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EXHIBIT 4.1
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FORM OF
SUBSCRIPTION AGREEMENT
DATED AS OF APRIL 10, 1998
BY AND BETWEEN
IVI PUBLISHING, INC.
AND
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SERIES B CONVERTIBLE PREFERRED STOCK
AND
COMMON STOCK PURCHASE WARRANTS
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SUBSCRIPTION AGREEMENT
SERIES B CONVERTIBLE PREFERRED STOCK
AND
COMMON STOCK PURCHASE WARRANTS
IVI PUBLISHING, INC.
PAGE
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1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE ........................... 1
(a) Subscription ................................................. 1
(b) Form of Payment .............................................. 1
2. BUYER REPRESENTATIONS, WARRANTIES, ETC ........................... 2
(a) Purchase for Investment ...................................... 2
(b) Accredited Investor .......................................... 2
(c) Reoffers and Resales ......................................... 2
(d) Company Reliance ............................................. 2
(e) Information Provided ......................................... 2
(f) Absence of Approvals ......................................... 2
(g) Subscription Agreement ....................................... 2
3. COMPANY REPRESENTATIONS, WARRANTIES, ETC ......................... 3
(a) Organization and Authority ................................... 3
(b) Capitalization ............................................... 3
(c) Concerning the Shares and the Common Stock ................... 4
(d) Subscription Agreement; Certificate of Designation;
Registration Rights Agreement; Warrants; Transfer Agent
Instructions ................................................. 4
(e) Non-contravention ............................................ 4
(f) Approvals .................................................... 5
(g) Information Provided ......................................... 5
(h) Absence of Certain Changes ................................... 5
(i) Absence of Certain Proceedings ............................... 6
(j) Properties ................................................... 6
(k) Labor Relations .............................................. 7
(l) SEC Filings .................................................. 7
(m) Absence of Brokers, Finders, Etc ............................. 7
(n) No Solicitation .............................................. 7
(o) Certain Issuances of Securities .............................. 7
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS ............................ 8
(a) Transfer Restrictions ........................................ 8
(b) Restrictive Legend ........................................... 8
(c) Registration Rights Agreement ................................ 9
(d) Form D ....................................................... 9
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(e) Authorization for Trading; Reporting Status .................. 9
(f) Use of Proceeds .............................................. 9
(g) Blue Sky Laws ................................................ 10
(h) Certain Expenses ............................................. 10
(i) Certain Issuances of Securities .............................. 10
(j) Certain Trading Restrictions ................................. 11
(k) Best Efforts ................................................. 12
5. TRANSFER AGENT INSTRUCTIONS; CONVERSION PROCEDURE ................ 12
(a) Transfer Agent Instructions .................................. 12
(b) Conversion Procedure ......................................... 12
6. CLOSING DATE ..................................................... 13
7. CONDITIONS TO THE COMPANYAES OBLIGATION TO SELL AND ISSUE ........ 13
8. CONDITIONS TO THE BUYERAES OBLIGATION TO PURCHASE ................ 13
9. MISCELLANEOUS .................................................... 14
(a) Governing Law ................................................ 14
(b) Counterparts ................................................. 14
(c) Headings, etc ................................................ 14
(d) Severability ................................................. 14
(e) Amendments ................................................... 14
(f) Waivers ...................................................... 15
(g) Notices ...................................................... 15
(h) Assignment ................................................... 15
(i) Survival of Representations and Warranties ................... 15
(j) Entire Agreement ............................................. 16
(k) Termination .................................................. 16
(l) Further Assurances ........................................... 16
(m) Public Statements, Press Releases, Etc ....................... 16
(n) Construction ................................................. 16
ANNEXES
Annex I Form of Certificate of Designation
Annex II Form of Warrants
Annex III Form of Registration Rights Agreement
Annex IV Form of Transfer Agent Instructions
Annex V Form of Notice of Conversion of Series B Convertible Preferred Stock
Annex VI Form of Opinion of Counsel to be Delivered on Closing Date
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Annex VII Form of Opinion of Special Counsel to be Delivered on Closing Date
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SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of April 10, 1998, by and
between IVI PUBLISHING, INC., a Minnesota corporation (the "Company"), with
headquarters located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇, and ____________________________ (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, shares of non-voting, convertible preferred
stock of the Company which will be convertible into shares of Common Stock, $.01
par value (the "Common Stock"), of the Company and in connection therewith the
Company is to issue to the Buyer warrants to purchase shares of Common Stock as
provided in the Agreement; and
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D as promulgated by the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933
Act");
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(a) SUBSCRIPTION. The Buyer hereby agrees to purchase from the Company the
number of shares (the "Preferred Shares") of Series B Convertible Preferred
Stock, $.01 par value (the "Preferred Stock"), of the Company set forth on the
signature page of this Agreement, having the terms and conditions as set forth
in the form of Certificate of Designation of the Series B Convertible Preferred
Stock attached hereto as ANNEX I (the "Certificate of Designation") at the price
per share and for the aggregate purchase price set forth on the signature page
of this Agreement (the "Purchase Price"). The Purchase Price shall be payable in
United States Dollars. In connection with the purchase of the Preferred Shares
by the Buyer, the Company shall issue to the Buyer at the closing on the Closing
Date (as defined herein) Common Stock Purchase Warrants in the form attached
hereto as ANNEX II (the "Warrants") to purchase the number of shares of Common
Stock set forth therein (subject to adjustment as provided in the Warrants). The
shares of Preferred Stock issuable pursuant to Section 5 of the Certificate of
Designation as dividends on the Preferred Shares are referred to herein as the
"Dividend Shares." The shares of Common Stock issuable upon exercise of the
Warrants are referred to herein as the "Warrant Shares." The Warrant Shares and
the shares of Common Stock issuable upon conversion of the Preferred Shares and
the Dividend Shares are referred to
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herein collectively as the "Common Shares." The Common Shares, the Preferred
Shares and the Dividend Shares are referred to herein collectively as the
"Shares." The Shares and the Warrants are referred to herein collectively as the
"Securities."
