COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement, dated on and as of the date set
forth on the signature page hereto (this "AGREEMENT"), is made between Voxware,
Inc., a Delaware corporation (the "COMPANY"), the undersigned purchaser(s) (each
a "PURCHASER" and collectively, the "PURCHASERS") and each assignee of a
Purchaser who becomes a party hereto.
WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"SECURITIES ACT") and Regulation D promulgated thereunder, the Company desires
to offer, issue and sell to the Purchasers (the "OFFERING"), and the Purchasers,
severally and not jointly, desire to purchase from the Company, shares (the
"SHARES") of the Company's common stock, par value $0.001 per share (the "COMMON
STOCK").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration the
receipt and adequacy of which is hereby acknowledged, the Company and each of
the Purchasers agree as follows:
A. SUBSCRIPTION; CLOSING CONDITIONS
(1) Subject to the conditions to closing set forth herein, each
Purchaser hereby irrevocably subscribes for and agrees to purchase Shares for
the aggregate purchase price set forth on the signature page of such Purchaser
hereto (the "SUBSCRIPTION Amount"). The Shares to be issued to each Purchaser
hereunder shall consist of (i) Shares in an amount equal to the quotient of (x)
such Purchaser's Subscription Amount, divided by (y) the Offering Price, rounded
down to the nearest whole number. The aggregate Subscription Amount for the
Shares to be issued pursuant to the Offering shall be no less than $6,000,000
and shall not exceed $6,600,000.
(2) For purposes of this Agreement, the "OFFERING PRICE" shall be
$0.032 per Share.
(3) The purchase and sale shall take place at a closing or multiple
closings mutually agreed upon by the Company and the Placement Agents, as
defined below (each closing referred to as the "CLOSING"). Prior to the Closing,
each Purchaser, other than Edison Venture Fund V, L.P. ("Edison") and Cross
Atlantic Technology Fund II, L.P. ("Cross Atlantic"), shall deliver the
applicable Subscription Amount, by wire transfer to a non-interest bearing
escrow account (the "ESCROW ACCOUNT") established by the Company and the
European Placement Agent with Silicon Valley Bank, as escrow agent, or with such
other or successor financial institution acting as escrow agent as the Company
and the European Placement Agent may agree (the "ESCROW AGENT"), pursuant to an
escrow agreement to be entered into by and among the Company, the European
Placement Agent and the Escrow Agent (the "ESCROW AGREEMENT"), in accordance
with the wire transfer instructions set forth on SCHEDULE A, and such amount
shall be held in the manner described in Paragraph (4) below. Each of the
Purchasers hereby appoints the European Placement Agent as its "Investor
Representative" (as defined under the relevant Escrow Agreement) to act as its
agent for purposes of providing instructions to the Escrow Agent from time to
time in respect of distribution of funds from the Escrow Account. The minimum
Subscription Amount required for each Purchaser is $10,000, and the aggregate
minimum Subscription Amount for the initial Closing is $6,000,000. In the event
there is more than one closing, the term "CLOSING" shall apply to each such
closing unless otherwise specified herein.
(4) All payments for Shares made by each Purchaser, other than
Edison and Cross Atlantic, will be deposited as soon as practicable for the
Purchaser's benefit in the Escrow Account pursuant to SCHEDULE A attached
hereto. Payments for Shares made by the Purchasers will be returned promptly,
prior to an applicable Closing, without interest or deduction, if, or to the
extent, the undersigned's subscription is rejected or the Offering is terminated
for any reason. Each of Edison and Cross Atlantic shall deliver payment for
their respective Shares directly to the account of the Company.
(5) Upon receipt by the Company of the requisite payment for all
Shares to be purchased by the Purchasers whose subscriptions are accepted, the
Company shall, at each Closing: (i) in accordance with Paragraph (1) above;
deliver to (A) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ Limited (the "EUROPEAN PLACEMENT AGENT") and
Mufson ▇▇▇▇ ▇▇▇▇▇▇ & Company LLC, the placement agents for the Offering
(together, the "PLACEMENT AGENTS"), and as representatives of certain of the
Purchasers and (B) each of Edison and Cross Atlantic, a certificate stating that
the representations and warranties made by the Company in Section C of this
Agreement were true and correct in all material respects when made and are true
and correct in all material respects on the date of each such Closing relating
to the Shares subscribed for pursuant to this Agreement as though made on and as
of such Closing date (provided, however, that representations and warranties
that speak as of a specific date shall continue to be true and correct as of the
Closing with respect to such date); and (ii) cause to be delivered to the
Placement Agents, as representatives of certain of the Purchasers, and each of
Edison and Cross Atlantic, an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇ & Bockius LLP
substantially in the form of EXHIBIT A hereto. In the event either Placement
Agent does not represent any of the Purchasers at a Closing, the Company shall
have no obligation to deliver any documents or other materials to such Placement
Agent. The Placement Agent through whom such Purchaser subscribed shall then be
responsible for forwarding the foregoing documents to the Purchaser as promptly
as practicable. No later than three (3) business days after each Closing, the
Company shall deliver to the Placement Agents stock certificates representing
the shares of Common Stock purchased by each Purchaser at such Closing under
this Agreement. The Placement Agents shall then be responsible to forward the
foregoing documents and stock certificates to the Purchasers as promptly as
practicable.
(6) Each Purchaser acknowledges and agrees that this Agreement shall
be binding upon such Purchaser upon the execution and delivery to the Company,
in care of the relevant Placement Agent, of such Purchaser's signed counterpart
signature page to this Agreement unless and until the Company or the relevant
Placement Agent shall reject the subscription being made hereby by such
Purchaser.
(7) Each Purchaser agrees that each of the Company and the Placement
Agent through which such Purchaser has subscribed, if any, may reduce such
Purchaser's subscription with respect to the number of Shares to be purchased
without any prior notice or further consent by such Purchaser. If such a
reduction occurs, the part of the Subscription Amount attributable to the
reduction shall be promptly returned, without interest or deduction.
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(8) Each Purchaser acknowledges and agrees that the purchase of
Shares by such Purchaser pursuant to the Offering is subject to all the terms
and conditions set forth in this Agreement.
(9) The initial Closing shall also be subject to the following
additional closing conditions: (i) the Company shall have obtained the requisite
stockholder approval to convert its outstanding shares of Series D Preferred
Stock, $0.001 par value per share (the "SERIES D PREFERRED STOCK"), into shares
of Common Stock and convert its outstanding warrants to purchase shares of
Series D Preferred Stock into warrants to purchase shares of Common Stock; (ii)
the Company shall have obtained the requisite stockholder consent approving the
Offering and waiving any preemptive rights, rights to receive notice of the
Offering and any other applicable rights affected by the transactions
contemplated by the Offering; (iii) the Company shall have terminated its
Stockholders Agreement, dated June 27, 2003, as amended (the "STOCKHOLDERS
AGREEMENT"), made and entered into by and among the Company and the Purchasers
(as defined therein); and (iv) the Company shall have obtained the requisite
stockholder consent approving the Reverse Split and the Amended Charter
referenced in Section F.5 below.
B. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Each of the Purchasers, severally and not jointly, hereby represents and
warrants to the Company and each of the Placement Agents, and agrees with the
Company as follows:
(1) The Purchaser has carefully read this Agreement, and related
ancillary documents (the "OFFERING DOCUMENTS"), and is familiar with and
understands the terms of the Offering. Specifically, and without limiting in any
way the foregoing representation, the Purchaser has carefully read and
considered the Company's annual report on Form 10-K for the fiscal year ended
June 30, 2004, and any amendments thereto (the "2004 FORM 10-K"), the Company's
quarterly report on Form 10-QSB for the quarter ended September 30, 2004, and
any amendments thereto; the Company's quarterly report on Form 10-QSB for the
quarter ended December 31, 2004, and any amendments thereto; the Company's
quarterly report on Form 10-QSB for the quarter ended March 31, 2005, and any
amendments thereto, the Company's Definitive Proxy Statement dated October 28,
2004 on Schedule 14A relating to its 2004 annual meeting of shareholders and
fully understands all of the risks related to the purchase of the Shares. The
Purchaser has carefully considered and has discussed with the Purchaser's
professional legal, tax, accounting and financial advisors, to the extent the
Purchaser has deemed necessary, the suitability of an investment in the Shares
for the Purchaser's particular tax and financial situation and has determined
that the Shares being subscribed for by the Purchaser are a suitable investment
for the Purchaser. The Purchaser recognizes that an investment in the Shares
involves substantial risks, including the possible loss of the entire amount of
such investment.
(2) The Purchaser acknowledges that (i) the Purchaser has had the
opportunity to request copies of any documents, records, and books pertaining to
this investment and (ii) any such documents, records and books that the
Purchaser requested have been made available for inspection by the Purchaser,
the Purchaser's attorney, accountant or advisor(s).
(3) The Purchaser and the Purchaser's advisor(s) have had a
reasonable opportunity to ask questions of and receive answers from
representatives of the Company or persons acting
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on behalf of the Company concerning the Offering and all such questions have
been answered to the full satisfaction of the Purchaser.
(4) The Purchaser is not subscribing for Shares as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar, meeting or conference whose
attendees have been invited by any general solicitation or general advertising.
(5) If the Purchaser is a natural person, the Purchaser has reached
the age of majority in the state in which the Purchaser resides. Each Purchaser
has adequate means of providing for the Purchaser's current financial needs and
contingencies, is able to bear the substantial economic risks of an investment
in the Shares for an indefinite period of time, has no need for liquidity in
such investment and can afford a complete loss of such investment.
(6) The Purchaser has sufficient knowledge and experience in
financial, tax and business matters to enable the Purchaser to utilize the
information made available to the Purchaser in connection with the Offering, to
evaluate the merits and risks of an investment in the Shares and to make an
informed investment decision with respect to an investment in the Shares on the
terms described in the Offering Documents.
