EXHIBIT 4.3
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
December 19, 2001 is made by and among DAISYTEK INTERNATIONAL CORPORATION, a
Delaware corporation, with headquarters located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "COMPANY"), and the investors named on the
signature pages hereto (each of whom is hereinafter referred to as the
"INVESTOR" and all of whom collectively are hereinafter referred to as the
"INVESTORS"). Capitalized terms used herein and not otherwise defined have the
meanings given them in Article VIII hereof.
RECITALS:
A. The Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act and Rule 506 under Regulation D.
B. The Investors desire, upon the terms and conditions stated in this
Agreement, to purchase shares of Common Stock for an aggregate purchase price of
$17,678,080. The purchase price per share of the Common Stock is $11.20.
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
under which the Company has agreed to provide certain registration rights under
the Securities Act and the rules and regulations promulgated thereunder to the
Investors.
In consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Investors hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
1.1 Purchase and Sale of Securities. At the Closing, subject to the
terms of this Agreement and the satisfaction or waiver of the conditions set
forth in Articles VI and VII hereof, the Company will issue and sell to each
Investor, and each Investor will (on a several and not a joint basis) purchase
from the Company, the number of Securities set forth beneath such Investor's
name on the signature pages hereof.
1.2 Payment at Closing. On the Closing Date, each Investor will pay the
aggregate purchase price for the Securities as set forth beneath its name on the
signature pages hereof, by wire transfer of immediately available funds in
accordance with the written wire instructions set forth on the signature page
hereto of the Company, and the Company will deliver to each Investor a
certificate representing the Securities so purchased by such Investor against
delivery of the purchase price therefor as described above. The Company shall
hold all such purchase price amounts in trust until it has delivered
certificates representing the Securities to the Investors.
1.3 Closing Date. Subject to the satisfaction or waiver of the
conditions set forth in Articles VI and VII hereof, the Closing will take place
at 10:00 a.m. Central Time on December 20, 2001, or at another date or time
agreed upon by each of the parties to this Agreement (the "Closing Date"). The
Closing will be held at the offices of the Company or at such other place as the
parties agree.
1.4 Independent Investors. Nothing contained herein or in any agreement
or document relating to this transaction, and no action taken by any Investor,
shall be deemed to constitute the Investors as, or to create any presumption
that the Investors are in any way acting in concert or as, a group with respect
to the obligations or transaction hereunder. Each Investor shall be entitled to
independently protect and enforce its rights.
ARTICLE II
INVESTOR'S REPRESENTATIONS AND WARRANTIES
Each Investor represents and warrants to the Company, severally and
solely with respect to itself and its purchase hereunder and not with respect to
any other Investor, that:
2.1 Investment Purpose. The Investor is purchasing the Securities for
its own account and not with a view to the public sale or distribution thereof;
provided, however, that by making the representation herein, the Investor
reserves the right to dispose of the Securities in accordance with or pursuant
to an effective registration statement or an exemption from registration under
the Securities Act and by making the representations herein, such Investor does
not agree to hold any Securities for any minimum or other specific term. The
Investor understands that the Company has no present intention of registering
the Securities other than as contemplated by the Registration Rights Agreement.
The Investor further represents that it does not have any contract, undertaking,
agreement or arrangement with any person or entity to sell, transfer or grant
participation to any third person or entity with respect to any of the
Securities. Since November 1, 2001, neither the Investor nor any of its
affiliates have sold shares nor made any Short Sales (as defined in Rule 3b-3 of
the Exchange Act) of the Company's common stock.
2.2 Investor Status. The Investor is either: (i) a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act; or (ii)
an "institutional accredited investor" as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D. The Investor is not registered as a broker or dealer under
Section 15(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). If an Investor is subject to the Employee Retirement Income Security Act
of 1974, as amended, and is acquiring the Securities as a fiduciary or agent for
another investor's account, the Investor will have sole investment and voting
discretion with respect to such account and will have full power to make the
acknowledgments, representations and agreements contained herein on behalf of
such account. Such Investor after the acquisition of the Securities will not be
an "Acquiring Person" as defined in the Rights Agreement of the Company dated
October 15, 1999.
2.3 Reliance on Exemptions. The Investor understands that the
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of
United States federal and state securities laws and that the Company is relying
upon the truth and accuracy of, and the Investor's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Investor set forth herein in order to determine the availability of such
exemptions and the eligibility of the Investor to acquire the Securities.