(b) FORM OF PAYMENT. At the closing on the Closing Date (1) the Company shall
issue and deliver to the Buyer the Preferred Shares and the Warrants, registered
in the name of the Buyer or its nominee, against payment of the Purchase Price
to the Company and (2) the Buyer shall pay the Purchase Price to the Company, by
wire transfer of immediately available funds to such account as specified by the
Company to the Buyer at least one Business Day prior to the Closing Date,
against issuance and delivery to the Buyer of the Preferred Shares and the
Warrants. As used in this Agreement, the term "Business Day" means any day other
than a Saturday, Sunday or other day on which commercial banks in The City of
New York are authorized or required by law to remain closed.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
(a) PURCHASE FOR INVESTMENT. The Buyer is purchasing the Preferred Shares and
acquiring the Warrants for its own account for investment only and not with a
view towards the public sale or distribution thereof;
(b) ACCREDITED INVESTOR. The Buyer is an "accredited investor" as that term is
defined in Rule 501 of the General Rules and Regulations under the 1933 Act by
reason of Rule 501(a)(3);
(c) REOFFERS AND RESALES. All subsequent offers and sales of the Shares by the
Buyer shall be made pursuant to registration of the Shares being offered and
sold under the 1933 Act or pursuant to an exemption from registration;
(d) COMPANY RELIANCE. The Buyer understands that the Preferred Shares are being
offered and sold, the Warrants are being issued, and the Common Shares are being
offered, in each case 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 upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Preferred Shares and the Warrants and to receive an offer of the Common Shares;
(e) INFORMATION PROVIDED. The 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 Preferred
Shares and the issuance of the Warrants and the offer of the Common Shares which
have been requested by the Buyer; the Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and have received
satisfactory answers to any such inquiries; without limiting the generality of
the foregoing, the Buyer has had the opportunity to obtain and to review the
Company's (1) Annual Report on Form 10-K for the
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fiscal year ended December 31, 1996 (the "1996 10-K"), (2) Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1997, June 30, 1997 and September 30,
1997, (3) definitive proxy statement for the Company's 1997 Annual Meeting of
Shareholders and (4) Current Reports on Form 8-K dated October 16, 1997, October
28, 1997 (as amended by Amendment No. 1 thereto on Form 8-K/A) and November 3,
1997, in each case as filed with the SEC (collectively, the "SEC Reports"); and
the Buyer understands that its investment in the Securities involves a high
degree of risk;
(f) ABSENCE OF APPROVALS. The 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 Securities; and
(g) SUBSCRIPTION AGREEMENT. The Buyer has all requisite power and authority,
corporate or otherwise, to execute, deliver and perform its obligations under
this Agreement and the other agreements executed or to be executed by the Buyer
in connection herewith and to consummate the transactions contemplated hereby
and thereby. This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Buyer and is a valid and binding agreement of the
Buyer enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally.
3. COMPANY REPRESENTATIONS, WARRANTIES, ETC.
Except as set forth in the Company's Disclosure Letter delivered to
the Buyer prior to the execution and delivery of this Agreement (the "Company
Disclosure Letter"), the Company represents and warrants to, and covenants and
agrees with, the Buyer that:
(a) ORGANIZATION AND AUTHORITY. Each of the Company and its subsidiary listed in
Exhibit 21 to the 1996 10-K (the "Subsidiary") is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and has all requisite corporate power and authority to (i) own,
lease and operate its properties and to carry on its business as described in
the SEC Reports and as now being conducted, and (ii) to execute, deliver and
perform its obligations under this Agreement, the Certificate of Designation,
the Warrants, the Registration Rights Agreement, the form of which is attached
hereto as ANNEX III (the "Registration Rights Agreement"), the Transfer Agent
Instructions, the form of which is attached hereto as ANNEX IV (the "Transfer
Agent Instructions"), and the other agreements to be executed and delivered by
the Company in connection herewith, and to consummate the transactions
contemplated hereby and thereby. Each of the Company and the Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions wherein such qualification is necessary and where failure so to
qualify could have a material adverse effect on the business, properties,
operations, condition (financial or other), results of operations or prospects
of the Company and the Subsidiary, taken as a whole. The Company has no equity
investment in any person other than the Subsidiary.
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(b) CAPITALIZATION. The authorized capital stock of the Company consists of
30,000,000 shares of capital stock of which 10,135,201 shares of Common Stock
were outstanding on April 8, 1998, all of which are fully paid and
nonassessable; 5,800 shares of Preferred Stock, $.01 par value, will be
designated as Series B Convertible Preferred Stock of which 5,000 shares will be
issued pursuant to this Agreement and the other subscription agreement for the
purchase of shares of Preferred Stock and the acquisition of Warrants being
entered into by the Company in connection herewith (the "Other Subscription
Agreement"); and on the Closing Date there will be (x) no material increase from
April 8, 1998 in the number of shares of Common Stock outstanding and (y) no
issuances of preferred stock except pursuant to this Agreement and the Other
Subscription Agreement. As of April 8, 1998, the Company had outstanding
options, warrants and similar rights entitling the holders to purchase 2,698,200
shares of Common Stock. Other than as set forth in the preceding sentence, the
Company does not have outstanding any material amount of securities (or
obligations to issue any such securities) convertible into, exchangeable for or
otherwise entitling the holders thereof to acquire shares of Common Stock,
except as disclosed in the SEC Reports. The Company has duly reserved from its
authorized and unissued shares of Common Stock the full number of shares
required for (a) all options, warrants, convertible securities and other rights
to acquire shares of Common Stock which are outstanding and (b) all shares of
Common Stock and options and other rights to acquire shares of Common Stock
which may be issued or granted under the stock option and similar plans which
have been adopted by the Company or the Subsidiary. Each outstanding class or
series of securities, if any, for which any antidilution or similar adjustment
arising by reason of the issuance or conversion of the Preferred Shares and the
Dividend Shares or the issuance or exercise of the Warrants or the Shares of
Preferred Stock and Warrants to be issued pursuant to the Other Subscription
Agreement will occur is identified in Section 3(b)-1 of the Company Disclosure
Letter, together with the amount of such antidilution adjustment. The
outstanding shares of Common Stock and outstanding options, warrants and other
securities convertible into, exchangeable for or otherwise entitling the holder
thereof to acquire shares of Common Stock have been duly authorized and validly
issued. None of such outstanding shares of Common Stock, options, warrants and
other securities has been issued in violation of the preemptive rights of any
securityholder of the Company. The offers and sales of the outstanding shares of
Common Stock and such options, warrants and other securities were at all
relevant times either registered under the 1933 Act and applicable state
securities laws or exempt from such requirements. No holder of any of the
Company's securities has any rights, "demand," "piggy-back" or otherwise, to
have such securities registered by reason of the intention to file, filing or
effectiveness of the Registration Statement (as defined in the Registration
Rights Agreement).
