or defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (i) the Indemnifying Party shall have agreed to pay such fees,
out-of-pocket costs and expenses, (ii) the Indemnified Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel
18
would not be appropriate due to actual or, as reasonably determined by legal
counsel to the Indemnified Party, potentially differing interests between such
parties in the conduct of the defense of such Claim, or if there may be legal
defenses available to the Indemnified Party that are in addition to or disparate
from those available to the Indemnifying Party, or (iii) the Indemnifying Party
shall have failed to employ legal counsel reasonably satisfactory to the
Indemnified Party within a reasonable period of time after notice of the
commencement of such Claim. If the Indemnified Party employs separate legal
counsel in circumstances other than as described in clauses (i), (ii) or (iii)
above, the fees, costs and expenses of such legal counsel shall be borne
exclusively by the Indemnified Party. Except as provided above, the Indemnifying
Party shall not, in connection with any Claim in the same jurisdiction, be
liable for the fees and expenses of more than one firm of legal counsel for the
Indemnified Party (together with appropriate local counsel). The Indemnifying
Party shall not, without the prior written consent of the Indemnified Party
(which consent shall not unreasonably be withheld), settle or compromise any
Claim or consent to the entry of any judgment that does not include an
unconditional release of the Indemnified Party from all liabilities with respect
to such Claim or judgment.
d. CONTRIBUTION. To the extent that the indemnification provisions
above may be unenforceable for any reason, the Indemnifying Party shall make the
maximum contribution to the payment and satisfaction of each of the Losses which
is permissible under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws.
b. COUNTERPARTS. This Agreement may be executed in two or more
identical 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. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
c. HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all other
prior oral or written agreements between the Buyers, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the documents referenced herein contain
the entire understanding of the parties with respect
19
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
f. NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile, provided a copy
is mailed by U.S. certified mail, return receipt requested; (iii) three (3) days
after being sent by U.S. certified mail, return receipt requested, or (iv) one
(1) day after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:
If to the Company:
Educational Video Conferencing, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer and
Chief Financial Officer
With a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to the Transfer Agent:
Continental Stock Transfer & Trust Company
▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Compliance Department
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's counsel as set forth on the Schedule of
Buyers. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any
20
purchasers of the Securities. The Company shall not assign this Agreement or any
rights or obligations hereunder without the prior written consent of the Buyers.
A Buyer may assign some or all of its rights hereunder without the consent of
the Company, provided, however, that (i) any such assignment shall not release
such Buyer from its obligations hereunder unless such obligations are assumed by
such assignee and the Company has consented to such assignment and assumption
and (ii) no Buyer may assign its rights hereunder in a manner that would cause
the offering of Securities hereunder to be required to be registered under the
1933 Act.
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. SURVIVAL. The representations and warranties of the Company and
the Buyers contained in Sections 3 and 2, respectively, shall survive the
Closing until three years after the Closing Date, including, without limitation,
all financial statements thereto. The agreements and covenants set forth in
Sections 4, 5 and 9, and the indemnification provisions set forth in Section 8,
shall survive the Closing. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
j. PUBLICITY. Without the prior written consent of the subject Buyer
or Buyers, the Company will not, and will use reasonable efforts to ensure that
its officers, directors, employees and agents do not, disclose the name of any
Buyer; provided, however, that the Company shall be entitled, without the prior
approval of any Buyer, to make any press release or other public disclosure with
respect to such transactions as is required by applicable law and regulations
(although each Buyer shall be consulted by the Company in connection with any
such press release or other public disclosure prior to its release and shall be
provided with a copy thereof), but only to the extent required by such law or
regulation.
k. 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.
l. CONSENT TO JURISDICTION. The parties hereto expressly submit
themselves to the exclusive jurisdiction of the state and federal courts of New
York in any action or proceeding relating to this Agreement or any of the other
documents contemplated hereby or any of the transactions contemplated hereby or
thereby. Each party hereby irrevocably waives, to the fullest extent permitted
by law, any objection that it may now or hereafter have to the laying of venue
of any such action, suit or proceeding brought in such a court and any claim
that any such action, suit or proceeding brought in such a court has been
brought in an inconvenient forum. The parties hereto irrevocably and
unconditionally consent to the service of process of any of the aforementioned
courts in any such action, suit or proceeding by the mailing of copies thereof
by registered or certified mail, postage prepaid, at their respective addresses
set forth or provided for herein, such service to become effective 10 days after
such mailing. Nothing herein shall affect the right of any party to serve
process in any manner permitted by law.