(7) The Purchaser will not sell or otherwise transfer the Shares
without registration under the Securities Act of 1933, as amended (the
"SECURITIES ACT") and applicable state securities laws or an applicable
exemption therefrom. The Purchaser acknowledges that neither the offer nor sale
of the Shares has been registered under the Securities Act or under the
securities laws of any state. The Purchaser represents and warrants that the
Purchaser is acquiring the Shares for the Purchaser's own account, for
investment and not with a view toward resale or distribution within the meaning
of the Securities Act. The Purchaser has not offered or sold the Shares being
acquired nor does the Purchaser have any present intention of selling,
distributing or otherwise disposing of such Shares either currently or after the
passage of a fixed or determinable period of time or upon the occurrence or
non-occurrence of any predetermined event or circumstances in violation of the
Securities Act. The Purchaser is aware that (i) the Shares are not currently
eligible for sale in reliance upon Rule 144 promulgated under the Securities Act
and (ii) the Company has no obligation to register the Shares subscribed for
hereunder, except as provided in Section E hereof.
(8) The Purchaser acknowledges that the certificates representing
the Shares shall be stamped or otherwise imprinted with a legend substantially
in the following form:
The securities represented hereby have not been registered under
the Securities Act of 1933, as amended, or any state securities
laws and neither the securities nor any interest therein may be
offered, sold, transferred, pledged or otherwise disposed of
except pursuant to an effective registration under such act or
an exemption from registration, which, in the opinion of counsel
reasonably satisfactory to this corporation, is available.
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Certificates evidencing the Shares shall not be required to contain such
legend or any other legend (i) following any sale of such Shares pursuant to
Rule 144, or (ii) if such Shares are eligible for sale under Rule 144(k) or have
been sold pursuant to the Registration Statement (as hereafter defined) and in
compliance with the obligations set forth in Section E(6), below, or (iii) such
legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the Staff of
the Securities and Exchange Commission), in each such case (i) through (iii) to
the extent reasonably determined by the Company's legal counsel. At such time
and to the extent a legend is no longer required for the Shares, the Company
will use its best efforts to no later than five (5) trading days following the
delivery by a Purchaser to the Company or the Company's transfer agents of a
legended certificate representing such Shares (together with such accompanying
documentation or representations as reasonably required by counsel to the
Company), deliver or cause to be delivered a certificate representing such
Shares that is free from the foregoing legend.
(9) If this Agreement is executed and delivered on behalf of a
partnership, corporation, trust, estate or other entity: (i) such partnership,
corporation, trust, estate or other entity has the full legal right and power
and all authority and approval required (a) to execute and deliver this
Agreement and all other instruments executed and delivered by or on behalf of
such partnership, corporation, trust, estate or other entity in connection with
the purchase of its Shares, and (b) to purchase and hold such Shares; (ii) the
signature of the party signing on behalf of such partnership, corporation,
trust, estate or other entity is binding upon such partnership, corporation,
trust, estate or other entity; and (iii) such partnership, corporation, trust or
other entity has not been formed for the specific purpose of acquiring such
Shares, unless each beneficial owner of such entity is qualified as an
accredited investor within the meaning of Rule 501(a) of Regulation D
promulgated under the Securities Act and has submitted information to the
Company substantiating such individual qualification.
(10) If the Purchaser is a retirement plan or is investing on behalf
of a retirement plan, the Purchaser acknowledges that an investment in the
Shares poses additional risks, including the inability to use losses generated
by an investment in the Shares to offset taxable income.
(11) The information contained in the purchaser questionnaire in the
form of EXHIBIT B attached hereto (the "PURCHASER QUESTIONNAIRE") delivered by
the Purchaser in connection with this Agreement is complete and accurate in all
respects, and the Purchaser is an "accredited investor" as defined in Rule 501
of Regulation D under the Securities Act on the basis indicated therein. The
Purchaser shall indemnify and hold harmless the Company and each officer,
director or control person, who is or may be a party or is or may be threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of or arising from any actual or alleged misrepresentation or misstatement of
facts or omission to represent or state facts made or alleged to have been made
by the Purchaser to the Company or omitted or alleged to have been omitted by
the Purchaser, concerning the Purchaser or the Purchaser's authority to invest
or financial position in connection with the Offering, including, without
limitation, any such misrepresentation, misstatement or omission contained in
the Agreement or any other document submitted by the Purchaser, against losses,
liabilities and expenses for which the Company or any officer, director or
control person has not otherwise been reimbursed (including attorney's fees,
judgments, fines and amounts paid in settlement) actually and reasonably
incurred by the
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Company or such officer, director or control person in connection with such
action, suit or proceeding. For the avoidance of doubt, such indemnification
shall be the several, and not joint, obligation of each Purchaser with respect
to its own action or inaction as provided above.
(12) The information contained in the selling stockholder
questionnaire in the form of EXHIBIT C attached hereto (the "SELLING STOCKHOLDER
QUESTIONNAIRE") delivered by the Purchaser in connection with this Agreement is
complete and accurate in all respects.
(13) To the extent that the Purchaser is a resident of the United
Kingdom or would otherwise be subject to the FPO, as defined below, the
Purchaser is either a person of a kind described in Article 19 (Investment
Professionals), Article 48 (Certified High Net Worth Individuals), Article 49
(High Net Worth Companies, Unincorporated Association etc), and/or Article 50
(Sophisticated Investors) of the FPO, as presently in effect. "FPO" means
Financial Services and Markets ▇▇▇ ▇▇▇▇ (Financial Promotion) Order 2005 (SI
2005/1529), as amended.
C. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby makes the following representations and warranties to
the Purchaser and the Placement Agents, which shall survive the Closing and the
purchase and sale of the Shares.
(1) ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to conduct
its business as currently conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in all jurisdictions
in which the character of the property owned or leased or the nature of the
business transacted by it makes qualification necessary, except where the
failure to be so qualified would not have a material adverse effect on the
business, properties, prospects, financial condition or results of operations of
the Company (a "MATERIAL ADVERSE EFFECT").
(2) CAPITALIZATION. The authorized capital stock of the Company
consists of 2,365,000,000 shares of stock of all classes. The authorized capital
stock is divided into 1,500,000,000 shares of Common Stock, $0.001 par value per
share, and 865,000,000 shares of Preferred Stock, $0.001 par value per share
(the "PREFERRED STOCK"). As of July 20, 2005, there were 78,508,912 shares of
Common Stock issued and outstanding, and 649,316,089 shares of Preferred Stock
issued and outstanding. As of July 20, 2005, the Company had reserved
177,431,249 shares of Common Stock for issuance to employees, directors and
consultants pursuant to the Company's 2003 Stock Incentive Plan, of which
124,003,067 shares of Common Stock are subject to outstanding, unexercised
options as of such date, and the Company had reserved 29,662,846 shares of
Common Stock issuable upon exercise of outstanding Common Stock warrants and
156,879,326 shares of Preferred Stock issuable upon exercise of outstanding
Preferred Stock warrants. Other than as set forth above or as contemplated in
this Agreement, there are no other options, warrants, calls, rights, commitments
or agreements of any character to which the Company is a party or by which
either the Company is bound or obligating the Company to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of the Company or obligating the
6
Company to grant, extend or enter into any such option, warrant, call, right,
commitment or agreement.
(3) ISSUANCE; RESERVATION OF SHARES. The issuance of the Shares has
been duly and validly authorized by all necessary corporate and stockholder
action, and the Shares, when issued and paid for pursuant to this Agreement,
will be validly issued, fully paid and non-assessable shares of Common Stock of
the Company.
(4) AUTHORIZATION; ENFORCEABILITY. The Company has all corporate
right, power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Company, its directors and stockholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company, the
authorization, sale, issuance and delivery of the Shares contemplated herein and
the performance of the Company's obligations hereunder has been taken, including
without limitation all of the approvals required to be obtained under Section A
(9) of this Agreement. This Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms and
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies, and to limitations of public
policy. The issuance and sale of the Shares contemplated hereby will not give
rise to any preemptive rights or rights of first refusal on behalf of any
person.
(5) NO CONFLICT; GOVERNMENTAL AND OTHER CONSENTS.
(a) The execution and delivery by the Company of this
Agreement and the consummation of the transactions contemplated hereby will not
result in the violation of any law, statute, rule, regulation, order, writ,
injunction, judgment or decree of any court or governmental authority to or by
which the Company is bound, or of any provision of the Certificate of
Incorporation or Bylaws of the Company, and will not conflict with, or result in
a breach or violation of, any of the terms or provisions of, or constitute (with
due notice or lapse of time or both) a default under, any lease, loan agreement,
mortgage, security agreement, trust indenture or other agreement or instrument
to which the Company is a party or by which it is bound or to which any of its
properties or assets is subject, nor result in the creation or imposition of any
lien upon any of the properties or assets of the Company except to the extent
that any such violation, conflict or breach would not be reasonably likely to
have a Material Adverse Effect. No holder of any of the securities of the
Company or any of its Subsidiaries has any rights ("demand," "piggyback" or
otherwise) to have such securities registered by reason of the intention to
file, filing or effectiveness of a Registration Statement (as defined in Section
E hereof).
(b) No consent, approval, authorization or other order of
any governmental authority or other third-party is required to be obtained by
the Company in connection with the authorization, execution and delivery of this
Agreement or with the authorization, issue and sale of the Shares, except such
post-Closing filings as may be required to be made with the Securities and
Exchange Commission (the "SEC"), The NASDAQ Stock Market ("NASDAQ") and with any
state or foreign blue sky or securities regulatory authority.
7
(6) LITIGATION. There are no pending, or to the Company's knowledge
threatened, legal or governmental proceedings against the Company, which, if
adversely determined, would be reasonably likely to have a Material Adverse
Effect on the Company. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body (including, without
limitation, the SEC) pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries wherein an
unfavorable decision, ruling or finding could adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under this Agreement.