(c) CONCERNING THE SHARES AND THE COMMON STOCK. The Shares have been duly
authorized. The Preferred Shares, when issued and paid for in accordance with
this Agreement, the Dividend Shares, when issued as dividends on the outstanding
shares of Preferred Stock, and the Common Shares, when issued upon conversion of
the Preferred Shares or the Dividend Shares or upon exercise of the Warrants, as
the case may be, will be duly and validly issued, fully paid and non-assessable
and will not subject the holder thereof to personal liability by reason of being
such holder. There are no preemptive or similar rights of any shareholder of the
Company or any other person to acquire any of the Shares. The Company has duly
reserved 2,800,000 shares of Common Stock for conversion of the shares of
Preferred Stock and exercise of the Warrants and
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conversion of shares of preferred stock and exercise of warrants issued pursuant
to the Other Subscription Agreement, and such shares shall remain so reserved
(subject to reduction from time to time for shares of Common Stock issued upon
conversion of shares of Preferred Stock or redemption or other permitted
retirement of shares of Preferred Stock), and the Company shall from time to
time reserve such additional shares of Common Stock as shall be required to be
reserved pursuant to the Certificate of Designation, as long as the Preferred
Stock is convertible, and pursuant to the Warrants, as long as the Warrants are
exercisable. The Common Stock is listed for trading on the Nasdaq SmallCap
Market ("Nasdaq") and (1) the Company and the Common Stock meet the criteria for
continued listing and trading on Nasdaq; (2) the Company has not been notified
since January 1, 1996 by Nasdaq of any failure or potential failure to meet the
criteria for continued listing and trading on Nasdaq and (3) no suspension of
trading in the Common Stock is in effect. The Company knows of no reason that
the Common Shares will not be eligible for listing on Nasdaq.
(d) SUBSCRIPTION AGREEMENT; CERTIFICATE OF DESIGNATION; REGISTRATION RIGHTS
AGREEMENT; WARRANTS; TRANSFER AGENT INSTRUCTIONS. This Agreement, the
Certificate of Designation, the Registration Rights Agreement, the Warrants and
the Transfer Agent Instructions and the other agreements and instruments
contemplated hereby and thereby have been duly and validly authorized by the
Company, this Agreement has been duly executed and delivered by the Company and
this Agreement is, and the Registration Rights Agreement, the Warrants and the
Transfer Agent Instructions and such other agreements, when executed and
delivered by the Company, will be, valid and binding obligations of the Company
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.
(e) NON-CONTRAVENTION. The execution and delivery by the Company of this
Agreement and the other documents contemplated by this Agreement and the
consummation by the Company of the issuance of the Preferred Shares and the
Warrants as contemplated by this Agreement, and the other transactions
contemplated by this Agreement, the Certificate of Designation, the Registration
Rights Agreement, the Warrants and the Transfer Agent Instructions do not and
will not, with or without the giving of notice or the lapse of time, or both (i)
result in any violation of any terms of the Articles of Incorporation or By-laws
of the Company or the Subsidiary, (ii) conflict with or result in a breach by
the Company or the Subsidiary of any of the terms or provisions of, or
constitute a default under, or result in the modification, amendment,
termination or cancellation of, result in the acceleration of any obligation of
the Company or the Subsidiary under, or result in the creation or imposition of
any lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company or the Subsidiary pursuant to, any indenture, mortgage,
deed of trust or other agreement or instrument to which the Company or the
Subsidiary is a party or by which the Company or the Subsidiary or any of their
respective properties or assets is bound or affected, (iii) violate or
contravene any applicable law, rule or regulation or any applicable decree,
judgment or order of any court, United States federal or state regulatory body,
administrative agency or other governmental body having jurisdiction over the
Company or the Subsidiary or any of their respective properties or assets or
(iv) have any material adverse effect on any permit, certification,
registration, approval, consent, license or franchise necessary for the
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Company or the Subsidiary to own or lease and operate any of their respective
properties or to conduct any of their respective businesses or the ability of
the Company or the Subsidiary to make use thereof.
(f) APPROVALS. No authorization, approval or consent of, or filing with, any
court, governmental body, regulatory agency, self-regulatory organization, or
stock exchange or market or the shareholders of the Company is required to be
obtained or made by the Company for (1) the execution, delivery and performance
by the Company of this Agreement, the Registration Rights Agreement, the
Warrants, the Transfer Agent Instructions and the other agreements and
instruments contemplated hereby and thereby, (2) the execution, filing and
performance by the Company of the Certificate of Designation, (3) the issuance
and sale of the Preferred Shares and the issuance of the Warrants as
contemplated by this Agreement and (4) the issuance of Common Shares on
conversion of the Preferred Shares or the Dividend Shares or upon the exercise
of the Warrants or the issuance of Dividend Shares as dividends on shares of
Preferred Stock, other than (v) the listing of the Common Shares on Nasdaq, (w)
the filing of the Certificate or Designations with the Secretary of State of the
State of Minnesota, (x) registration of the resale of the Common Shares under
the 1933 Act as contemplated by the Registration Rights Agreement, (y) as may be
required under applicable state securities or "blue sky" laws and (z) filing of
one or more Forms D with respect to the Shares as required under Regulation D.
(g) INFORMATION PROVIDED. The information provided by or on behalf of the
Company to the Buyer in connection with the transactions contemplated by this
Agreement, including, without limitation, the information referred to in Section
2(e) of this Agreement, does not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading, it being understood that, for purposes of this Section 3(g), any
statement contained in such information shall be deemed to be modified or
superseded for purposes of this Section 3(g) to the extent that a statement in
any document included in such information which was prepared or filed with the
SEC on a later date modifies or replaces such statement, whether or not such
later prepared or filed statement so states. The Company has not filed any
reports with the SEC under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), since December 31, 1996 other than the SEC Reports.
(h) ABSENCE OF CERTAIN CHANGES. Except as disclosed in the SEC Reports, since
December 31, 1996, there has been no material adverse change and no material
adverse development in the business, properties, operations, condition
(financial or other), results of operations or prospects of the Company and the
Subsidiary taken as a whole. Except as and to the extent disclosed, reflected or
reserved against in the financial statements of the Company and the notes
thereto included in the SEC Reports, neither the Company nor the Subsidiary has
any material (individually or in the aggregate) liabilities, debts or
obligations whether accrued, absolute, contingent or otherwise, and whether due
or to become due. Subsequent to December 31, 1996, neither the Company nor the
Subsidiary has incurred any liabilities, debts or obligations of any nature
whatsoever which are individually or in the aggregate material to the Company
and the Subsidiary, taken as a whole, other than those incurred in the ordinary
course of their respective businesses or disclosed in the SEC Reports.