2.4 Information. The Investor and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company, and materials relating to the offer and sale of the Securities,
that have been requested by the Investor or its advisors, if any. The Investor
and its advisors, if any, have been afforded the opportunity to ask questions of
the Company and have received what the Investor and its advisors, if any,
believe to be satisfactory answers to any such inquiries. The Investor
acknowledges, agrees and has been advised by the Company that its investment in
the Securities involves a significant degree of risk, including the risks
reflected in the SEC Documents. Notwithstanding the foregoing, the Company has
not disclosed, or caused to be disclosed or authorized the disclosure of any
material, nonpublic information concerning the Company to the Investor.
2.5 Experience. The Investor is experienced in evaluating companies
such as the Company, is able to fend for itself in transactions such as the one
contemplated by this Agreement, has such knowledge and experience in financial
and business matters that such Investor is capable of evaluating the merits and
risks of such Investor's prospective investment in the Company, and has the
ability to bear the economic risks of the investment in the Securities.
2.6 Governmental Review. The Investor understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities or an
investment therein.
2.7 Transfer or Resale. The Investor understands that:
(a) the issuance of the Securities has not been registered under
the Securities Act or any applicable state securities laws and, consequently,
the Investor may have to bear the risk of owning the Securities for an
indefinite period of time because the Securities may not be transferred unless
(i) the resale of the Securities is registered pursuant to an effective
registration statement under the Securities Act; (ii) if requested by the
Company, the Investor has delivered to the Company an opinion of counsel (in
form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the Securities to be sold or transferred may be
sold or transferred pursuant to an exemption from such registration (other than
pursuant to Rule 144); (iii) the Securities are sold or transferred pursuant to
Rule 144; or (iv) the Securities are sold or transferred to an affiliate (as
defined in Rule 144) of the Investor;
(b) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 (including the holding period
requirement, the volume limitations and the manner of sale restrictions, if
applicable), and, if Rule 144 is not applicable, the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the Securities Act) under the Securities Act or the rules and
regulations of the SEC thereunder; and
(c) except as set forth in the Registration Rights Agreement,
neither the Company nor any other person is under any obligation to register the
Securities under the Securities Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
2.8 Legends. The Investor understands that until (a) the Securities may
be sold under Rule 144(k) or (b) such time as the Securities have been sold
pursuant to an effective registration statement under the Securities Act or in
compliance with Rule 144, the certificates representing the Securities will bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN
RELIANCE UPON AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.
The legend set forth above will be removed and the Company will issue a
certificate without the legend to the holder of any certificate upon which it is
stamped, in accordance with the terms of Article V hereof.
2.9 Organization and Existence. To the extent indicated on the
signature pages hereto, each Investor is either (i) a limited partnership duly
organized and validly existing under the laws of its respective state of
formation, (ii) a limited liability company duly organized and validly existing
under the laws of its respective state of formation, (iii) a corporation duly
organized and validly existing under the laws of its respective state or country
of incorporation, (iv) a series of a registered investment company or (v) a
trust fund whose trustee is a bank or trust company. Such Investor represents
that it was not organized solely for the purpose of making an investment in the
Company.
2.10 Authorization; Enforcement. This Agreement, the Registration
Rights Agreement and all other agreements, documents and instruments
contemplated hereby and thereby have been duly and validly authorized, executed
and delivered on behalf of the Investor and are valid and binding agreements of
the Investor enforceable against Investor in accordance with their respective
terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
2.11 No Conflicts; No Violation.
(a) The execution, delivery and performance of this Agreement by
the Investor will not (i) conflict with or result in a violation of any
provision of its charter documents or (ii) to the knowledge of Investor, result
in a violation of any law, rule, regulation, order, judgment or decree
applicable to the Investor.
(b) The Investor is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self regulatory agency in order for it
to execute, deliver or perform any of its obligations under this Agreement.