21
m. NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
n. EQUITABLE RELIEF. The Company recognizes that in the event that
it fails to perform, observe, or discharge any or all of its obligations under
this Agreement, any remedy at law may prove to be inadequate relief to the
Buyers. The Company therefore agrees that the Buyers shall be entitled to seek
temporary and permanent injunctive relief in any such case without the necessity
of proving actual damages.
o. WAIVER. The Buyers hereby waive the requirement of notice and
delivery of transaction documents in connection with the proposed issuance of
"Additional Securities" pursuant to Section 18(b) of the Certificate of
Designations.
22
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Series B Stock Purchase Agreement to be duly executed as of the date first
written above.
EDUCATIONAL VIDEO CONFERENCING, INC
By:
------------------------------------------
Name: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Chairman and Chief Executive Officer
[ ]
By: [ ]
By:
------------------------------------
Name:
Title:
[ ]
By: [ ]
By: [ ]
By:
------------------------------------
Name:
Title:
23
SCHEDULE OF BUYERS
NUMBER OF NUMBER OF
INVESTOR ADDRESS AND SERIES B WARRANT INVESTOR'S ADVISOR AND
INVESTOR NAME FACSIMILE NUMBER PREFERRED SHARES SHARES LEGAL COUNSEL ADDRESS
24
SCHEDULES TO THE SERIES B STOCK PURCHASE AGREEMENT
(OMITTED FROM THIS FILING. COPIES WILL BE PROVIDED
TO THE COMMISSION UPON REQUEST)
25
Exhibits to the Series B Stock Purchase Agreement of [ ], 2000
EXHIBIT A
Certificate of Designations
See Exhibit 3.6 of the Registrant's
Form 8-K Report dated October 6, 2000
26
Exhibits to the Series B Stock Purchase Agreement of [ ], 2000
EXHIBIT B
Common Stock Purchase Warrants
See Exhibit 4.8 of the Registrant's
Form 8-K Report dated October 6, 2000
27
Exhibits to the Series B Stock Purchase Agreement of [ ], 2000
EXHIBIT C
Registration Rights Agreement
3
See Exhibit 10.57 to the Registrant's
Form 8-K Report dated October 6, 2000
28
EXHIBITS TO THE SERIES B STOCK PURCHASE AGREEMENT OF [ ], 2000
EXHIBIT D
FORM OF OPINION ON REMOVAL OF LEGEND
In connection with the resale of the [Conversion Shares]
[Warrant Shares] by the Seller and assuming that the Registration Statement
remains in effect and currently updated as required under the 1933 Act, that no
stop order is issued and that the Company remains in existence, we are of the
opinion that: (i) the resale of the [Conversion Shares] [Warrant Shares] by the
Seller is registered under the 1933 Act under the Registration Statement; (ii)
upon the presentation of the certificate representing the [Conversion Shares]
[Warrant Shares] for transfer and upon your receipt of a letter of confirmation
indicating that such shares have been transferred in conformity with the
prospectus delivery requirements of the 1933 Act, you may issue a new
certificate representing the [Conversion Shares] [Warrant Shares] in the name of
the subsequent purchaser; and (iii) the certificate representing the [Conversion
Shares] [Warrant Shares] in the name of such purchaser may be issued without a
restrictive legend.
30
Exhibits to the Series B Stock Purchase Agreement of [ ], 2000
EXHIBIT E
Irrevocable Transfer Agent Instructions
See attached
31
TRANSFER AGENT INSTRUCTIONS
EDUCATIONAL VIDEO CONFERENCING, INC.