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(i) ABSENCE OF CERTAIN PROCEEDINGS. Except as described in the SEC Reports,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board or body or governmental agency (collectively, an "Action")
pending or, to the knowledge of the Company or the Subsidiary, threatened
against the Company or the Subsidiary, in any such case wherein an unfavorable
decision, ruling or finding would have a material adverse effect on the
business, properties, condition (financial or other), results of operations or
prospects of the Company and the Subsidiary, taken as a whole or the
transactions contemplated by this Agreement or any of the documents contemplated
hereby or which would adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under, this
Agreement or any of such other documents; neither the Company or any subsidiary
nor any director or officer thereof is or has been the subject of any Action
involving (i) a claim of violation of or liability under federal or state
securities laws or (ii) a claim of breach of fiduciary duty; the Company does
not have pending before the SEC any request for confidential treatment of
information and to the best of the Company's knowledge no such request will be
made by the Company prior to the time the Registration Statement relating to the
Common Shares which is contemplated by the Registration Rights Agreement is
first ordered effective by the SEC; and there has not been, and to the best of
the Company's knowledge there is not pending or contemplated, any investigation
by the SEC involving the Company or any current or former director or officer of
the Company.
(j) PROPERTIES. The Company and the Subsidiary have good title to all property
real and personal (tangible and intangible) and other assets owned by them, free
and clear of all security interests, charges, mortgages, liens or other
encumbrances, except such as are described in the SEC Reports or such as do not
materially interfere with the use of such property made, or proposed to be made,
by the Company or the Subsidiary. The leases, licenses or other contracts or
instruments under which the Company and the Subsidiary lease, hold or are
entitled to use any property, real or personal, are valid, subsisting and
enforceable with only such exceptions as do not materially interfere with the
use of such property made, or proposed to be made, by the Company or the
Subsidiary. Neither the Company nor the Subsidiary has received notice of any
material violation of any applicable law, ordinance, regulation, order or
requirement relating to its owned or leased properties. The Company does not
have any knowledge of, and the Company has not given or received any notice of,
any pending conflicts with or infringement of the rights of others with respect
to any Company Proprietary Rights (as defined herein) or with respect to any
license of Company Proprietary Rights. No action, suit, arbitration, or legal,
administrative or other proceeding or investigation is pending, or, to the best
knowledge of the Company, threatened, which involves any Company Proprietary
Rights. Neither the Company nor the Subsidiary is subject to any judgment,
order, writ, injunction or decree of any court or any federal, state, local,
foreign or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or any arbitrator, or has entered into or
is a party to any contract which restricts or impairs the use of any such
Company Proprietary Rights in a manner which would have a material adverse
effect on the use by the Company or the Subsidiary of any of the Company
Proprietary Rights. To the best knowledge of the Company, no Company Proprietary
Rights and no services or products sold by the Company or the Subsidiary,
conflict with or infringe upon any proprietary rights available to any third
party. Neither the Company nor the Subsidiary has received written notice of any
pending conflict with or infringement upon such
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third-party proprietary rights. Neither the Company nor the Subsidiary has
entered into any consent, indemnification, forbearance to ▇▇▇ or settlement
agreement with respect to Company Proprietary Rights other than in the ordinary
course of business. No claims have been asserted by any person with respect to
the validity of the Company's or the Subsidiary's ownership or right to use the
Company Proprietary Rights and, to the best knowledge of the Company, there is
no reasonable basis for any such claim to be successful. To the best knowledge
of the Company, the Company Proprietary Rights are valid and enforceable. No
registration relating to the Company Proprietary Rights 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, except for such lapses, expirations, abandonments, cancellations,
adversarial proceedings or failures to be in good standing which would not,
singly or in the aggregate, have a material adverse effect on the business,
properties, operations, condition (financial or otherwise), results of
operations or prospects of the Company and the Subsidiary taken as a whole. The
Company and the Subsidiary have complied, in all material respects, with their
respective contractual obligations relating to the protection of the Company
Proprietary Rights used pursuant to licenses. To the best knowledge of the
Company, no person is infringing on or violating the Company Proprietary Rights.
As used herein, the term "Company Proprietary Rights" means all patents, patent
applications, inventions, trademarks, trade names, applications for registration
of trademarks, service marks, service ▇▇▇▇ applications, copyrights, know-how,
manufacturing processes, formulae, trade secrets, licenses and rights in any
thereof and any other intangible property and assets which are material to the
businesses of the Company and the Subsidiary as now conducted, as proposed to be
conducted or as described in this Agreement.
(k) LABOR RELATIONS. No material labor problem exists or, to the knowledge of
the Company or the Subsidiary, is imminent with respect to any of the employees
of the Company or the Subsidiary.
(l) SEC FILINGS. The Company has timely filed all required forms, reports and
other documents required to be filed with the SEC under the 1934 Act. All of
such forms, reports and other documents complied, when filed, in all material
respects, with all applicable requirements of the 1933 Act and the 1934 Act.
(m) ABSENCE OF BROKERS, FINDERS, ETC. No broker, finder or similar person is
entitled to any commission, fee or other compensation by reason of the
transactions contemplated by this Agreement and the Company shall pay, and
indemnify and hold harmless the Buyer from, any claim made against the Buyer by
any person for any such commission, fee or other compensation.
(n) NO SOLICITATION. No form of general solicitation or general advertising was
used by the Company or, to the best of its knowledge, any other person acting on
behalf of the Company, in respect of or in connection with the offer and sale of
the Shares. Neither the Company nor, to its knowledge, any person acting on
behalf of the Company has, either directly or indirectly, sold or offered for
sale to any person any of the Preferred Shares or the Warrants or, within the
six months prior to the date hereof, any other similar security of the Company
except as contemplated by this Agreement and the Other Subscription Agreement;
and neither the Company nor any person authorized to act on its behalf will sell
or offer for sale any shares of Preferred
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Stock or shares of Common Stock or Warrants, or solicit any offers to buy any
shares of Preferred Stock or shares of Common Stock or Warrants, so as thereby
to cause the issuance or sale of any of the Shares or the issuance of the
Warrants to be in violation of Section 5 of the 1933 Act.