2.12 Acknowledgments Regarding Placement Agent. Investor acknowledges
that ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated is acting as placement agent (the
"Placement Agent") for the Securities being offered hereby and will be
compensated by the Company for acting in such capacity. Investor further
acknowledges that the Placement Agent has acted solely as placement agent for
the Company in connection with the offering of the Securities by the Company,
that certain of the information and data provided to Investor in connection with
the transactions contemplated hereby have not been subjected to independent
verification by the Placement Agent, and that the Placement Agent makes no
representation or warranty with respect to the accuracy or completeness of such
information, data or other related disclosure material. Investor further
acknowledges that in making its decision to enter into this Agreement and
purchase the Securities it has relied on its own examination of the Company,
this Agreement and all exhibits hereto, and the terms of, and consequences, of
holding the Securities. Investor further acknowledges that the provisions of
this Section 2.12 are also for the benefit of, and may also be enforced by, the
Placement Agent.
2.13 No Public Offering. Investor has not received any information
relating to the Securities or the Company, and is not purchasing the Securities
as a result of, any form of general solicitation or general advertising,
including but not limited to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio or pursuant to any seminar or meeting whose attendees
were invited by any general solicitation or general advertising.
2.14 Residency. The Investor is an entity with its principal place of
business in the jurisdiction set forth immediately below such Investor's name on
the signature pages hereto.
2.15 Representation. The Investor has had an opportunity to consult
with an attorney in connection with the Investor's investment in the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Investors that:
3.1 Organization and Qualification. The Company is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, with full corporate power and authority to own, lease,
use and operate its properties and to carry on its business as and where now
owned, leased, used, operated and conducted. The Company is duly qualified to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary, except where
the failure to be so qualified or in good standing in each such jurisdiction
would not have a Material Adverse Effect.
3.2 Authorization; Enforcement. (a) The Company has all requisite
corporate power and authority to enter into and to perform its obligations under
this Agreement, the Registration Rights Agreement and all other agreements,
documents and instruments contemplated hereby and thereby, to consummate the
transactions contemplated hereby and thereby and to issue the Securities in
accordance with the terms hereof; (b) the execution, delivery and performance of
this Agreement, the Registration Rights Agreement and all other agreements,
documents and instruments contemplated hereby and thereby by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including without limitation the issuance of the Securities) have been duly
authorized by the Company's Board of Directors and no further consent or
authorization of the Company, its Board or Directors or its stockholders is
required; (c) this Agreement, the Registration Rights Agreement and all other
agreements, documents and instruments contemplated hereby and thereby have been
or will be duly executed by the Company; and (d) each of this Agreement, the
Registration Rights Agreement and all other agreements, documents and
instruments contemplated hereby and thereby constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, or moratorium or similar laws affecting the rights of creditors
generally and the application of general principles of equity except as the
indemnification agreements of the Company in the Registration Rights Agreement
may be legally unenforceable.
3.3 Capitalization. As of December 14, 2001, the authorized capital
stock of the Company consists of (a) 30,000,000 shares of Common Stock, par
value $.01 per share, of which 15,813,815 shares are issued and outstanding and
941,977 shares are available for issuance under the Company's stock option
plans, (b) 3,407,826 options for shares of Common Stock issued under the Option
Plans, (c) 1,599,998 options for shares of Common Stock, such options not issued
under any of the Option Plans, and (d) 1,000,000 shares of preferred stock, par
value $1.00 per share, none of which are issued and outstanding. All of such
outstanding shares of Common Stock are duly authorized, validly issued, fully
paid and nonassessable. No shares of capital stock of the Company, including the
Securities issuable pursuant to this Agreement, are subject to preemptive rights
or any other similar rights of the stockholders of the Company or any liens or
encumbrances imposed through the actions or failure to act of the Company.
Except for: (i) stock options and other awards under the Option Plans and
1,599,998 options to purchase Common Stock, such options not issued under an
Option Plan, (ii) rights to acquire stock under the 423 Plan, (iii) Preferred
Share Purchase Rights, (iv) a right to acquire shares of Common Stock under the
DSI Purchase Agreement and (v) the transactions contemplated hereby, there are
no outstanding options, warrants, scrip, rights to subscribe for, puts, calls,
rights of first refusal, agreements, understandings, claims or other commitments
or rights of any character whatsoever that could require the Company to issue
additional shares of capital stock of the Company.
Except for the agreement to provide certain registration rights for shares of
Common Stock acquired under the DSI Purchase Agreement, there are no agreements
or arrangements (other than the Registration Rights Agreement) under which the
Company is obligated to register the sale of any of its securities under the
Securities Act. There are no anti-dilution or price adjustment provisions
contained in any security issued by the Company (or in any agreement providing
rights to security holders) that will be triggered by the issuance of the
Securities.