SEPTEMBER 22, 2000
Continental Stock Transfer & Trust Company
▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: Compliance Department
Ladies and Gentlemen:
Reference is made to that certain Series B Stock Purchase Agreement
(the "Purchase Agreement"), dated [ ], 2000, between Educational Video
Conferencing, Inc., a Delaware corporation (the "Company"), and [ ](the
"Holder"), pursuant to which the Company is issuing to the Holders (i) an
aggregate of [ ] shares of the Company's Series B 7% Convertible Preferred
Stock, $[ ] stated value per share (the "Preferred Shares"), and (ii)
Warrants to purchase an aggregate of [ ] shares of Common Stock, par value
$.0001 per share (the "Common Stock"), of the Company. Capitalized terms which
are defined in the Purchase Agreement are used herein as so defined.
This letter shall serve as our irrevocable authorization and direction
to you (provided that you are acting as the transfer agent of the Company at
such time):
(i) to issue shares (the "Conversion Shares") of Common Stock of
the Company to or upon the order of a Holder from time to time upon (a)
the Company's delivery to you of a Conversion Notice and Transfer Agent
Instructions in the form attached hereto as EXHIBIT A which has been
acknowledged by the Company as indicated by the signatures of officers
of the Company thereon and (b) the delivery to you of an executed
opinion from counsel to the Company in the form attached hereto as
EXHIBIT C; and
(ii) to issue shares (the "Warrant Shares") of Common Stock of
the Company to or upon the order of a Holder from time to time upon (a)
the Company's delivery to you of a Election to Purchase and Transfer
Agent instructions in the form attached hereto as EXHIBIT B which has
been acknowledged by the Company as indicated by the signatures of
officers of the Company thereon and (b) the delivery to you of an
executed opinion from counsel to the Company in the form attached
hereto as EXHIBIT C.
You acknowledge and agree that so long as you have previously
received: (i) an executed opinion from counsel to the Company in the form
attached hereto as EXHIBIT D that a registration statement covering resales of
the Conversion Shares and Warrant Shares has been declared effective by the SEC
under the 1933 Act; (ii) a copy of such registration statement; (iii)
confirmation in the form attached hereto as EXHIBIT E from a broker for the
Holder or the recipient of any shares sold, that any transfer of Conversion
Shares or Warrant Shares has been
32
made in conformity with the prospectus delivery requirements of the 1933 Act,
then you shall issue within three business days the certificates representing
the Conversion Shares and the Warrant Shares and such certificates shall not
bear any legend restricting transfer of the Conversion Shares or the Warrant
Shares thereby and should not be subject to any stop-transfer restriction;
provided, however, that if you have not previously received any of the
foregoing, then the certificates for the Conversion Shares and/or the Warrant
Shares shall be issued within three business days upon receipt of an executed
opinion from counsel to the Company in the form attached hereto as EXHIBIT C.
Please be advised that the Holders are relying upon this letter as an
inducement to enter into the Agreement and, accordingly, each Holder is a third
party beneficiary to these instructions.
Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions. Should you have any
questions concerning this matter, please contact [ ].
EDUCATIONAL VIDEO CONFERENCING, INC.
By:
--------------------------------
Name:
Title:
THE FOREGOING INSTRUCTIONS
ARE AGREED TO
this ____ day of [ ], 2000
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By:
--------------------------------------
Name:
Title:
Enclosures
cc: [ ]
[ ]
33
EXHIBIT A
EDUCATIONAL VIDEO CONFERENCING, INC.
CONVERSION NOTICE
AND TRANSFER AGENT INSTRUCTIONS
Reference is made to the Certificate of Designations of Educational Video
Conferencing, Inc. (the "CERTIFICATE OF DESIGNATIONS"). In accordance with and
pursuant to the Certificate of Designations, the undersigned hereby elects to
convert the number of shares of Series B 7% Convertible Preferred Stock, $100.00
stated value per share (the "SERIES B PREFERRED SHARES"), of Educational Video
Conferencing, Inc., a Delaware corporation (the "Company"), indicated below into
shares of Common Stock, $.0001 par value per share (the "COMMON STOCK"), of the
Company, by tendering the stock certificate(s) representing the share(s) of
Series B Preferred Shares specified below as of the date specified below.