(o) CERTAIN ISSUANCES OF SECURITIES. The Company has not issued any shares of
Common Stock or shares of any series of preferred stock or other securities
convertible into, exchangeable for or otherwise entitling the holder to acquire
shares of Common Stock which are subject to Rule 4310(c)(25)(H)(i) of Nasdaq (or
any successor, replacement or similar provision thereof or of any other market
on which the Common Stock is listed for trading) and which would be integrated
with the sale of the Preferred Shares to the Buyer or the issuance of Common
Shares upon conversion of the Preferred Shares or the Dividend Shares or upon
exercise of the Warrants or the Dividend Shares in payment of dividends thereon
for purposes of such Rule 4310(c)(25)(H)(i) (or any successor, replacement or
similar provision thereof or of any other market on which the Common Stock is
listed for trading).
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
(a) TRANSFER RESTRICTIONS. The Company and the Buyer acknowledge and agree that
(1) the Preferred Shares and the Warrants have not been and are not being
registered under the provisions of the 1933 Act and, except as provided in the
Registration Rights Agreement with respect to the resale of the Common Shares,
the Common Shares have not been and are not being registered for resale under
the 1933 Act, and the Securities may not be transferred unless (A) subsequently
registered for resale thereunder or (B) the Buyer shall have delivered to the
Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any resale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any such resale of
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 used in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other person is under any obligation to register the Securities
(other than registration of the resale of the Common Shares pursuant to the
Registration Rights Agreement) under the 1933 Act or to comply with the terms
and conditions of any exemption thereunder (other than pursuant to Section 4(d)
hereof and pursuant to the Registration Rights Agreement).
(b) RESTRICTIVE LEGEND. (1) The Buyer acknowledges and agrees that the Preferred
Shares shall bear a restrictive legend in substantially the following form (and
a stop-transfer order may be placed against transfer of the Preferred Shares):
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
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securities under the Securities Act of 1933, as amended, or an opinion
of counsel that registration is not required under said Act.
The number of shares constituting the portion of the Maximum Share
Amount, as defined in the Certificate of Designation of the Series B
Convertible Preferred Stock (the "Certificate of Designation"),
allocated to the Shares represented by this certificate for purposes of
conversion thereof is 1,215,000.
Section 10(b)(3)(a) of the Certificate of Designation permits a holder
of the securities represented by this certificate to convert such
securities in accordance with the Certificate of Designation without
being required to surrender this certificate to the Company unless all
of the securities represented hereby are so converted. Consequently,
following conversion of any of the securities represented by this
certificate, the number of shares represented by this certificate may be
less than the number of shares stated hereon. Upon request of any
proposed transferee of this certificate, the Company will provide
confirmation of the number of shares evidenced by this certificate.
(2) The Buyer further acknowledges and agrees that the Dividend
Shares shall bear restrictive legends in substantially the form set forth in the
first and third legends set forth in Section 4(b)(1) and a legend to the effect
specified in Section 7(a) of the Certificate of Designation.
(3) The Buyer further acknowledges and agrees that the Warrants
shall bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the Warrants):
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 resold, transferred or assigned
in the absence of an effective registration statement for the securities
under the Securities Act of 1933, as amended, or an opinion of counsel
that registration is not required under said Act.
(4) The Buyer further acknowledges and agrees that until such time
as the Common Shares have been registered for resale under the 1933 Act as
contemplated by the Registration Rights Agreement, the certificates for the
Common Shares may bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the certificates
for the Common Shares):
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 resold, transferred or assigned
in the absence of an effective registration statement for the securities
under the Securities Act of 1933, as amended, or an opinion of counsel
that registration is not required under said Act.
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15
(5) Once the Registration Statement required to be filed by the
Company pursuant to Section 2 of the Registration Rights Agreement has been
declared effective, thereafter (1) upon request of the Buyer the Company will
substitute certificates without restrictive legend for certificates for any
Common Shares issued prior to the date such Registration Statement is declared
effective by the SEC which bear such restrictive legend and remove any
stop-transfer restriction relating thereto promptly, but in no event later than
three trading days after surrender of such certificates by the Buyer and (2) the
Company shall not place any restrictive legend on certificates for Common Shares
issued on conversion of or as dividends on the Preferred Shares or upon exercise
of the Warrants or impose any stop-transfer restriction thereon.
(c) REGISTRATION RIGHTS AGREEMENT. The parties hereto agree to enter into the
Registration Rights Agreement in the form attached hereto as ANNEX III on or
before the Closing Date.
(d) 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 the Buyer
promptly after such filing. The Buyer agrees to cooperate with the Company in
connection with such filing and, upon request of the Company, to provide all
information relating to the Buyer reasonably required for such filing.
(e) AUTHORIZATION FOR TRADING; REPORTING STATUS. On or before the Closing Date,
the Company shall file a notification for listing of additional shares with the
Nasdaq relating to the Common Shares and on or prior to the Closing Date shall
provide evidence of such filing to the Buyer. So long as the Buyer beneficially
owns any of the Preferred Shares, the Dividend Shares, the Warrants or the
Common Shares, the Company shall file all reports required to be filed with the
SEC pursuant to Section 13 or 15(d) of 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 permit such
termination.
(f) USE OF PROCEEDS. Neither the Company nor the Subsidiary owns or has any
present intention of acquiring any "margin stock" as defined in Regulation G (12
CFR Part 207) of the Board of Governors of the Federal Reserve System ("margin
stock"). The proceeds of sale of the Preferred Shares will be used for general
working capital purposes and in the operation of the Company's business. None of
such proceeds will be used, directly or indirectly (1) to make any loan to or
investment in any other person (other than financing the Company's subsidiaries
in the ordinary course of business) or (2) for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any margin stock or for the
purpose of maintaining, reducing or retiring any indebtedness which was
originally incurred to purchase or carry any stock that is currently a margin
stock or for any other purpose which might constitute the transactions
contemplated by this Agreement a "purpose credit" within the meaning of such
Regulation G. Neither the Company nor any agent acting on its behalf has taken
or will take any action which might cause this Agreement or the transactions
contemplated hereby to violate Regulation G, Regulation T or any other
regulation of the Board of Governors of the Federal Reserve System or to violate
the 1934 Act, in each case as in effect now or as the same may hereafter be in
effect.
(g) BLUE SKY LAWS. On or before the Closing Date, the Company shall take such
action as and to the extent it shall be necessary or required to qualify, or to
obtain an exemption for, the
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Preferred Shares for sale to the Buyer and the Warrants for issuance to the
Buyer pursuant to this Agreement, the Dividend Shares for issuance to the Buyer
pursuant to the Certificate of Designation, and the Common Shares for issuance
to the Buyer on conversion of the Preferred Shares and the Dividend Shares and
exercise of the Warrants under such of the securities or "blue sky" laws of
jurisdictions as shall be applicable to the sale of the Preferred Shares and the
issuance of the Warrants pursuant to this Agreement, the issuance to the Buyer
of the Dividend Shares pursuant to the Certificate of Designation, and the
issuance to the Buyer of Common Shares on conversion of the Preferred Shares and
the Dividend Shares and exercise of the Warrants. The Company shall furnish
copies of all filings, applications, orders and grants or confirmations of
exemptions relating to such securities or "blue sky" laws on or prior to the
Closing Date.