(7) ACCURACY OF REPORTS. All reports required to be filed by the
Company within the two years prior to the date of this Agreement (the "SEC
REPORTS") under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), have been filed with the SEC, complied at the time of filing in all
material respects with the requirements of their respective forms and, except to
the extent updated or superseded by any subsequently filed report, including,
without limitation, the amendments to the Company's annual report on Form 10-K
for the year ended June 30, 2004, and any amendments thereto, the Company's
quarterly report on Form 10-QSB for the quarter ended September 30, 2004, and
any amendments thereto; the Company's quarterly report on Form 10-QSB for the
quarter ended December 31, 2004, and any amendments thereto and the Company's
quarterly report on Form 10-QSB for the quarter ended March 31, 2005, and any
amendments thereto, were complete and correct in all material respects as of the
dates at which the information was furnished, and contained (as of such dates)
no untrue statements of a material fact nor omitted to state any material fact
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(8) FINANCIAL INFORMATION. The Company's financial statements that
appear in the SEC Reports have been prepared in accordance with United States
generally accepted accounting principles ("GAAP"), except in the case of
unaudited statements, as permitted by Form 10-QSB of the SEC or as may be
indicated therein or in the notes thereto, applied on a consistent basis
throughout the periods indicated and such financial statements fairly present in
all material respects the financial condition and results of operations of the
Company as of the dates and for the periods indicated therein.
(9) ACCOUNTING CONTROLS. The Company and each of its subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain accountability for assets; (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
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(10) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ ACT OF 2002. The Company is, and will be, at all
times during the period the Company is required to maintain effectiveness of the
Registration Statement as provided herein, in compliance, in all material
respects, with all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and
all rules and regulations promulgated thereunder or implementing the provisions
thereof that are in effect and is taking reasonable steps to ensure
8
that it will be in compliance with other applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 not currently in effect upon the effectiveness of
such provisions.
(11) ABSENCE OF CERTAIN CHANGES. Since the date of the Company's
financial statements in the latest of the SEC Reports, there has not occurred
any undisclosed event that has caused a Material Adverse Effect or any
occurrence, circumstance or combination thereof that reasonably would be likely
to result in such Material Adverse Effect.
(12) INVESTMENT COMPANY. The Company is not an "investment company"
within the meaning of such term under the Investment Company Act of 1940, as
amended, and the rules and regulations of the SEC thereunder.
(13) SUBSIDIARIES. To the extent required under applicable SEC rules,
Exhibit 21.1 to the 2004 Form 10-K sets forth each subsidiary of the Company,
showing the jurisdiction of its incorporation or organization. For the purposes
of this Agreement, "subsidiary" shall mean any company or other entity of which
at least 50% of the securities or other ownership interest having ordinary
voting power for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the Company or any of
its other subsidiaries.
(14) INDEBTEDNESS. The financial statements in the SEC Reports
reflect, to the extent required, as of the date thereof all outstanding secured
and unsecured Indebtedness (as defined below) of the Company or any subsidiary,
or for which the Company or any subsidiary has commitments. For purposes of this
Agreement, "Indebtedness" shall mean (a) any liabilities for borrowed money or
amounts owed in excess of $50,000 (other than trade accounts payable incurred in
the ordinary course of business), (b) all guaranties, endorsements and other
contingent obligations in respect of Indebtedness of others, whether or not the
same are or should be reflected in the Company's balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(c) the present value of any lease payments in excess of $50,000 due under
leases required to be capitalized in accordance with GAAP. Neither the Company
nor any subsidiary is in default with respect to any Indebtedness.
(15) CERTAIN FEES. Other than fees payable to the Placement Agents
pursuant to the placement agent agreements described below, no brokers',
finders' or financial advisory fees or commissions will be payable by the
Company or any subsidiary with respect to the transactions contemplated by this
Agreement. Pursuant to the Company's agreement with ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ Limited,
it is entitled to a cash fee equal to 6% of the funds received from the
Purchasers participating in this Offering who reside outside of the United
States, and 4% warrant coverage on such amount with an exercise price equal to
110% of the Offering Price. Pursuant to the Company's agreement with Mufson ▇▇▇▇
▇▇▇▇▇▇ & Company LLC, it is entitled to a cash fee equal to 1% of the funds
received from all Purchasers who are not existing investors in the Company and
1% warrant coverage on such amount with an exercise price equal to 120% of the
Offering Price, plus a cash fee equal to 5% of the funds received from all
Purchasers who are not existing investors in the Company and who reside in the
United States and 4% warrant coverage on such amount with an exercise price
equal to 120% of the Offering Price.
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(16) MATERIAL AGREEMENTS. Except as set forth in the SEC Reports,
neither the Company nor any subsidiary is a party to any written or oral
contract, instrument, agreement, commitment, obligation, plan or arrangement, a
copy of which would be required to be filed with the SEC as an exhibit to Form
10-K (each, a "MATERIAL AGREEMENT"). The Company and each of its subsidiaries
has in all material respects performed all the obligations required to be
performed by them to date under the foregoing agreements, have received no
notice of default by the Company or the subsidiary that is a party thereto, as
the case may be, and, to the Company's knowledge, are not in default under any
Material Agreement now in effect, the result of which would be reasonably likely
to have a Material Adverse Effect.
(17) TRANSACTIONS WITH AFFILIATES. Except as set forth in the SEC
Reports, there are no loans, leases, agreements, contracts, royalty agreements,
management contracts or arrangements or other continuing transactions with
aggregate obligations of any party exceeding $60,000 between (a) the Company,
any subsidiary or any of their respective customers or suppliers on the one
hand, and (b) on the other hand, any person who would be covered by Item 404(a)
of Regulation S-K or any company or other entity controlled by such person.
(18) TAXES. The Company and each of the subsidiaries has prepared and
filed all federal, state, local, foreign and other tax returns for income, gross
receipts, sales, use and other taxes and custom duties ("TAXES") required by law
to be filed by it, except for tax returns, the failure to file which,
individually or in the aggregate, do not and would not have a Material Adverse
Effect on the Company and its subsidiaries taken as a whole. Such filed tax
returns are complete and accurate, except for such omissions and inaccuracies
which, individually or in the aggregate, do not and would not have a Material
Adverse Effect on the Company and its subsidiaries taken as a whole. The Company
and each subsidiary has paid or made provisions for the payment of all Taxes
shown to be due on such tax returns and all additional assessments, and adequate
provisions have been and are reflected in the financial statements of the
Company and the subsidiaries for all current Taxes to which the Company or any
subsidiary is subject and which are not currently due and payable, except for
such Taxes which, if unpaid, individually or in the aggregate, do not and would
not have a Material Adverse Effect on the Company and its subsidiaries, taken as
a whole. None of the federal income tax returns of the Company or any subsidiary
for the past five years has been audited by the Internal Revenue Service. The
Company has not received written notice of any assessments, adjustments or
contingent liability (whether federal, state, local or foreign) in respect of
any Taxes pending or threatened against the Company or any subsidiary for any
period which, if unpaid, would have a Material Adverse Effect on the Company and
the subsidiaries taken as a whole.
(19) INSURANCE. The Company and its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as the Company believes are prudent and customary in the
businesses in which the Company and its subsidiaries are engaged. Neither the
Company nor any of its subsidiaries 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 without an increase in cost significantly greater than
general increases in cost experienced for similar companies in similar
industries with respect to similar coverage.
10
(20) ENVIRONMENTAL MATTERS. Except as disclosed in the SEC Reports,
all real property owned, leased or otherwise operated by the Company and its
subsidiaries is free of contamination from any substance, waste or material
currently identified to be toxic or hazardous pursuant to, within the definition
of a substance which is toxic or hazardous under, or which may result in
liability under, any Environmental Law (as defined below), including, without
limitation, any asbestos, polychlorinated biphenyls, radioactive substance,
methane, volatile hydrocarbons, industrial solvents, oil or petroleum or
chemical liquids or solids, liquid or gaseous products, or any other material or
substance ("HAZARDOUS SUBSTANCE") which has caused or would reasonably be
expected to cause or constitute a threat to human health or safety, or an
environmental hazard in violation of Environmental Law or to result in any
environmental liabilities that would be reasonably likely to have a Material
Adverse Effect. Neither the Company nor any of its subsidiaries has caused or
suffered to occur any release, spill, migration, leakage, discharge, disposal,
uncontrolled loss, seepage, or filtration of Hazardous Substances that would
reasonably be expected to result in environmental liabilities that would be
reasonably likely to have a Material Adverse Effect. The Company and each
subsidiary has generated, treated, stored and disposed of any Hazardous
Substances in compliance with applicable Environmental Laws, except for such
non-compliances that would not be reasonably likely to have a Material Adverse
Effect. The Company and each subsidiary has obtained, or has applied for, and is
in compliance with and in good standing under all permits required under
Environmental Laws (except for such failures that would not be reasonably likely
to have a Material Adverse Effect) and neither the Company nor any of its
subsidiaries has any knowledge of any proceedings to substantially modify or to
revoke any such permit. There are no investigations, proceedings or litigation
pending or, to the Company's knowledge, threatened against the Company, any of
its subsidiaries or any of the Company's or its subsidiaries' facilities
relating to Environmental Laws or Hazardous Substances. "ENVIRONMENTAL LAWS"
shall mean all federal, national, state, regional and local laws, statutes,
ordinances and regulations, in each case as amended or supplemented from time to
time, and any judicial or administrative interpretation thereof, including
orders, consent decrees or judgments relating to the regulation and protection
of human health, safety, the environment and natural resources.