3.4 Issuance of Securities. The Securities are duly authorized and,
upon issuance in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, free from all taxes, liens, claims,
encumbrances and charges with respect to the issue thereof (other than those
imposed through acts or omissions of the Investor), and will not be subject to
preemptive rights of stockholders of the Company.
3.5 No Conflicts; No Violation.
(a) The execution, delivery and performance of this Agreement, the
Registration Rights Agreement and all other agreements, documents and
instruments contemplated hereby and thereby by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby (including,
without limitation, the issuance of the Securities) will not (i) conflict with
or result in a violation of any provision of the Amended and Restated
Certificate of Incorporation or By-laws of the Company or (ii) violate or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both could become a
default) under, or give to others any rights of termination, amendment
(including without limitation, the triggering of any anti-dilution provision),
acceleration or cancellation of, any agreement, indenture, patent, patent
license or instrument to which the Company is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
U.S. federal and state securities laws and regulations and regulations of any
self-regulatory organizations to which the Company or its securities are
subject), applicable to the Company or by which any property or asset of the
Company is bound or affected, except in the case of clauses (i), (ii) and (iii)
for such conflicts, breaches, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect.
(b) The Company is not in violation of its Amended and Restated
Certificate of Incorporation or By-laws and the Company is not in default (and
no event has occurred which with notice or lapse of time or both could put the
Company in default) under any agreement, indenture or instrument to which the
Company is a party or by which any property or assets of the Company is bound or
affected, except for such defaults as would not, individually or in the
aggregate, have a Material Adverse Effect.
(c) The Company is not conducting its business in violation of any
law, ordinance or regulation of any governmental entity, except for actual or
possible violations as would not, individually or in the aggregate, have a
Material Adverse Effect.
(d) Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws and
any listing agreement with any securities exchange or automated quotation
system, the Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or the
Registration Rights Agreement, in each case in accordance with the terms hereof
or thereof, or to issue and sell the
Securities in accordance with the terms hereof. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company is not in violation of the listing requirements of
the Nasdaq and has no knowledge of any action pending or threatened by the
National Association of Securities Dealers, Inc. (the "NASD") or the SEC with
respect to delisting the Common Stock.
3.6 SEC Documents; Financial Statements; Liabilities. Since September
30, 2001, the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to the
Securities Act or reporting requirements of the Exchange Act (all of the
foregoing which have been deemed filed with the SEC prior to the date hereof and
all exhibits included therein and financial statements and schedules thereto and
documents (other than exhibits) incorporated by reference therein, being
hereinafter referred to herein as the "SEC Documents"). The Company has
delivered to each Investor, or each Investor has had access to, true and
complete copies of the SEC Documents, except for such exhibits and incorporated
documents. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents have been prepared in
accordance with U.S. generally accepted accounting principles, consistently
applied, during the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments). Except
as set forth in the financial statements included in the SEC Documents, the
Company has no liabilities, contingent or otherwise, other than (A) liabilities
incurred in the ordinary course of business subsequent to September 30, 2001,
(B) liabilities of the type not required under generally accepted accounting
principles to be reflected in such financial statements or described in the
notes thereto, or (C) other liabilities which would not, individually or in the
aggregate, have a Material Adverse Effect.
3.7 Absence of Certain Changes. Except as disclosed in the SEC
Documents, since September 30, 2001, there has been no material adverse change
in the assets, liabilities, business, properties, operations, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole.
3.8 Absence of Litigation. Except as disclosed in the SEC Documents,
there is no action, suit, claim, proceeding, inquiry or investigation before or
by any court, public board, government agency, self-regulatory organization or
body pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its officers or directors acting as such that
could, individually or in the aggregate, have a Material Adverse Effect.
3.9 Intellectual Property Rights. The Company owns or possesses the
licenses or rights to use all patents, patent applications, patent rights,
inventions, know-how, trade secrets, trademarks, trademark applications, service
marks, service names, trade names and copyrights necessary to enable it to
conduct its business as now operated (the "Intellectual Property"), except where
the failure to possess such licenses or rights to use would not have,
individually or in the aggregate, a Material Adverse Effect. There is no claim
or action or proceeding pending or, to the Company's knowledge, threatened that
challenges the right of the Company with respect to any Intellectual Property.