(h) CERTAIN EXPENSES. Whether or not the closing occurs, the Company shall pay
or reimburse the Buyer for all reasonable expenses (including, without
limitation, legal fees and expenses of counsel to the Buyer) incurred by the
Buyer, not in excess of $15,000 in the aggregate for the Buyer and the buyer
under the Other Subscription Agreement, in connection with this Agreement and
the transactions contemplated hereby. The Company shall pay on demand all
expenses incurred by the Buyer, including reasonable attorneys' fees and
expenses, as a consequence of, or in connection with (1) the negotiation,
preparation or execution of any amendment, modification or waiver of this
Agreement, the Certificate of Designation, the Registration Rights Agreement,
the Warrants, the Transfer Agent Instructions and the other agreements and
instruments contemplated hereby and thereby requested by the Company, (2) any
default or breach of any of the Company's obligations set forth in any of such
agreements or instruments and (3) the enforcement or restructuring of any right
of, including the collection of any payments due, the Buyer under any of such
agreements or instruments, including any action or proceeding relating to such
enforcement or any order, injunction or other process seeking to restrain the
Company from paying any amount due the Buyer, in which the Buyer prevails.
(i) CERTAIN ISSUANCES OF SECURITIES. (1) Unless the Company obtains the
Shareholder Approval (as defined in the Certificate of Designation) or a waiver
thereof from the Nasdaq, the Company will not issue any shares of Common Stock
or shares of any other series of preferred stock or other securities convertible
into, exchangeable for, or otherwise entitling the holder to acquire, shares of
Common Stock which would be subject to the requirements of Rule 4310(c)(25)(H)
of Nasdaq (or any successor, replacement, or similar provision thereof or of any
other market on which the Common Stock is listed for trading) and which would be
integrated with the sale of the Preferred Shares to the Buyer, the issuance of
the Dividend Shares or the issuance of Common Shares upon conversion thereof for
purposes of Rule 4310(c)(25)(H) of Nasdaq (or any successor, replacement or
similar provision thereof or of any other market on which the Common Stock is
listed for trading).
(2) During the period from the date of this Agreement to the date on
which the Registration Statement (as defined in the Registration Rights
Agreement) shall have been effective with the SEC for 180 consecutive days,
without the prior written consent of the Buyer, which shall not be unreasonably
withheld, the Company shall not offer, sell, contract to sell or issue (or
engage any person to assist the Company in taking any such action) (A) any
security (whether debt or equity) with conversion or exchange terms similar in
nature to the conversion rights of the
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Preferred Stock or (B) any equity securities or securities convertible into,
exchangeable for or otherwise entitling the holder to acquire, any Common Stock
at a price below the market price of the Common Stock on the date of such
issuance or acquisition (collectively, "Discounted Securities"); provided,
however, that nothing in this Section 4(i) shall prohibit the Company from
issuing securities (v) pursuant to compensation plans for employees, directors,
officers, advisers or consultants of the Company and in accordance with the
terms of such plans as in effect as of the date of this Agreement, (w) upon
exercise of conversion, exchange, purchase or similar rights issued, granted or
given by the Company and outstanding as of the date of this Agreement and
disclosed in the SEC Reports or this Agreement, (x) pursuant to a public
offering underwritten on a firm commitment basis registered under the 1933 Act,
(y) as part of a transaction involving a strategic alliance, collaboration,
joint venture, partnership or other similar arrangement of the Company with
another corporation, partnership or other business entity which is engaged in a
business similar to, complementary to or related to the business of the Company,
so long as in the case of this clause (y) the Board of Directors by resolution
duly adopted (and a copy of which shall be furnished to the Buyer promptly after
adoption) determines that such issuance is fair to the holders of each class and
series of capital stock of the Company and to the Buyer in respect of its equity
interest in the Company that is represented by the Preferred Shares and the
Warrants or (z) through an investment banking or brokerage firm which, in the
reasonable judgment of the Buyer, is generally regarded as being in the top two
"tiers" of such firms determined on a national basis or on the basis of such
firms principally involved with the Company's industry, including, without
limitation, BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇ Brothers Inc.; NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities LLC; ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co; ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L ;
Credit Suisse First Boston Corporation; ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.; Bear, ▇▇▇▇▇▇▇ & Co.
Inc.; BT ▇▇▇▇ ▇▇▇▇▇ Co.; ▇▇▇ ▇▇▇▇▇▇ & Company; Salomon Brothers Inc.; J Bradford
& Co.; Pacific Crest Securities Inc.; ▇▇▇▇ ▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated; and ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC.
(3) Subject to the restrictions in Section 4(i)(1), during the
period from the date of execution and delivery of this Agreement to the date
which is one year after the Closing Date, the Company shall not offer, sell,
contract to sell or issue (or engage any person to assist the Company in taking
any such action) any Discounted Securities without giving the Buyer the first
right to acquire the Discounted Securities on the same terms as the Discounted
Securities are to be offered to other investors. The Company shall give notice
to the Buyer of the detailed terms of the Discounted Securities proposed to be
issued and, promptly after requested by the Buyer, such other information as
requested by the Buyer. The Buyer may, by notice to the Company, exercise such
right of first refusal at any time until the later of (x) ten Business Days
after such notice from the Company to the Buyer and (y) three Business Days
after the Company provides such additional information as shall have been
requested by the Buyer.
(j) CERTAIN TRADING RESTRICTIONS. The Buyer agrees that on the Closing Date it
will have no short position in the Common Stock. So long as the Company is in
compliance in all material respects with its obligations to the Buyer under this
Agreement, the Certificate of Designation and the Registration Rights Agreement,
the Buyer agrees that (1) from the Closing Date until the date the Registration
Statement is declared effective by the SEC, it will not sell or contract to sell
any equity security of the Company or engage in any short sales or other hedging
transactions relating to the Common Stock and (2) during the period from the
date the Registration Statement is
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declared effective by the SEC to the date of the conversion in full or
redemption of all Preferred Shares owned by the Buyer, the Buyer shall not
engage in short sales or other hedging transactions relating to the Common
Stock; provided, however, that the Buyer may enter into and maintain such
transactions involving up to 70,000 shares of Common Stock at any one time.