(21) INTELLECTUAL PROPERTY RIGHTS AND LICENSES. The Company and its
subsidiaries own or have the right to use any and all information, know-how,
trade secrets, patents, copyrights, trademarks, trade names, software, formulae,
methods, processes and other intangible properties that are of a such nature and
significance to the business that the failure to own or have the right to use
such items would have a Material Adverse Effect ("INTANGIBLE RIGHTS"). The
Company (including its subsidiaries) has not received any notice that it is in
conflict with or infringing upon the asserted intellectual property rights of
others in connection with the Intangible Rights, and, to the Company's
knowledge, neither the use of the Intangible Rights nor the operation of the
Company's businesses is infringing or has infringed upon any intellectual
property rights of others. All payments have been duly made that are necessary
to maintain the Intangible Rights in force. No claims have been made, and to the
Company's knowledge, no claims are threatened, that challenge the validity or
scope of any material Intangible Right of the Company or any of its
subsidiaries. The Company and each of its subsidiaries have taken reasonable
steps to obtain and maintain in force all licenses and other permissions under
Intangible Rights of third parties necessary to conduct their businesses as
heretofore conducted by them, and now being conducted by them, and as expected
to be conducted, and neither the Company nor any of its subsidiaries is or has
been in material breach of any such license or other permission.
11
(22) LABOR, EMPLOYMENT AND BENEFIT MATTERS.
(a) There are no existing, or to the best of the Company's
knowledge, threatened strikes or other labor disputes against the Company or any
of its subsidiaries that would be reasonably likely to have a Material Adverse
Effect. There is no organizing activity involving employees of the Company or
any of its subsidiaries pending or, to the Company's or its subsidiaries'
knowledge, threatened by any labor union or group of employees. There are no
representation proceedings pending or, to the Company's or its subsidiaries'
knowledge, threatened with the National Labor Relations Board, and no labor
organization or group of employees of the Company or its subsidiaries has made a
pending demand for recognition.
(b) Neither the Company nor any of its subsidiaries is, or
during the five years preceding the date of this Agreement was, a party to any
labor or collective bargaining agreement and there are no labor or collective
bargaining agreements which pertain to employees of the Company or its
subsidiaries.
(c) Each employee benefit plan is in compliance with all
applicable law, except for such noncompliance that would not be reasonably
likely to have a Material Adverse Effect.
(d) Neither the Company nor any of its subsidiaries has any
liabilities, contingent or otherwise, including without limitation, liabilities
for retiree health, retiree life, severance or retirement benefits, which are
not fully reflected, to the extent required by GAAP, on the Balance Sheet or
fully funded. The term "liabilities" used in the preceding sentence shall be
calculated in accordance with reasonable actuarial assumptions.
(e) None of the Company nor any of its subsidiaries (i) has
terminated any "employee pension benefit plan" as defined in Section 3(2) of
ERISA (as defined below) under circumstances that present a material risk of the
Company or any of its subsidiaries incurring any liability or obligation that
would be reasonably likely to have a Material Adverse Effect, or (ii) has
incurred or expects to incur any outstanding liability under Title IV of the
Employee Retirement Income Security Act of 1974, as amended and all rules and
regulations promulgated thereunder ("ERISA").
(23) COMPLIANCE WITH LAW. The Company is in compliance in all
material respects with all applicable laws, except for such noncompliance that
would not reasonably be likely to have a Material Adverse Effect. The Company
has not received any notice of, nor does the Company have any knowledge of, any
violation (or of any investigation, inspection, audit or other proceeding by any
governmental entity involving allegations of any violation) of any applicable
law involving or related to the Company which has not been dismissed or
otherwise disposed of that would be reasonably likely to have a Material Adverse
Effect. The Company has not received notice or otherwise has any knowledge that
the Company is charged with, threatened with or under investigation with respect
to, any violation of any applicable law that would reasonably be likely to have
a Material Adverse Effect. Neither the Company nor any of its subsidiaries nor
any employee or agents of the Company or any subsidiary has made any
contribution or other payment to any official of, or candidate for, any federal,
state or foreign office in violation of any law. The Company and its directors,
officers, employees and agents
12
have complied in all material respects with the Foreign Corrupt Practices Act of
1977, as amended, and any related rules and regulations.
(24) OWNERSHIP OF PROPERTY. Except as set forth in the Company's
financial statements included in the SEC Reports, each of the Company and its
subsidiaries has (i) good and marketable fee simple title to its owned real
property, if any, free and clear of all liens, except for liens which do not
individually or in the aggregate have a Material Adverse Effect; (ii) a valid
leasehold interest in all leased real property, and each of such leases is valid
and enforceable in accordance with its terms (subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies, and to limitations of public policy) and is in full force
and effect, and (iii) good title to, or valid leasehold interests in, all of its
other properties and assets free and clear of all liens, except for liens
disclosed in the SEC Reports or which otherwise do not individually or in the
aggregate have a Material Adverse Effect.
(25) NO INTEGRATED OFFERING. Assuming the accuracy of each
Purchaser's representations and warranties set forth in Section B hereof,
neither the Company, nor any of its affiliates or other person acting on the
Company's 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 cause the Offering of the Shares to be integrated with prior offerings by
the Company for purposes of the Securities Act, when integration would cause the
Offering not to be exempt from the requirements of Section 5 of the Securities
Act.
(26) GENERAL SOLICITATION. Neither the Company nor, to its knowledge,
any person acting on behalf of the Company, has offered or sold any of the
Shares by any form of "general solicitation" within the meaning of Rule 502
under the Securities Act. To the knowledge of the Company, no person acting on
its behalf has offered the Shares for sale other than to the Purchasers and
certain other "accredited investors" within the meaning of Rule 501 under the
Securities Act.
(27) NO MANIPULATION OF STOCK. The Company has not taken and will
not, in violation of applicable law, take or cause to be taken any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Shares.
(29) NO REGISTRATION. Assuming the accuracy of the representations
and warranties made by, and compliance with the covenants of, the Purchasers in
Section B hereof, no registration of the Shares under the Securities Act is
required in connection with the offer and sale of the Shares by the Company to
the Purchasers as contemplated by this Agreement.
(30) FORM D. The Company agrees to file one or more Forms D with
respect to the Shares on a timely basis as required under Regulation D under the
Securities Act to claim the exemption provided by Rule 506 of Regulation D and
to provide a copy thereof to each of the Placement Agents, the Purchasers and
their respective counsel promptly after such filing.
(31) CERTAIN FUTURE FINANCINGS AND RELATED ACTIONS. The Company will
not sell, offer to sell, solicit offers to buy or otherwise negotiate in respect
of any "security" (as defined in
13
the Securities Act) that is or could be integrated with the sale of the Shares
in a manner that would require the registration of the Shares under the
Securities Act.
(32) DISCLOSURE. The Company understands and confirms that each of
the Purchasers will rely on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided by the
Company to the Purchasers regarding the Company, its business and the
transactions contemplated hereby furnished by or on the behalf of the Company
are true and correct in all material respects and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. To the Company's knowledge, no
material 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.
(33) As of June 30, 2005, and after giving effect to the Offering
(assuming that the aggregate Subscription Amount of Shares to be issued pursuant
to the Offering shall be $6,000,000) and without giving effect to expenses, the
Company's stockholders' equity is approximately $6,800,000, on a pro-forma
basis. The NASDAQ SmallCap Market initial listing criteria regarding
stockholders' equity is $5,000,000. There can be no assurance that the Company
will subsequently meet such initial listing criteria.
D. UNDERSTANDINGS
Each of the Purchasers understands, acknowledges and agrees with the
Company as follows:
(1) The Company may terminate this Offering or reject any
subscription at any time prior to the relevant Closing in its sole discretion.
The execution of this Agreement by the Purchaser or solicitation of the
investment contemplated hereby shall create no obligation on the part of the
Company or either of the Placement Agents to accept any subscription or complete
the Offering.
(2) The Purchaser hereby acknowledges and agrees that the
subscription hereunder is irrevocable by the Purchaser, and that, except as
required by law, the Purchaser is not entitled to cancel, terminate or revoke
this Agreement or any agreements of the Purchaser hereunder and that if the
Purchaser is an individual this Agreement shall survive the death or disability
of the Purchaser and shall be binding upon and inure to the benefit of the
parties and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
(3) No federal or state agency or authority has made any finding or
determination as to the accuracy or adequacy of the Offering Documents or as to
the fairness of the terms of the Offering nor any recommendation or endorsement
of the Shares. Any representation to the contrary is a criminal offense. In
making an investment decision, Purchasers must rely on their own examination of
the Company and the terms of the Offering, including the merits and risks
involved.
14
(4) The Offering is intended to be exempt from registration under
the Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Regulation D thereunder, which is in part dependent upon the
truth, completeness and accuracy of the statements made by the Purchaser herein
and in the Purchaser Questionnaire.
(5) Notwithstanding the registration obligations provided herein,
there can be no assurance that the Purchaser will be able to sell or dispose of
the Shares. It is understood that prior to the earlier to occur of the effective
date of the Registration Statement required to be filed pursuant to Section
E(3)(a) or the first anniversary of the Closing Date, in order not to jeopardize
the Offering's exempt status under Section 4(2) of the Securities Act and
Regulation D, any transferee may, at a minimum, be required to fulfill the
investor suitability requirements thereunder.
(6) The Purchaser acknowledges that the Offering is confidential and
non-public and agrees that all information about the Offering shall be kept in
confidence by the Purchaser until the public announcement of the Offering by the
Company on or about the Closing.
(7) The Purchaser acknowledges that the foregoing restrictions on
the Purchaser's use and disclosure of any such confidential, non-public
information contained in the above-described documents restricts the Purchaser
from trading in the Company's securities to the extent such trading is on the
basis of material, non-public information of which the Purchaser is aware.
Except for the terms of the Offering Documents and the fact that the Company is
considering consummating the transactions contemplated therein, the Company
confirms that neither the Company nor, to its knowledge, any other person acting
on its behalf, has provided any of the Purchasers, either of the Placement
Agents or their respective agents or counsel with any information that
constitutes material, non-public information.