Date of Conversion:
----------------------------
Number of Series B
Preferred Shares to be converted:
----------------------------
Stock certificate no(s). of Series B
Preferred Shares to be converted:
----------------------------
Please confirm the following information:
Conversion Price:
----------------------------
Number of shares of Common Stock to be issued:
----------------------------
Please issue and deliver the Common Stock into which the Series B Preferred
Shares are being converted in the following name and to the following address:
Issue to:
---------------------------
---------------------------
---------------------------
Facsimile Number:
---------------------------
Authorization:
---------------------------
By:
---------------------------
Title:
Dated:
---------------------------
Continental Stock Transfer & Trust Company, as transfer agent and
registrar of the Common Stock, is hereby authorized and directed to issue the
above number of shares of Common Stock in the name of the above referenced
entity or person and to deliver the certificates representing such shares using
an overnight delivery service.
34
EDUCATIONAL VIDEO CONFERENCING, INC.
By:
-------------------------------------
35
EXHIBIT B
ELECTION TO PURCHASE SHARES AND TRANSFER AGENT INSTRUCTIONS
The undersigned hereby irrevocably elects to exercise the Warrant to
purchase ____ shares of Common Stock, par value $.0001 per share ("Common
Stock"), of Educational Video Conferencing, Inc. and hereby makes payment of
$________ therefor. The undersigned hereby requests that certificates for such
shares be issued and delivered as follows:
ISSUE TO:
-----------------------------------------------------------------------
(NAME)
--------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
--------------------------------------------------------------------------------
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
DELIVER TO:
---------------------------------------------------------------------
(NAME)
--------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
If the number of shares of Common Stock purchased hereby is less than
the number of shares of Common Stock covered by the Warrant, the undersigned
requests that a new Warrant representing the number of shares of Common Stock
not so purchased be issued and delivered as follows:
ISSUE TO:
-----------------------------------------------------------------------
(NAME OF HOLDER)
(ADDRESS, INCLUDING ZIP CODE)
DELIVER TO:
---------------------------------------------------------------------
(NAME OF HOLDER)
--------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
Dated: [NAME OF HOLDER]
--------------------
By
-------------------------------
Name:
Title:
Continental Stock Transfer & Trust Company, as transfer agent and
registrar of the Common Stock, is hereby authorized and directed to issue the
above number of shares of Common Stock in the name of the above referenced
entity or person and to deliver the certificates representing such shares using
an overnight delivery service.
EDUCATIONAL VIDEO CONFERENCING, INC.
By
--------------------------------
36
EXHIBIT C
FORM OF COUNSEL OPINION ON ISSUANCE
In connection with the issuance of [Conversion Shares] [Warrant
Shares], it is our opinion that the issuance of:
(i) Conversion Shares is exempt from registration under the 1933 Act
pursuant to Section 3(a)(9) of the 1933 Act; and
(ii) Warrant Shares is exempt from registration under the 1933 Act
pursuant to Section 4(2) of the Act.
Each stock certificate representing shares of Common Stock, if any,
issued to ______________ as Conversion Shares or Warrant Shares must bear the
following legend (which you should note differs from the legend normally placed
by you on certificates representing the Company's restricted Common Stock):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT."
37
EXHIBIT D
FORM OF COUNSEL OPINION ON REGISTRATION STATEMENT
In connection with the resale of the [Conversion Shares] [Warrant
Shares] by the Seller and assuming that the Registration Statement remains in
effect and currently updated as required under the 1933 Act, that no stop order
is issued and that the Company remains in existence, we are of the opinion that:
(i) the resale of the [Conversion Shares] [Warrant Shares] by the Seller is
registered under the 1933 Act under the Registration Statement; (ii) upon the
presentation of the certificate representing the [Conversion Shares] [Warrant
Shares] for transfer and upon your receipt of a letter of confirmation
indicating that such shares have been transferred in conformity with the
prospectus delivery requirements of the 1933 Act, you may issue a new
certificate representing the [Conversion Shares] [Warrant Shares] in the name of
the subsequent purchaser; and (iii) the certificate representing the [Conversion
Shares] [Warrant Shares] in the name of such purchaser may be issued without a
restrictive legend.
38
EXHIBIT E
PROSPECTUS DELIVERY ACKNOWLEDGMENT
In connection with the sale, pursuant to the final prospectus dated
__________________, of an aggregate of ______ shares of Common Stock of
Educational Video Conferencing, Inc. (the "COMPANY"), the undersigned hereby
acknowledges to the Company, its counsel and its transfer agent that copies of
such final prospectus were properly transmitted for delivery or otherwise
properly made available to the buyers.