(k) BEST EFFORTS. Each of the parties shall use its best efforts timely to
satisfy each of the conditions to the other party's obligations to sell and
purchase the Preferred Shares set forth in Section 7 or 8, as the case may be,
of this Agreement on or before the Closing Date.
5. TRANSFER AGENT INSTRUCTIONS; CONVERSION PROCEDURE.
(a) TRANSFER AGENT INSTRUCTIONS. Prior to the Closing Date, the Company will (1)
execute and deliver the Transfer Agent Instructions in the form attached hereto
as ANNEX IV and thereby irrevocably instruct, American Stock Transfer & Trust
Company, as Transfer Agent and Registrar (the "Transfer Agent"), to issue
certificates for the Common Shares from time to time upon conversion of the
Preferred Shares and the Dividend Shares and exercise of the Warrants in such
amounts as specified from time to time to the Transfer Agent in the Notices of
Conversion surrendered in connection with such conversions and referred to in
Section 5(b) of this Agreement and the Form of Subscription in the form attached
to the Warrants and (2) appoint the Transfer Agent the conversion agent for the
Preferred Stock and the exercise agent for the Warrants. The certificates for
the Common Shares may bear the restrictive legend specified in Section 4(b) of
this Agreement prior to registration of the resale of the Common Shares under
the 1933 Act. The certificates for the Common Shares shall be registered in the
name of the Buyer or its designee and in such denominations to be specified by
the Buyer in connection with each conversion of Preferred Shares or Dividend
Shares or exercise of the Warrants. The Company warrants that no instruction
other than (x) such instructions referred to in this Section 5, (y) stop
transfer instructions to give effect to Section 4(a) hereof prior to
registration of the resale of the Common Shares under the 1933 Act and (z) the
instructions required by Section 3(n) of the Registration Rights Agreement will
be given by the Company to the Transfer Agent and that the Common Shares shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement. Nothing in this Section 5(a) shall
limit in any way the Buyer's obligations and agreement to comply with the
registration and prospectus delivery requirements of the 1933 Act upon resale of
the Shares. If the Buyer provides the Company with an opinion of counsel,
reasonably satisfactory in form, scope and substance to the Company and its
legal counsel, that registration of a resale by the Buyer of any of the Shares
is not required under the 1933 Act, the Company shall permit the transfer of
such Shares and, in the case of the Common Shares in accordance with clause
(1)(B) of Section 4(a) of this Agreement, promptly instruct the Company's
transfer agent to issue upon transfer one or more share certificates in such
name and in such denominations as specified by the Buyer within three trading
days after receipt of such opinion. Nothing in this Section 5(a) shall limit the
obligations of the Company under Section 3(n) of the Registration Rights
Agreement.
(b) CONVERSION PROCEDURE. In connection with the exercise of conversion rights
relating to the Preferred Shares, the Buyer or any subsequent holder of the
Preferred Shares shall complete, sign and furnish to the Transfer Agent a Notice
of Conversion of Series B Convertible Preferred
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Stock in the form attached hereto as ANNEX V, which shall be deemed to satisfy
all requirements of the Certificate of Designation. The Buyer shall also give a
copy of the Conversion Notice to the Company as provided in the Certificate of
Designation.
6. CLOSING DATE.
Subject to the satisfaction or waiver of the conditions set forth in
Sections 7 and 8, the date and time of the issuance and sale of the Preferred
Shares (the "Closing Date") shall be 12:00 noon, Seattle, Washington time, on or
before the date which is three Business Days after the date of this Agreement,
or such other mutually agreed to time. The closing shall occur on the Closing
Date at the offices of ___________________________________.
7. CONDITIONS TO THE COMPANYAES OBLIGATION TO SELL AND ISSUE.
The Buyer understands that the Company's obligation to sell the
Preferred Shares and issue the Warrants to the Buyer pursuant to this Agreement
on the Closing Date is conditioned upon the satisfaction of the following
conditions precedent on or before the Closing Date (any or all of which may be
waived by the Company in its sole discretion):
(a) The receipt and acceptance by the Company of this Agreement as
evidenced by execution of this Agreement by the Company and delivery of an
executed counterpart of this Agreement to the Buyer or its legal counsel;
(b) Delivery by the Buyer to the Company of good funds as payment in
full of an amount equal to the Purchase Price for the Preferred Shares in
accordance with Section 1(b) hereof;
(c) The accuracy on the Closing Date of the representations and
warranties of the Buyer contained in this Agreement as if made on the Closing
Date and the performance by the Buyer on or before the Closing Date of all
covenants and agreements of the Buyer required to be performed on or before the
Closing Date; and
(d) On the Closing Date, no legal action, suit or proceeding shall
be pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement.
8. CONDITIONS TO THE BUYERAES OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Preferred Shares and acquire the Warrants from the Company pursuant to this
Agreement on the Closing Date is conditioned upon the satisfaction of the
following conditions precedent on or before the Closing Date (any or all of
which may be waived by the Buyer in its sole discretion):
(a) Delivery by the Company to the Buyer of the certificates for the
Preferred Shares and the Warrants in accordance with this Agreement;
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(b) The accuracy on the Closing Date of the representations and
warranties of the Company contained in this Agreement as if made on the Closing
Date and the performance by the Company on or before the Closing Date of all
covenants and agreements of the Company required to be performed on or before
the Closing Date and receipt by the Buyer of a certificate, dated the Closing
Date, of the Chief Executive Officer or the Chief Financial Officer of the
Company confirming such matters and such other matters as the Buyer may
reasonably request;
(c) The receipt by the Buyer of confirmation of the filing with the
Secretary of State of the State of Minnesota of the Certificate of Designation;
(d) The receipt by the Buyer of a certificate, dated the Closing
Date, of the Secretary of the Company certifying (1) the Certificate of
Incorporation and By-Laws of the Company as in effect on the Closing Date, (2)
all resolutions of the Board of Directors (and committees thereof) of the
Company relating to this Agreement and the transactions contemplated hereby and
(3) such other matters as reasonably requested by the Buyer;
(e) The Transfer Agent shall have acknowledged receipt of the
Transfer Agent Instructions in the form attached hereto as ANNEX IV;
(f) Receipt by the Buyer on the Closing Date of an opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Company, dated the Closing Date, in form,
scope and substance reasonably satisfactory to the Buyer, to the effect set
forth in ANNEX VI attached hereto, and an opinion of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.,
special counsel for the Company, dated the Closing Date, in form, scope and
substance reasonably satisfactory to the Buyer to the effect set forth in ANNEX
VII attached hereto; and
(g) On the Closing Date, no legal action, suit or proceeding shall
be pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement.
9. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Washington.
(b) COUNTERPARTS. This Agreement may be executed in counterparts and by the
parties hereto on separate counterparts, all of which together shall constitute
one and the same instrument. A facsimile transmission of this Agreement bearing
a signature on behalf of a party hereto shall be legal and binding on such
party. Although this Agreement is dated as of the date first set forth above,
the actual date of execution and delivery of this Agreement by each party is the
date set forth below such party's signature on the signature page hereof. Any
reference in this Agreement or in any of the documents executed and delivered by
the parties hereto in connection herewith to (1) the date of execution and
delivery of this Agreement by the Buyer shall be deemed a reference to the date
set forth below the Buyer's signature on the signature page hereof, (2) the date
of execution and delivery of this Agreement by the Company shall be deemed a
reference to the date set forth below the Company's signature on the signature
page hereof and (3) the date of
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execution and delivery of this Agreement or the date of execution and delivery
of this Agreement by the Buyer and the Company shall be deemed a reference to
the later of the dates set forth below the signatures of the parties on the
signature page hereof.
(c) HEADINGS, ETC.. The headings, captions and footers 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 or the
validity or enforceability of this Agreement in any other jurisdiction.
(e) AMENDMENTS. No amendment, modification, waiver, discharge or termination of
any provision of this Agreement nor consent to any departure by the Buyer or the
Company therefrom shall in any event be effective unless the same shall be in
writing and signed by the party to be charged with enforcement, and then shall
be effective only in the specific instance and for the purpose for which given.
No course of dealing between the parties hereto shall operate as an amendment of
this Agreement.
(f) WAIVERS. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
or any course of dealings between the parties, shall not operate as a waiver
thereof or an amendment hereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or
exercise of any other right or power.
(g) NOTICES. Any notices required or permitted to be given under the terms of
this Agreement shall be sent by mail or delivered personally (which shall
include telephone line facsimile transmission with answer back confirmation) or
by courier and shall be effective five days after being placed in the mail, if
mailed, or upon receipt, if delivered personally or by courier, in the case of
the Company addressed to the Company at its address shown in the introductory
paragraph of this Agreement, Attention: Chief Financial Officer (telephone line
facsimile transmission number (▇▇▇) ▇▇▇-▇▇▇▇ or, in the case of the Buyer, at
its address or telephone line facsimile transmission number shown on the
signature page of this Agreement, with a copy to ___________________________
(telephone line facsimile transmission number _____________) or such other
address or telephone line facsimile transmission number as a party shall have
provided by notice to the other party in accordance with this provision. The
Buyer hereby designates as its address for any notice required or permitted to
be given to the Buyer pursuant to the Certificate of Designation the address
shown on the signature page of this Agreement, with a copy to:
_____________________ (facsimile number ______________), until the Buyer shall
designate another address for such purpose.
(h) ASSIGNMENT. Prior to the Closing Date, the Buyer shall have the right to
assign its rights and obligations under this Agreement with respect to the
purchase of all or any portion of the
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Preferred Shares and the issuance of the Warrants to any affiliate of the Buyer,
provided any such assignee, by written instrument duly executed by such
assignee, assumes all obligations of the Buyer hereunder with respect to the
purchase of the portion of the Preferred Shares or the acquisition of the
Warrants so assigned and makes the same representations and warranties with
respect thereto as the Buyer makes in this Agreement, whereupon the Buyer shall
be relieved of any further obligations, responsibilities and liabilities with
respect to the purchase of all or the portion of the Preferred Shares and
acquisition of the related Warrants the obligation for the purchase or
acquisition of which has been so assigned. In the case of any such assignment,
the Company shall agree in writing with such assignee to make available to such
assignee the benefits of the Registration Rights Agreement with respect to the
Common Shares issuable on conversion of the Preferred Shares and exercise of the
Warrants with respect to which the purchase under this Agreement has been so
assigned. Any transfer of the Preferred Shares, Dividend Shares or the Warrants
by the Buyer after the Closing Date shall be made in accordance with Section
4(a). After the Closing Date, the Buyer shall have the right to assign its
rights and obligations under this Agreement in connection with any transfer of
the Buyer's rights under the Registration Rights Agreement by compliance with
the provisions of Section 9 of the Registration Rights Agreement.
(i) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective representations,
warranties, covenants and agreements of the Buyer and the Company contained in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall survive the delivery of payment for the Preferred Shares and
shall remain in full force and effect regardless of any investigation made by or
on behalf of them or any person controlling or advising any of them.
(j) ENTIRE AGREEMENT. This Agreement and its Annexes set forth the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and understandings, whether written or oral,
with respect thereto.
(k) TERMINATION. The Buyer shall have the right to terminate this Agreement by
giving notice to the Company at any time at or prior to the Closing Date if:
(1) the Company shall have failed, refused, or been unable at or
prior to the date of such termination of this Agreement to perform any
of its obligations hereunder;
(2) any other condition of the Buyer's obligations hereunder is
not fulfilled; or
(3) the closing shall not have occurred on a Closing Date on or
before April 30, 1998, other than solely by reason of a breach of this
Agreement by the Buyer.
Any such termination shall be effective upon the giving of notice thereof by the
Buyer. Upon such termination, the Buyer shall have no further obligation to the
Company hereunder and the Company shall remain liable for any breach of this
Agreement or the other documents contemplated hereby which occurred on or prior
to the date of such termination.
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(l) FURTHER ASSURANCES. Each party to this Agreement will perform any and all
acts and execute any and all documents as may be necessary and proper under the
circumstances in order to accomplish the intents and purposes of this Agreement
and to carry out its provisions.
(m) PUBLIC STATEMENTS, PRESS RELEASES, ETC. The Company and the Buyer shall have
the right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of the
Buyer, to make any press release or other public disclosure with respect to such
transactions as is required by applicable law and regulations (although the
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).
(n) 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.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer
and the Company by their respective officers or other representatives thereunto
duly authorized on the respective dates set forth below.
NUMBER OF SHARES: ____________
PRICE PER SHARE: $1,000.00
AGGREGATE PURCHASE PRICE: $________________
By:________________________________
Date:______________________________
Address:
IVI PUBLISHING, INC.
By:________________________________
Name:
Title:
Date:______________________________