(8) The Purchaser agrees that beginning on the date hereof until the
Offering is publicly announced by the Company (which the Company has represented
to the Placement Agents will occur as soon as practicable following the
Closing), the Purchaser will not enter into any Short Sales. For purposes of the
foregoing sentence, a "Short Sale" by a Purchaser means a sale of Common Stock
that is marked as a short sale and that is executed at a time when such
Purchaser has no equivalent offsetting long position in the Common Stock,
exclusive of the Shares. For purposes of determining whether a Purchaser has an
equivalent offsetting long position in the Common Stock, all Common Stock that
would be issuable upon exercise in full of all options then held by such
Purchaser (assuming that such options were then fully exercisable,
notwithstanding any provisions to the contrary, and giving effect to any
exercise price adjustments scheduled to take effect in the future) shall be
deemed to be held long by such Purchaser.
(9) In the United Kingdom, the Common Stock will only be available
for subscription pursuant to the Offering to persons of a kind described in
Article 19 (Investment Professionals), Article 48 (Certified High Net Worth
Individuals), Article 49 (High Net Worth Companies, Unincorporated Association
etc), and/or Article 50 (Sophisticated Investors) of the FPO, as presently in
effect, and in circumstances that will not constitute an offer to the public in
the United Kingdom within the meaning of the EU Prospectus Directive
(2003/71/EC), and the
15
Financial Services and Markets ▇▇▇ ▇▇▇▇, as amended, and the rules and
regulations promulgated thereunder.
E. REGISTRATION RIGHTS
(1) CERTAIN DEFINITIONS. For purposes of this Section E, the
following terms shall have the meanings ascribed to them below.
(a) "PROSPECTUS" means the prospectus included in the
Registration Statement (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the Offering of any portion of the Registrable
Shares covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
(b) "REGISTRABLE SHARES" shall mean any Shares issued or
issuable pursuant to the Offering Documents together with any securities issued
or issuable upon any stock split, dividend or other distribution, adjustment,
recapitalization or similar event with respect to the foregoing.
(c) "REGISTRATION STATEMENT" means the registration
statement required to be filed under this Section E, including the Prospectus,
amendments and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in
such registration statement.
(2) SHELF REGISTRATION.
(a) The Company shall use its best efforts to cause to
prepare and file with the SEC a "Shelf" Registration Statement covering the
resale of all Registrable Shares for an offering to be made on a continuous
basis pursuant to Rule 415 on or prior to September 9, 2005 (such date of actual
filing, the "FILING DATE"). The Registration Statement shall be on Form S-2 (as
promulgated under the Securities Act) or its then equivalent form and shall
contain (except if otherwise directed by the Purchasers) a "Plan of
Distribution" substantially in the form attached hereto as EXHIBIT D. Each
Purchaser will furnish to the Company in writing the information specified in
Item 507 or 508 of Regulation S-K, as applicable, of the Securities Act for use
in connection with the Registration Statement or prospectus or preliminary
prospectus included therein. Each Purchaser agrees to promptly furnish
additional information required to be disclosed in order to make the information
previously furnished to the Company by such Purchaser not materially misleading.
The Registration Statement shall register the Registrable Shares for resale by
the holders thereof.
(b) The Company shall use its best efforts to cause the
Registration Statement to be declared effective by the SEC on or prior to the
90th day following the Filing Date, and shall use its best efforts to keep the
Registration Statement continuously effective under the
16
Securities Act until the earliest of (i) the second anniversary of the final
Closing or (ii) the date when all Registrable Shares covered by such
Registration Statement have been sold (the "EFFECTIVENESS PERIOD").
(c) The Company shall notify each Placement Agent in writing
(which for purposes of this Agreement shall also include electronic mail
notification) promptly (and in any event within one business day) after
receiving notification from the SEC that the Registration Statement has been
declared effective.
(d) Upon the occurrence of any Event (as defined below), as
partial relief for the damages suffered therefrom by the Purchasers (which
remedy shall not be exclusive of any other remedies which are available at law
or in equity; and provided further that the Purchasers shall be entitled to
pursue an action for specific performance of the Company's obligations under
Paragraph (2)(b) above and any such actions at law, in equity, for specific
performance or otherwise shall not require the Purchaser to post a bond), the
Company shall pay to each Purchaser, as liquidated damages and not as a penalty
(it being agreed that it would not be feasible to ascertain the extent of such
damages with precision), such amounts and at such times as shall be determined
pursuant to this Paragraph (2)(d). For such purposes, the following shall
constitute an "EVENT":
(i) the Registration Statement is not declared effective on
or prior to the date that is 90 days after the Filing Date (the
"REQUIRED EFFECTIVE DATE"), in which case the Company shall pay (A) on
the 31st day following the Required Effective Date an amount in shares
of Common Stock equal to two percent (2%) of the aggregate number of
Shares purchased by such Purchaser and (B) on the 31 st day following
every successive quarter thereafter or any portion thereof until the
Registration Statement is declared effective, an amount in shares of
Common Stock equal to two percent (2%) of the aggregate number of Shares
purchased by such Purchaser. The payment obligations of the Company
under this Section E(2)(d) shall be cumulative.
(3) REGISTRATION PROCEDURES. In connection with the Company's
registration obligations hereunder, the Company shall:
(a) Use its reasonable best efforts to (i) prepare and file
with the SEC such amendments, including post-effective amendments, to the
Registration Statement as may be necessary to keep the Registration Statement
continuously effective as to the Registrable Shares for the Effectiveness
Period; (ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement, and as so supplemented or amended to be filed
pursuant to Rule 424; and (iii) respond as promptly as reasonably possible to
any comments received from the SEC with respect to the Registration Statement or
any amendment thereto and as promptly as reasonably possible provide each of the
Placement Agents true and complete copies of all correspondence from and to the
SEC relating to the Registration Statement.
(b) Notify each of the Placement Agents as promptly as
reasonably possible, and (if requested by the Placement Agents) confirm such
notice in writing no later than one (1) trading day thereafter, of any of the
following events: (i) the SEC notifies the Company whether there will be a
"review" of the Registration Statement; (ii) the SEC comments in writing on the
17
Registration Statement (in which case the Company shall deliver to each of the
Placement Agents a copy of such comments and of all written responses thereto);
(iii) the SEC or any other Federal or state governmental authority in writing
requests any amendment or supplement to the Registration Statement or Prospectus
or requests additional information related thereto; (iv) if the SEC issues any
stop order suspending the effectiveness of the Registration Statement or
initiates any action, claim, suit, investigation or proceeding (a "PROCEEDING")
for that purpose; (v) the Company receives notice in writing of any suspension
of the qualification or exemption from qualification of any Registrable Shares
for sale in any jurisdiction, or the initiation or threat of any Proceeding for
such purpose; or (vi) the financial statements included in the Registration
Statement become ineligible for inclusion therein or any statement made in the
Registration Statement or Prospectus or any document incorporated or deemed to
be incorporated therein by reference is untrue in any material respect or any
revision to the Registration Statement, Prospectus or other document is required
so that it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(c) Use its reasonable best efforts to avoid the issuance of
or, if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of the Registration Statement or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable Shares
for sale in any jurisdiction, at the earliest practicable moment.
(d) Promptly deliver to each Purchaser, without charge, such
reasonable number of copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Purchasers
may reasonably request. The Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Purchasers in connection with the offering and sale of the Registrable Shares
covered by such Prospectus and any amendment or supplement thereto.
(e) The Company will use its reasonable best efforts to
maintain the quotation of its securities on the OTC Bulletin Board and comply
with all applicable rules and regulations of the SEC, OTC Bulletin Board and
NASDAQ in all material respects.
(f) Prior to any public offering of Registrable Shares, use
its commercially reasonable efforts to register or qualify or cooperate with the
selling Purchasers in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable Shares
for offer and sale under the securities or "blue sky" laws of such jurisdictions
within the United States as any Purchaser requests in writing, to keep each such
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Shares covered by a Registration Statement; PROVIDED, HOWEVER, that the Company
shall not be required for any such purpose to (i) qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not be
otherwise required to qualify but for the requirements of this Paragraph (3)(f),
or (ii) subject itself to taxation.
(g) Upon the occurrence of any event described in Paragraph
(3)(b)(vi) above, as promptly as reasonably possible, prepare a supplement or
amendment, including a post-
18
effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that the Company may suspend sales pursuant to the
Registration Statement for a period of up to sixty (60) days (unless the holders
of at least a majority of the then-eligible Registrable Shares consisting of
outstanding shares of Common Stock consent in writing to a longer delay of up to
an additional thirty (30) days) no more than once in any twelve-month period if
the Company furnishes to the holders of the Registrable Shares a certificate
signed by the Company's Chief Executive Officer stating that in the good faith
judgment of the Company's Board of Directors, (i) the offering could reasonably
be expected to interfere in any material respect with any acquisition, corporate
reorganization or other material transaction under consideration by the Company
or (ii) there is some other material development relating to the operations or
condition (financial or other) of the Company that has not been disclosed to the
general public and as to which it is in the Company's best interests not to
disclose such development; provided further, however, that the Company may not
so suspend sales more than once in any calendar year without the written consent
of the holders of at least a majority of the then-eligible Registrable Shares
consisting of outstanding shares of Common Stock. Each violation of the
Company's obligation not to suspend sales pursuant to the Registration Statement
longer than permitted pursuant to the PROVISO of this Paragraph 3(g) shall be
deemed an "Event" and for each such default, Purchaser shall be entitled to the
payment provisions set forth in Paragraph 2(d)(i).