Dated:
------------------------------
[ ]
By:
------------------------
Name:
Title:
39
Exhibits to the Series B Stock Purchase Agreement of [ ], 2000
EXHIBIT F
Opinion of Company Counsel
Omitted from this filing
40
Exhibits to the Series B Stock Purchase Agreement of [ ], 2000
EXHIBIT G
Company Board of Director Resolutions
Omitted from this filing
41
Exhibits to the Series B Stock Purchase Agreement of [ ], 2000
EXHIBIT H
Co-Sale Agreement
See Exhibit 10.58 of the Registrant's
Form 8-K Report dated October 6, 2000
42
Exhibits to the Series B Stock Purchase Agreement of [ ], 2000
EXHIBIT I
Series A Waiver
See attached
43
[LETTERHEAD OF EDUCATIONAL VIDEO CONFERENCING , INC.]
SEPTEMBER 21, 2000
BY FACSIMILE (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: The Shaar Fund Ltd. (the "Buyer") and Educational Video
CONFERENCING, INC. (THE "COMPANY")
Dear ▇▇. ▇▇▇▇▇▇▇▇▇:
Reference is made to the Securities Purchase Agreement dated as of
February 3, 2000 between the Company and the Buyer (the "Purchase Agreement").
Unless the context of this letter requires otherwise, all capitalized terms
below shall have the same meaning as in the Documents, as that term is defined
in the Purchase Agreement.
The Buyer is aware that the Company anticipates closing this week a
financing involving the issuance of a new series of the Company's preferred
stock and warrants to purchase shares of Common Stock for gross proceeds of
$10,000,000 (the "Financing"). The Buyer is also aware that a portion of the
proceeds of the Financing must be used to redeem all shares of Series A
Preferred Stock. In order to complete the Financing on schedule, the Company is
requesting from the Buyer:
1. A waiver of the right of first refusal set forth in Section IV. G. of
the Purchase Agreement.
2. A waiver of the notice or redemption requirement of Section 6.6 of the
Certificate of Designation provided the Company notifies the Buyer or you by
facsimile, not less than three hours prior to the closing of the Financing, that
the redemption of the Series A Preferred Stock will be made at the time of
closing of the Financing (the "Redemption Notice"). In this regard the Company
will require wire transfer instructions from the Buyer. Notices of conversion
made by the Buyer pursuant to the Certificate of Designation ("Conversion
Notices") will be deemed timely given to the Company if received by the Company
at least one hour prior to the closing of the Financing. The Company will have
the right to rescind the Redemption Notice, without penalty or
44
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
September 21, 2000
Page 2
premium, by notifying the Buyer or you by facsimile by not later than 4:30 p.m.
on the next Business Day after giving the Redemption Notice in the event the
Financing does not close for any reason; whereupon, the Buyer shall have the
option to rescind any or all of the Conversion Notices by giving facsimile
notice to the Company within 24 hours after the receipt by the Buyer of the
Company's recision of the Redemption Notice.
3. Confirmation that the filing by the Company of a certificate of
designations in Delaware relating to the Financing and the issuance of the
securities in the Financing will not trigger any anti-dilution adjustment under
the Series A Preferred Stock and will not contravene any other provision of the
Documents, including the provision of Article 8 paragraph (b) of the Certificate
of Designation regarding the creation of a series of capital stock having a
preference over the Series A Preferred Stock.
The effectiveness of the Buyer's agreement to the foregoing is
conditioned upon the wire transfer to the Buyer of payment in full of the
Optional Redemption Price and the Company giving irrevocable instructions to its
transfer agent to issue to the Buyer the number of Common Shares as equals all
accrued and unpaid dividends to the date of the closing of the Financing,
simultaneously with the closing of the Financing, it being understood that such
Common Shares shall be registered for resale in the Registration Statement.
This letter will become void if the closing of the Financing is not
completed on or before October 5, 2000.
Please have the Buyer indicate its agreement to give the foregoing
waivers and confirmation by signing and returning a copy of this letter. This
firm will rely upon the Buyer's agreement in rendering its opinion in connection
with the Financing.
Very truly yours,
/s/▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman
AGREED:
THE SHAAR FUND LTD.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Managing Director
45