3.10 Tax Status. The Company has made or filed all federal, state and
foreign income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject (unless and only to the extent that the
Company has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith. To the knowledge of the Company, there are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
state or local tax.
3.11 Environmental Laws. The Company (i) is in compliance with all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
has received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business as presently conducted and
(iii) is in compliance with all terms and conditions of any such permit, license
or approval, except where, in each of the three foregoing clauses, the failure
to so comply would not have, individually or in the aggregate, a Material
Adverse Effect.
3.12 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances within the prior six months that would
require registration under the Securities Act of the issuance of the Securities
to the Investors.
3.13 No Brokers. The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement or the transactions contemplated hereby,
except with respect to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated whose commissions and
fees will be paid for by the Company.
3.14 Insurance. The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company is engaged.
3.15 Employment Matters. To the Company's knowledge, the Company is in
compliance with all federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours except where failure to be in compliance would
not, individually or in the aggregate, have a Material Adverse Effect.
3.16 Investment Company Status. The Company is not and upon
consummation of the sale of the Securities will not be an "investment company,"
a company controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
3.17 Issuer Status. The Company is not an issuer as described in Rule
262 promulgated under the Securities Act.
3.18 No Public Offering. The number of offerees contacted concerning
this transaction and the number of Investors are small enough and sophisticated
enough so that no offering to the public could be deemed to have occurred with
respect to the Transaction and neither the Company nor anyone acting on its
behalf has offered or sold the Securities by any form of general solicitation or
general advertising.
3.19 Eligibility For Use of Form S-3.
(a) The Company has a class of securities registered pursuant to
Section 12(b) of the Exchange Act or a class of equity securities registered
pursuant to Section 12(g) of the Exchange Act or is required to file reports
pursuant to Section 15(d) of the Exchange Act.
(b) The Company: (i) has been subject to the requirements of
Section 12 or 15(d) of the Exchange Act and has filed all the material required
to be filed pursuant to Section 13, 14 or 15(d) for a period of at least 12
calendar months immediately preceding the filing of the registration statement
on Form S-3; and (ii) has filed in a timely manner all reports required to be
filed during the 12 calendar months and any portion of a month immediately
preceding the filing of the registration statement and, if the Company has used
(during the 12 calendar months and any portion of a month immediately preceding
the filing of the Form S-3) Rule 12b-25(b) under the Exchange Act with respect
to a report or a portion of a report, that report or portion thereof has
actually been filed within the time period prescribed by the rule.
(c) Neither the Company nor any of its consolidated or
unconsolidated subsidiaries have, since the end of the last fiscal year for
which certified financial statements of the Company and its consolidated
subsidiaries were included in a report filed pursuant to Section 13(a) or 15(d)
of the Exchange Act: (i) failed to pay any dividend or sinking fund installment
on preferred stock; or (ii) defaulted: (1) on any installment or installments on
indebtedness for borrowed money or (2) on any rental on one or more long term
leases, which defaults in the aggregate are material to the financial position
of the Company and its consolidated and unconsolidated subsidiaries, taken as a
whole.
ARTICLE IV
COVENANTS
4.1 Best Efforts. Each party will use its reasonable best efforts to
satisfy in a timely fashion each of the conditions to be satisfied by it under
Articles VI and VII of this Agreement.
4.2 Form D; Blue Sky Laws. The Company will file a Notice of Sale of
Securities on Form D with respect to the Securities, if required under
Regulation D, and provide a copy thereof to each Investor promptly after such
filing. The Company will take such action as it reasonably determines to be
necessary, if any, to qualify the Securities for sale to the Investors under
this Agreement under applicable securities (or "blue sky") laws of the states of
the United States (or to obtain an exemption from such qualification), and will
provide evidence of any such action so taken to the Investors on or prior to the
date of the Closing. The Company will publicly announce this transaction within
2 business days of the time of closing and will file with the SEC a Current
Report on Form 8-K disclosing this Agreement and the transactions contemplated
hereby within 10 business days after the Closing Date.
4.3 Reporting Status; Eligibility to Use Form S-3. The Company's Common
Stock is registered under Section 12 of the Exchange Act. Throughout the
Registration Period (as defined in the Registration Rights Agreement), the
Company will timely file all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC under the reporting
requirements of the Exchange Act, and the Company will not terminate its status
as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination. The Company currently meets, and will use its reasonable best
efforts to continue to meet, the "registrant eligibility" requirements for a
secondary offering set forth in the general instructions to Form S-3 to enable
the registration of the Registrable Securities (as defined in the Registration
Rights Agreement).