(4) REGISTRATION EXPENSES. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation
those related to filings with the SEC, NASDAQ and in connection with applicable
state securities or "Blue Sky" laws, (b) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Shares and of
printing copies of Prospectuses reasonably requested by the Purchasers), (c)
messenger, telephone and delivery expenses, (d) fees and disbursements of
counsel for the Company and fees and disbursements, up to an aggregate of
$15,000, of a single counsel for all the Purchasers, and (e) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement. In addition to the
foregoing, the Company will pay for one legal opinion per Purchaser in
connection with a sale of the Common Stock pursuant to the Registration
Statement; provided, however, the reasonable costs of any additional legal
opinions for a Purchaser shall be borne by such Purchaser. Notwithstanding the
foregoing, each Purchaser shall pay any and all costs, fees, discounts or
commissions attributable to the sale of its respective Registrable Shares.
(5) INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Purchaser, its officers and directors, partners, members, agents, brokers
and employees of each of them, each Person who controls any such Purchaser
(within the meaning of Section 15 of the Securities Act or ▇▇▇▇▇▇▇
▇▇
▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇) and the officers, directors, partners, members, agents
and employees of each such controlling Person, and each underwriter of
Registrable Shares, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, settlement costs and
expenses, including without limitation costs of preparation and reasonable
attorneys' fees (collectively, "Losses"), as incurred, arising out of or
relating to any untrue or alleged untrue statement of a material fact contained
in the Registration Statement, any Prospectus or form of prospectus or in any
amendment or supplement thereto, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based upon information
regarding such Purchaser furnished in writing to the Company by such Purchaser
expressly for use therein, or to the extent that such information related to
such Purchaser or such Purchaser's proposed method of distribution of
Registrable Shares and was reviewed and expressly approved in writing by such
Purchaser expressly for use in the Registration Statement, such Prospectus or
such form of Prospectus or in any amendment or supplement thereto (which shall,
however, be deemed to include disclosure substantially in accordance with the
"Plan of Distribution" attached hereto), or (ii) in the case of an occurrence of
an event of the type specified in Paragraph (3)(b) above, the use by such
Purchaser of an outdated or defective Prospectus after the Company has notified
such Purchaser in writing that the Prospectus is outdated or defective and prior
to the receipt by such Purchaser of the Advice contemplated in Paragraph (6)
below. The Company shall notify the Purchasers promptly of the institution,
threat or assertion of any Proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement.
(b) INDEMNIFICATION BY PURCHASERS. Each Purchaser shall,
severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, and each Person who controls the
Company (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses (as determined by a court of competent jurisdiction in a
final judgment not subject to appeal or review) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus or in any
amendment or supplement thereto, or arising out of or based upon any omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading to the extent, but only to the extent, that
such untrue statement or omission is contained in any information furnished in
writing by such Purchaser to the Company specifically for inclusion in such
Registration Statement or Prospectus or to the extent that (i) such untrue
statements or omissions are based upon information regarding such Purchaser
furnished in writing to the Company by such Purchaser expressly for use therein,
or to the extent that such information related to such Purchaser or such
Purchaser's proposed method of distribution of Registrable Shares and was
reviewed and expressly approved in writing by such Purchaser expressly for use
in the Registration Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto (which shall, however, be deemed to include
disclosure substantially in accordance with the "Plan of Distribution" attached
hereto), or (ii) in the case of an occurrence of an event of the type specified
in Paragraph (3)(b) above, the use by such Purchaser of an outdated or defective
Prospectus after the Company has notified such Purchaser
20
in writing that the Prospectus is outdated or defective and prior to the receipt
by such Purchaser of the Advice contemplated in Paragraph (6) below. In no event
shall the liability of any selling Purchaser hereunder be greater in amount than
the dollar amount of the net proceeds received by such Purchaser upon the sale
of the Registrable Shares giving rise to such indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an "INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify
the Person from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing,
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof,
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that such failure shall have
prejudiced the Indemnifying Party. An Indemnified Party shall have the right to
employ separate counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed
in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall
have failed promptly to assume the defense of such Proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (iii) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party; PROVIDED,
however, that in the event that the Indemnifying Party shall be required to pay
the fees and expenses of separate counsel, the Indemnifying Party shall only be
required to pay the fees and expenses of one separate counsel for such
Indemnified Party or Parties. The Indemnifying Party shall not be liable for any
settlement of any such Proceeding affected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding. All fees
and expenses of the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten (10) business days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party shall be obliged to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).
(d) CONTRIBUTION. If a claim for indemnification under
Paragraph (5)(a) or (b) is unavailable to an Indemnified Party (by reason of
public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the
21
amount paid or payable by such Indemnified Party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or related to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Paragraph (5)(c),
any reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Paragraph 5(d) was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Paragraph (5)(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this Paragraph (5)(d), no Purchaser shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by such Purchaser from the sale of the
Registrable Shares subject to the Proceeding exceeds the amount of any damages
that such Purchaser has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
(6) DISPOSITIONS. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Shares pursuant to the Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in Paragraphs
(3)(b), such Purchaser will discontinue disposition of such Registrable Shares
under the Registration Statement until such Purchaser's receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement contemplated
by Paragraph (3)(g), or until it is advised in writing (the "ADVICE") by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.
(7) NO PIGGY-BACK ON REGISTRATIONS. Neither the Company nor any of
its security holders (other than the Purchasers and the Placement Agents, in
such capacities pursuant hereto) may include securities of the Company in the
Registration Statement other than the Registrable
22
Shares, and the Company shall not after the date hereof enter into any agreement
providing any such right with respect to the Registration Statement to any of
its security holders.
(8) PIGGY-BACK REGISTRATIONS. If at any time during the
Effectiveness Period, other than any suspension period referred to in Paragraph
(3)(g), there is not an effective Registration Statement covering all of the
Registrable Shares and the Company shall determine to prepare and file with the
SEC a registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, then the Company shall send to each Purchaser written notice of such
determination and if, within fifteen (15) days after receipt of such notice, any
such Purchaser shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Shares not already
covered by an effective Registration Statement such Purchaser requests to be
registered.
(9) RULE 144. For a period of two years following the date hereof,
the Company agrees with each holder of Registrable Shares to:
(a) use its reasonable best efforts to comply with the
requirements of Rule 144(c) under the Securities Act with respect to current
public information about the Company;
(b) use its reasonable best efforts to file with the SEC in
a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act (at any time it is subject to such
reporting requirements); and
(c) furnish to any holder of Registrable Shares upon request
(i) a written statement by the Company as to its compliance with the
requirements of said Rule 144(c) and the reporting requirements of the
Securities Act and the Exchange Act (at any time it is subject to such reporting
requirements), (ii) a copy of the most recent annual or quarterly report of the
Company, and (iii) such other reports and documents of the Company as such
holder may reasonably request to avail itself of any similar rule or regulation
of the SEC allowing it to sell any such securities without registration.
F. COVENANTS OF THE COMPANY
(1) The Company hereby agrees to obtain prior to the initial Closing
lock-up agreements from the Company's directors and Edison Venture Fund and
Cross Atlantic Partners providing that, such party has not entered into a hedge,
pledge agreement or other forward contract to sell the Lock-up Shares (as
defined below), and for a period of one year from the the date on which the
Registration Statement becomes effective, such party shall agree not to sell,
lend or enter into a forward contract to sell a number of shares of capital
stock equal to the number of Lock-up Shares. For purposes hereof, the term
"LOCK-UP SHARES" shall include the shares of Preferred Stock or Common Stock
held by such party immediately prior to the Closing or acquired by it during
such lock-up period.
23
(2) As soon as reasonably practicable, and in accordance with
applicable rules and regulations, following the first Closing, the Company
shall, by filing a Current Report on Form 8-K and/or by issuance of a press
release, disclose such Closing of the Offering.
(3) As soon as reasonably practicable after the consummation of the
Reverse Stock Split (defined below) and so long as the Company meets the listing
standards of the NASDAQ National Market or NASDAQ SmallCap Market, the Company
shall use its commercially reasonable efforts to cause the Common Stock to be
listed on the NASDAQ National Market or NASDAQ SmallCap Market as promptly as
practicable (including, if necessary, effecting a Reverse Split, defined below)
and to maintain such listing thereafter, and, in accordance, therewith, will use
commercially reasonable efforts to comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the NASDAQ
National Market or NASDAQ SmallCap Market.
(4) The Company shall use its commercially reasonable efforts to
affect a reverse stock split of the Common Stock (the "Reverse Split") in order
to facilitate the listing of the Common Stock on the NASDAQ National Market or
NASDAQ SmallCap Market. The Company's Board of Directors shall approve the
Reverse Split in principle prior to Closing and shall, based on the advice of
its counsel and financial advisors, determines in good faith, the exact number
of the Reverse Split as soon as reasonably practicable after Closing. The
Company shall use its best efforts to receive Stockholder approval for the
Reverse Split and to amend and restate its Amended and Restated Certificate of
Incorporation in order to eliminate the authorized Series D Preferred Stock at
the Company's next Annual Meeting of the Stockholders, to be held by the Company
no later than November 30, 2005, and the Company shall not in any event issue
any further Series D Preferred Stock on or after the date of this Agreement.
G. USE OF PERSONAL DATA
The Company will collect and use personal information of the Purchaser
(A) for the purposes of (i) its purchase of Shares and the performance of this
Agreement; (ii) the issuance of a certificate representing the Shares in the
name of such Purchaser and (iii) the Company's obligation to deliver to such
Purchaser any notices and other communications that may be required by the terms
of this Agreement or otherwise; and (B) as may be required by law or other
regulatory body.
The Purchaser understands that certain personal details which the
Purchaser has provided to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ Ltd ("NFL") will be sent by NFL to
the Company in the US for the above purposes.
The Purchaser's name and address will be included on the Schedule of
Purchasers, and will be publicly filed with the Securities and Exchange
Commission. Such information will also be publicly filed in connection with the
Registration Statement, as defined in this Agreement.
The Purchaser acknowledges that the Company, and certain other entities
to whom their personal data are disclosed in accordance with the above
provisions, are located in the US, whose laws do not give the same level of
protection to personal data as in the European Union (the "EU"). To the extent
the Company collects the Purchaser's personal data from ▇▇▇▇
24
▇▇▇▇▇▇▇▇▇▇▇▇ Ltd or otherwise from an entity or using equipment in the EU, the
Company will take commercially reasonable steps to ensure that it implements
appropriate security measures to protect the Purchaser's personal data against
unauthorised access and accidental loss and damage.
The Purchaser hereby consents to such disclosure and processing of their
personal information by NFL and the Company. H. MISCELLANEOUS
(1) All pronouns and any variations thereof used herein shall be
deemed to refer to the masculine, feminine, singular or plural, as identity of
the person or persons may require.
(2) Any notice or other document required or permitted to be given
or delivered to the Purchasers shall be in writing and sent (a) by fax if the
sender on the same day sends a confirming copy of such notice by an
internationally recognized overnight delivery service (charges prepaid) or (b)
by an internationally recognized overnight delivery service (with charges
prepaid):
(i) if to the Company, at
Voxware, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ Commons, Chief Financial Officer
or such other address as it shall have specified to the
Purchaser in writing, with a copy (which shall not constitute
notice) to:
▇▇▇▇▇▇ ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(ii) if to the Purchaser, at its address set forth on the
signature page to this Agreement, or such other address as it
shall have specified to the Company in writing.
(3) Failure of the Company to exercise any right or remedy under
this Agreement or any other agreement between the Company and the Purchaser, or
otherwise, or delay by the Company in exercising such right or remedy, will not
operate as a waiver thereof. No waiver by the Company will be effective unless
and until it is in writing and signed by the Company.
(4) This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of New Jersey, as such laws
are applied by the New Jersey
25
courts to agreements entered into and to be performed in New Jersey by and
between residents of New Jersey, and shall be binding upon the Purchaser, the
Purchaser's heirs, estate, legal representatives, successors and assigns and
shall inure to the benefit of the Company, its successors and assigns. The
Company and each Purchaser hereby submits to the exclusive jurisdiction of the
federal and state courts residing in the State of New Jersey, and waives any
objection to venue with respect to actions brought in such courts.
(5) If any provision of this Agreement is held to be invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed modified to conform with such statute or rule of law. Any
provision hereof that may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provisions hereof.
(6) The parties understand and agree that, unless provided otherwise
herein, money damages would not be a sufficient remedy for any breach of the
Agreement by the Company or the Purchaser and that the party against which such
breach is committed shall be entitled to equitable relief, including injunction
and specific performance, as a remedy for any such breach. Such remedies shall
not, unless provided otherwise herein, be deemed to be the exclusive remedies
for a breach by either party of the Agreement but shall be in addition to all
other remedies available at law or equity to the party against which such breach
is committed.
(7) The obligations of each Purchaser under this Agreement are
several and not joint with the obligations of any other Purchaser, and no
Purchaser shall be responsible in any way for the performance of the obligations
of any other Purchaser hereunder, except as may result from the actions of any
such Purchaser other than through the execution hereof. Nothing contained herein
solely by virtue of being contained herein shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any similar
entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated hereby.
(8) This Agreement, together with the agreements and documents
executed and delivered in connection with this Agreement, constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.
I. SIGNATURE
The signature page of this Agreement is contained as part of the
applicable subscription package, entitled "Signature Page".
* * * * * * *
26
SIGNATURE PAGE
The Purchaser hereby subscribes for such number of Shares as shall equal
the Subscription Amount as set forth below, divided by the Offering Price and
agrees to be bound by the terms and conditions of this Agreement.
PURCHASER
1. Dated: , 2005
2. Total Subscription Amount: $__________
------------------------------------- -------------------------------------
Signature of Purchaser
(and title, if applicable)
-------------------------------------
Name of Purchaser (Please Print)
-------------------------------------
Taxpayer Identification or Social Security Number (if any)
-------------------------------------
Registered Holder Name (please print as name will appear
on stock certificate, if different from above)
Purchaser Address:
-------------------------------------
-------------------------------------
-------------------------------------
Number and Street
-------------------------------------
City and State or County
-------------------------------------
Zip Code or Post Code
-------------------------------------
Country
Delivery Address for Share Certificate (if different from above):
-------------------------------------
-------------------------------------
-------------------------------------
Number and Street
-------------------------------------
City and State or County
-------------------------------------
Zip Code or Post Code
-------------------------------------
Country
ACCEPTED BY:
VOXWARE, INC.
By:
-------------------------------
Name:
Title:
Dated:
------------------------------
2
SCHEDULE A
----------
ESCROW INSTRUCTIONS
PLEASE SEND WIRE TRANSFERS TO THE ESCROW ACCOUNT AS FOLLOWS:
Bank: Silicon Valley Bank
Account Name: Voxware, Inc. Escrow Account
Account Number: 3300469176
ABA No. ▇▇▇▇▇▇▇▇▇
SWIFT Code: ▇▇▇▇▇▇▇▇
Address: Silicon Valley Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (USA)
EXHIBIT A
---------
LEGAL MATTERS
▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP shall deliver an opinion generally covering
the following matters. The opinion shall be subject to and include customary
assumptions, limitations and qualifications, and shall be subject to the review
and modification by the ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP Opinion Committee.
1. The Company is a corporation, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority under the laws of the State of Delaware to conduct its
business as it is described in the Company's annual report on Form 10-K for the
fiscal year ended June 30, 2004, and any amendments thereto, the Company's
quarterly reports on Form 10-QSB for each of the periods ending subsequent to
June 30, 2004, and any amendments thereto, and to enter into and perform its
obligations under the Agreement.
2. The authorized capital stock of the Company consists of
2,365,000,000 shares of stock of all classes. The authorized capital stock is
divided into 1,500,000,000 shares of Common Stock, $0.001 par value per share
(the "COMMON STOCK"), and 865,000,000 shares of Preferred Stock, $0.001 par
value per share (the "PREFERRED STOCK"). As of July 20, 2005, there were
78,508,912 shares of Common Stock issued and outstanding, and 649,316,089 shares
of Preferred Stock issued and outstanding.
3. The Shares have been duly authorized or reserved for issuance by
all necessary corporate action on the part of the Company; and the Shares, when
issued and delivered against payment therefor in accordance with the provisions
of the Agreement, will be validly issued, fully paid and non-assessable.
4. The execution and delivery by the Company of the Agreement, and
the consummation by the Company of the transactions contemplated thereby, have
been duly authorized by all necessary corporate action on the part of the
Company. The Agreement constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
rights to indemnification and contribution thereunder may be limited by
applicable law and except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles.
5. Assuming (a) the accuracy of the representations made by each
Purchaser in the Agreement; (b) that neither the Company, the Placement Agent
nor any person acting on behalf of either the Company or the Placement Agent has
offered or sold the Securities by any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D promulgated (the
"REGULATION D") under the Securities Act; (c) that no offerings or sales of
securities of the Company after the date hereof in a transaction can be
"integrated" with any sales of the Securities; and (d) that each person or
entity that purchased securities of the Company directly from the Company or its
agents and without registration between the date six months
prior to the Closing of the Offering and the date of the Agreement was, as of
the date of such purchase, an "accredited investor" as defined in Rule 501 of
Regulation D, the sale of the Securities to the Purchasers at the Closing under
the circumstances contemplated by this Agreement are exempt from the
registration and prospectus delivery requirements of Section 5 of the Securities
Act.
6. To our knowledge, without any inquiry (including, without
limitation, without any docket search or other inquiry), there is no action,
proceeding or litigation pending or threatened against the Company before any
court, governmental or administrative agency or body affecting the transactions
contemplated by this Agreement, which is not otherwise disclosed in the
Company's filings with the Securities and Exchange Commission.
EXHIBIT B
---------
VOXWARE, INC.
CONFIDENTIAL PURCHASER QUESTIONNAIRE
BEFORE ANY SALE OF SHARES BY VOXWARE, INC. CAN BE MADE TO YOU, THIS
QUESTIONNAIRE MUST BE COMPLETED AND RETURNED TO VOXWARE, INC.
1. IF YOU ARE AN INDIVIDUAL PLEASE FILL IN THE IDENTIFICATION QUESTIONS IN
(A) IF YOU ARE AN ENTITY PLEASE FILL IN THE IDENTIFICATION QUESTIONS IN
(B)
A. IDENTIFICATION QUESTIONS FOR INDIVIDUAL
Purchaser Name__________________________________________________
Residence Address_______________________________________________
Home Telephone Number___________________________________________
Fax Number______________________________________________________
Date of Birth___________________________________________________
Social Security Number (if any)_________________________________
B. IDENTIFICATION QUESTIONS FOR ENTITIES
Purchaser Name__________________________________________________
Address of Principal____________________________________________
Place of Business_______________________________________________
State (or Country) of Formation
or Incorporation______________________________________________
Contact Person__________________________________________________
Telephone Number (___)__________________________________________
Type of Entity
(corporation, partnership,
trust, etc.)__________________________________________________
Was entity formed for the purpose of this investment?