4.4 Expenses. The Company and each Investor is liable for, and will
pay, its own expenses incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the other agreements to be executed
in connection herewith, including, without limitation, attorneys' and
consultants' fees and expenses.
4.5 Financial Information. The financial statements of the Company will
be prepared in accordance with United States generally accepted accounting
principles, and will fairly present in all material respects the consolidated
financial position of the Company and results of its operations and cash flows
as of, and for the periods covered by, such financial statements (subject, in
the case of unaudited statements, to normal year-end audit adjustments).
4.6 Listing. The Company will use its best efforts to obtain and, so
long as any Investor owns any of the Securities, maintain the listing and
trading of its Common Stock (including the Securities) on the Nasdaq and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the National Association of Securities
Dealers, Inc. and such exchanges, as applicable. Each Investor acknowledges and
agrees that the certificate representing the Securities purchased by such
Investor will not be physically delivered to such Investor until the expiration
of the Nasdaq imposed waiting period relating to listing applications, which
shall not in any event be more than 14 business days after the Closing Date.
4.7 Compliance with Law. As long as an Investor owns any of the
Securities, the Company will use its commercially reasonable efforts to conduct
its business in compliance with all applicable laws, rules and regulations of
the jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state and federal environmental laws and
regulations, the failure to comply with which would have a Material Adverse
Effect. From and after the date hereof, the Company will not provide to any
Investor any material non-public information which, according to applicable law,
rule or regulation should be disclosed publicly by the Company but which has not
been so disclosed.
4.8 Sales by Investors. Each Investor will sell any Securities sold by
it in compliance with applicable prospectus delivery requirements, if any, or
otherwise in compliance with the requirements for an exemption from registration
under the Securities Act and the rules and regulations promulgated thereunder.
No Investor will make any sale, transfer or other disposition of the Securities
in violation of federal or state securities laws.
4.9 Investor Questionnaire. Each Investor will certify the information
required to be included in any registration statement filed in satisfaction of
the Company's obligations under the Registration Rights Agreement.
4.10 Exchange Act Reporting. In order to make available to the
Investors the benefits of Rule 144 or any similar rule or regulation of the SEC
that may at any time permit the Investors to sell securities of the Company to
the public without registration, the Company will, until the end of the
Registration Period (as defined in the Registration Rights Agreement):
(a) File with the SEC in a timely manner, and make and keep
available, all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject to
such requirements (it being agreed that nothing herein limits the Company's
obligations under Section 4.3 of this Agreement) and the filing and availability
of such reports and other documents is required for the applicable provisions of
Rule 144; and
(b) Furnish to each Investor, so long as such Investor holds
Registrable Securities (as defined in the Registration Rights Agreement),
promptly upon request, (i) a written statement by the Company that it has
complied with the reporting requirements of the Securities Act and the Exchange
Act, (ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents filed by the Company with the SEC and (iii)
such other information as may be reasonably requested to permit the Investors to
sell such securities pursuant to Rule 144 without registration.
ARTICLE V
TRANSFER AGENT INSTRUCTIONS; REMOVAL OF LEGENDS
5.1 Issuance of Certificates. The Company will instruct its transfer
agent to issue a certificate, registered in the name of each Investor or its
nominee, for the respective Securities. All such certificates will bear the
restrictive legend described in Section 2.8, except as otherwise specified in
this Article V. In addition, the Company will issue irrevocable Transfer Agent
Instructions to the transfer agent in the form of Exhibit A hereto. The Company
will not give to its transfer agent any instruction with respect to the
Securities other than as contemplated by Article V and stop transfer
instructions to give effect to Section 2.8 hereof (prior to registration
of the Securities under the Securities Act). Nothing in this Section will affect
in any way the Investors' obligations and agreements set forth in Section 2.8
hereof to comply with all applicable prospectus delivery requirements, if any,
upon resale of the Securities.