Yes ___ No ___
2. DESCRIPTION OF INVESTOR
The following information is required to ascertain whether you would be
deemed an "accredited investor" as defined in Rule 501 of Regulation D
under the Securities Act. Please check as many of the following as
applicable:
[ ] a corporation or partnership with total assets in excess of
$5,000,000, not organized for the purpose of this particular
investment
[ ] private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940, a U.S.
venture capital fund which invests primarily through private
placements in non-publicly traded securities and makes available
(either directly or through co-investors) to the portfolio
companies significant guidance concerning management, operations
or business objectives
[ ] a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958
[ ] an investment company registered under the Investment Company
Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act
[ ] a trust not organized to make this particular investment, with
total assets in excess of $5,000,000 whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii) of
the Securities Act of 1933 and who completed item 4 below of
this questionnaire
[ ] a bank as defined in Section 3(a)(2) or a savings and loan
association or other institution defined in Section 3(a)(5)(A)
of the Securities Act of 1933 acting in either an individual or
fiduciary capacity
[ ] an insurance company as defined in Section 2(13) of the
Securities Act of 1933
[ ] an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974 (i) whose
investment decision is made by a fiduciary which is either a
bank, savings and loan association, insurance company, or
registered investment advisor, OR (ii) whose total assets exceed
$5,000,000, or (iii) if a self-directed plan, whose investment
decisions are made solely by a person who is an accredited
investor and who completed Part I of this questionnaire;
[ ] a charitable, religious, educational or other organization
described in Section 501(c)(3) of the Internal Revenue Code, not
formed for the purpose of this investment, with total assets in
excess of $5,000,000
[ ] an entity not located in the U.S. none of whose equity owners
are U.S. citizens or U.S. residents
[ ] a broker or dealer registered under Section 15 of the Securities
Exchange Act of 1934
[ ] a plan having assets exceeding $5,000,000 established and
maintained by a government agency for its employees
[ ] an individual who had individual income from all sources during
each of the last two years in excess of $200,000 OR the joint
income of you and your spouse (if married) from all sources
during each of such years in excess of $300,000 and who
reasonably excepts that EITHER your own income from all sources
during the current year will exceed $200,000 OR the joint income
of you and your spouse (if married) from all sources during the
current year will exceed $300,000
[ ] an individual whose net worth as of the date you purchase the
securities offered, together with the net worth of your spouse,
be in excess of $1,000,000
[ ] an entity in which all of the equity owners are accredited
investors
3. BUSINESS, INVESTMENT AND EDUCATIONAL EXPERIENCE OF INDIVIDUAL
Occupation______________________________________________________________
Number of Years_________________________________________________________
Present Employer________________________________________________________
Position/Title__________________________________________________________
Educational Background__________________________________________________
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Frequency of prior investment (check one in each column):
------------------------ ---------------------- -----------------------------
STOCKS & BONDS VENTURE CAPITAL INVESTMENTS
------------------------ ---------------------- -----------------------------
FREQUENTLY
------------------------ ---------------------- -----------------------------
OCCASIONALLY
------------------------ ---------------------- -----------------------------
NEVER
------------------------ ---------------------- -----------------------------
4. SIGNATURE
The above information is true and correct. The undersigned recognizes that the
Company and its counsel are relying on the truth and accuracy of such
information in reliance on the exemption contained in Subsection 4(2) of the
Securities Act of 1933, as amended, and Regulation D promulgated thereunder. The
undersigned agrees to notify the Company promptly of any changes in the
foregoing information which may occur prior to the investment.
Executed at ___________________, on , 2005
________________________________________
(Signature)
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EXHIBIT C
SELLING STOCKHOLDER QUESTIONNAIRE
To: Voxware, Inc.
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Reference is made to the Common Stock Purchase Agreement (the
"Agreement"), made between Voxware, Inc., a Delaware corporation (the
"Company"), and the Purchasers noted therein.
Pursuant to Section B(12) of the Agreement, the undersigned hereby
furnishes to the Company the following information for use by the Company in
connection with the preparation of the Registration Statement contemplated by
Section E of the Agreement.
(1) NAME AND CONTACT INFORMATION:
Full legal name of record holder: ________________________________
(as it appears on Share Certificate)
Address of record holder: ________________________________
________________________________
Social Security Number or Taxpayer
identification number of record holder: ________________________________
Identity of beneficial owner (if
different than record holder): ________________________________
Name of contact person: ________________________________
Telephone number of contact person: ________________________________
Fax number of contact person: ________________________________
E-mail address of contact person: ________________________________
(2) BENEFICIAL OWNERSHIP OF REGISTRABLE SHARES:
(a) Number of Registrable Shares, as defined in the Agreement, owned
by Selling Stockholder:
________________________________________________________________________
(b) Number of Registrable Shares requested to be registered:
________________________________________________________________________
(3) BENEFICIAL OWNERSHIP OF OTHER SECURITIES OF THE COMPANY OWNED BY
THE SELLING STOCKHOLDER:
Except as set forth below in this Item (3), the undersigned is not the
beneficial or registered owner of any securities of the Company other
than the Registrable Shares listed above in Item (2)(a).
Type and amount of other securities beneficially owned by the Selling
Stockholder:
________________________________________________________________________
________________________________________________________________________
(4) RELATIONSHIPS WITH THE COMPANY:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (5% or more)
has held any position or office or has had any other material
relationship with the Company (or its predecessors or affiliates) during
the past three years.
State any exceptions here:
________________________________________________________________________
________________________________________________________________________
(5) PLAN OF DISTRIBUTION:
Except as set forth below, the undersigned intends to distribute
pursuant to the Registration Statement the Registrable Shares listed
above in Item (2) in accordance with the "Plan of Distribution" section
set forth therein:
State any exceptions here:
________________________________________________________________________
________________________________________________________________________
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(6) SELLING STOCKHOLDER AFFILIATIONS:
(a) Is the Selling Stockholder a registered broker-dealer?
________________________________________________________________________
(b) Is the Selling Stockholder an affiliate of a registered
broker-dealer(s)? (For purposes of this response, an "affiliate" of, or
person "affiliated" with, a specified person, is a person that directly,
or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the person specified.)
________________________________________________________________________
(c) If the answer to Item (6)(b) is yes, identify the registered
broker-dealer(s) and describe the nature of the affiliation(s):
________________________________________________________________________
(d) If the answer to Item (6)(b) is yes, did the Selling Stockholder
acquire the Registrable Shares in the ordinary course of business (if
not, please explain)?
________________________________________________________________________
(e) If the answer to Item (6)(b) is yes, did the Selling
Stockholder, at the time of purchase of the Registrable Shares, have any
agreements, plans or understandings, directly or indirectly, with any
person to distribute the Registrable Shares (if yes, please explain)?
________________________________________________________________________
(7) VOTING OR INVESTMENT CONTROL OVER THE REGISTRABLE SHARES:
If the Selling Stockholder is not a natural person, please identify the
natural person or persons who have voting or investment control over the
Registrable Shares listed in Item (2) above:
________________________________________________________________________
Pursuant to Section E(3) of the Agreement, the undersigned acknowledges
that the Company may, by notice to the Placement Agents and to each Purchaser at
its last known address, suspend or withdraw the Registration Statement and
require that the undersigned immediately cease sales of Registrable Shares
pursuant to the Registration Statement under certain circumstances described in
the Agreement. At any time that such notice has been given, the undersigned may
not sell Registrable Shares pursuant to the Registration Statement.
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The undersigned hereby acknowledges that pursuant to Section B(12) of
the Agreement, the undersigned shall indemnify the Company and each of its
directors and officers against, and hold the Company and each of its directors
and officers harmless from, any losses, claims, damages, expenses or liabilities
(including reasonable attorneys fees) to which the Company or its directors and
officers may become subject by reason of any statement or omission in the
Registration Statement made in reliance upon, or in conformity with, a written
statement by the undersigned, including the information furnished in this
Questionnaire by the undersigned.
By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items (1) through (7) above and
the inclusion of such information in the Registration Statement, any amendments
thereto and the related prospectus. The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.
The undersigned has reviewed the answers to the above questions and
affirms that the same are true, complete and accurate. THE UNDERSIGNED AGREES TO
NOTIFY THE COMPANY IMMEDIATELY OF ANY CHANGES IN THE FOREGOING INFORMATION AT
ANY TIME DURING THE EFFECTIVENESS OF THE REGISTRATION STATEMENT.
Dated: _____________, 2005 ___________________________________________
Signature of Record Holder
(Please sign your name in exactly the same
manner as the certificate(s) for the shares
being registered)
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EXHIBIT D
---------
PLAN OF DISTRIBUTION
The Selling Stockholders and any of their pledges, assignees, donees selling
shares received from such Selling Stockholders as a gift, and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares
as agents but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended, if available, rather than under this
prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agents for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The Selling Stockholders who are registered broker-dealers are deemed to
be "underwriters" within the meaning of the Securities Act. In addition, Selling
Stockholders who are affiliates of registered broker-dealers may be deemed to be
"underwriters" within the meaning of the Securities Act if such Selling
Stockholder (i) did not acquire the shares of common stock in the ordinary
course of business or (ii) had any agreement or understanding, directly or
indirectly, with any person to distribute the shares of common stock. In such
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act, and such Selling Stockholders may be subject
to certain additional regulations and statutory liabilities under the Securities
Act and Exchange Act. To our knowledge and based upon information we received
from the Selling Stockholders, (i) each Selling Stockholder that is a registered
broker-dealer or affiliated with a registered broker-dealer acquired the shares
of common stock in the ordinary course of business, (ii) such Selling
Stockholder did not have any agreement or understanding, directly or indirectly,
with any person to distribute the shares of common stock, and (iii) no such
Selling Stockholder received any securities as underwriting compensation. We are
also not aware of any underwriting plan or agreement, underwriters' or dealers'
compensation, or passive market making or stabilizing transactions involving the
purchase or distribution of these securities
The Company is required to pay all fees and expenses incident to the
registration of the shares, including certain fees and disbursements of counsel
to the Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
To the extent required, the Company will amend or supplement this
prospectus to disclose material arrangements regarding the plan of distribution.
To comply with the securities laws of certain jurisdictions, registered or
licensed brokers or dealers may need to offer or sell the shares offered by this
prospectus. The applicable rules and regulations under the Securities Exchange
Act of 1934, as amended, may limit any person engaged in a distribution of the
shares of common stock covered by this prospectus in its ability to engage in
market activities with respect to such shares. A Selling Stockholder, for
example, will be subject to applicable provisions of the Exchange Act and the
rules and regulations under it, which provisions may limit the timing of
purchases and sales of any shares of common stock by that Selling Stockholder.
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