5.2 Unrestricted Securities. If, unless otherwise required by
applicable state or federal securities laws, (a) the Securities represented by a
certificate have been sold under an effective registration statement filed under
the Securities Act or pursuant to Rule 144, (b) a holder of Securities provides
the Company with an opinion of counsel, if requested by the Company, in form,
substance and scope customary for opinions of counsel in comparable
transactions, which counsel and opinion shall be reasonably satisfactory to the
Company, to the effect that a public sale or transfer of such Securities may be
made without registration under the Securities Act and such sale may occur
without restriction on the timing or manner of such sale or transfer or (c) the
Securities represented by a certificate can be sold without restriction as to
the number of securities sold under Rule 144(k), the Company will permit the
transfer of the Securities, and the transfer agent will issue one or more
certificates, free from any restrictive legend, in such name and in such
denominations as specified by such holder in accordance with the Transfer Agent
Instructions. Notwithstanding anything herein to the contrary, the Securities
may be pledged as collateral in connection with a bona fide margin account or
other lending arrangement; provided that such pledge will not alter the
provisions of this Article V with respect to the removal of restrictive legends.
5.3 Enforcement of Provision. The Company acknowledges that a breach by
it of its obligations hereunder will cause irreparable harm to the Investor by
invalidating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Article V will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Section,
that the Investor will be entitled, in addition to all other available remedies,
to an injunction restraining any breach and requiring immediate transfer.
5.4 Delivery of Proxy Statements. The Company agrees to furnish to each
Investor (as well as to any proxy consultant of an Investor identified in
writing to the Company by such Investor) copies of its definitive proxy
statements as filed with the SEC so long as such Investor is a stockholder.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company to issue and sell the Securities to each
Investor at the Closing is subject to the satisfaction by such Investor, on or
before the Closing Date, of each of the following conditions. These conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion:
6.1 The Investor will have executed the Registration Rights Agreement
and will have delivered such Agreement to the Company.
6.2 The Investor will have delivered the purchase price for the
Securities to the Company in accordance with this Agreement.
6.3 The representations and warranties of the Investors must be true
and correct as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date, which
representations and warranties must be correct as of such date), and the
Investor will have performed and complied with the covenants and conditions
required by this Agreement to be performed or complied with by the Investor at
or prior to the Closing.
6.4 No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction will have been enacted, entered, promulgated or endorsed by
or in any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
ARTICLE VII
CONDITIONS TO EACH INVESTOR'S OBLIGATION TO PURCHASE
The obligation of each Investor hereunder to purchase the Securities
from the Company at the Closing is subject to the satisfaction, on or before the
Closing Date, of each of the following conditions. These conditions are for each
Investor's respective benefit and may be waived by such Investor at any time in
its sole discretion:
7.1 The Company will have executed the Registration Rights Agreement
and will have delivered such Agreement to the Investor.
7.2 The representations and warranties of the Company must be true and
correct in all material respects as of the Closing as though made at that time
(except for representations and warranties that speak as of a specific date,
which representations and warranties must be true and correct as of such date)
and the Company must have performed and complied with the covenants and
conditions required by this Agreement to be performed or complied with by the
Company at or prior to the Closing.
7.3 No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction will have been enacted, entered, promulgated or endorsed by
or in any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
7.4 Trading and listing of the Common Stock on the Nasdaq must not have
been suspended by the SEC or the Nasdaq.
7.5 Such Investor will have received an opinion of the Company's
counsel, dated as of the Closing Date in form, scope and substance reasonably
satisfactory to the Investors and in substantially the form attached hereto as
Exhibit B.
7.6 The irrevocable Transfer Agent Instructions, in substantially the
form attached hereto as Exhibit A will have been delivered to the Company's
transfer agent and acknowledged in writing by such transfer agent.
7.7 The Company shall certify to the Investors that it has received
binding Securities Purchase Agreements in form and substance substantially
similar to this Agreement to purchase not less than 1,000,000 shares of Common
Stock on the Closing Date.
ARTICLE VIII
DEFINITIONS
8.1 "423 Plan" means the Daisytek International Corporation 1998
Employee Stock Purchase Plan.
8.2 "Agreement" has the meaning set forth in the introductory
paragraph.
8.3 "Closing" means the closing of the purchase and sale of the
Securities under this Agreement.
8.4 "Closing Date" has the meaning set forth in Section 1.3.
8.5 "Common Stock" means the common stock, par value $0.01 per share,
of the Company.
8.6 "Company" means Daisytek International Corporation.
8.7 "DSI Purchase Agreement" means that certain the Asset Purchase
Agreement, dated as of June 29, 2001, by and among Digital Storage, LLC, an Ohio
limited liability company; Digital Storage Incorporated, an Ohio corporation;
NCT Ventures LLC, an Ohio limited liability company; Digital Storage Canada,
Inc., an Ontario corporation; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, an individual; DS Acquisition
Corp., a Delaware corporation; Daisytek (Canada), Inc., an Ontario corporation,
and the Company.
8.8 "Environmental Laws" has the meaning set forth in Section 3.11.
8.9 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
8.10 "Intellectual Property" has the meaning set forth in Section 3.9.
8.11 "Investors" means the investors whose names are set forth on the
signature pages of this Agreement, and their permitted transferees.
8.12 "Knowledge" means the actual knowledge of the executive officers
of the Company, without independent investigation.
8.13 "Material Adverse Effect" means a material adverse effect on (a)
the assets, liabilities, financial condition or results of operation of the
Company's business, taken as a whole or (b) the ability of the Company to
perform its obligations pursuant to the transactions contemplated by this
Agreement or under the agreements or instruments to be entered into or filed in
connection herewith.
8.14 "NASD" has the meaning set forth in Section 3.5(d).
8.15 "Nasdaq" means the Nasdaq National Market System.
8.16 "Option Plans" means the 1994 Stock Option Plan of Daisytek
International Corporation, as amended, Non-Employee Director Stock Option and
Retainer Plan and 1998 Amended and Restated Stock Option Plan of Daisytek
International Corporation.
8.17 "Placement Agent" has the meaning set forth in Section 2.12.
8.18 "Preferred Share Purchase Rights" means the rights issued as a
dividend to the Company's stockholders of record on October 25, 1999.
8.19 "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Closing Date, by and among the parties to this
Agreement, in the form attached hereto as Exhibit C.
8.20 "Regulation D" means Regulation D as promulgated by the SEC under
the Securities Act.
8.21 "Rule 144" and "Rule 144(k)" mean Rule 144 and Rule 144(k),
respectively, promulgated under the Securities Act, or any successor rule.
8.22 "SEC" means the United States Securities and Exchange Commission.
8.23 "SEC Documents" has the meaning set forth in Section 3.6.
8.24 "Securities" means the Common Stock sold pursuant to this
Agreement.
8.25 "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute.
8.26 "Transfer Agent Instructions" means the transfer agent
instructions as defined in Exhibit A.
ARTICLE IX
GOVERNING LAW; MISCELLANEOUS
9.1 Governing Law; Jurisdiction. This Agreement will be governed by and
interpreted in accordance with the laws of the State of Delaware without regard
to the principles of conflict of laws. The parties hereto hereby submit to the
exclusive jurisdiction of the United States federal and state courts located in
the State of Delaware with respect to any dispute arising under this Agreement,
the agreements entered into in connection herewith or the transactions
contemplated hereby or thereby.
9.2 Counterparts; Signatures by Facsimile. This Agreement may be
executed in two or more counterparts, all of which are considered one and the
same agreement and will become effective when counterparts have been signed by
each party and delivered to the other parties. This Agreement, once executed by
a party, may be delivered to the other parties hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering
this Agreement.
9.3 Headings. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.
9.4 Severability. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law will
not affect the validity or enforceability of any other provision hereof.
9.5 Entire Agreement; Amendments. This Agreement and the Registration
Rights Agreement (including all schedules and exhibits thereto) constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, representations,
warranties or undertakings, other than those set forth or referred to herein or
therein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
9.6 Notices. Any notices required or permitted to be given under the
terms of this Agreement must be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and will be effective five days
after being placed in the mail, if mailed by regular U.S. mail, or upon receipt,
if delivered personally or by facsimile, in each case addressed to a party. Any
notice sent by courier (including a recognized overnight delivery service) will
be deemed received one business day after being sent. The addresses for such
communications are:
If to the Company:
Daisytek International Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to an Investor: To the address set forth immediately below such
Investor's name on the signature pages hereto.
Each party will provide written notice to the other parties of any
change in its address.
9.7 Successors and Assigns. This Agreement is binding upon and inures
to the benefit of the parties and their successors and permitted assigns. The
Company will not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investors, and no Investor may assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the Company. Notwithstanding the foregoing, an Investor may assign
all or part of its rights and obligations hereunder to any of its "affiliates,"
as that term is defined under the Securities Act, without the consent of the
Company so long as the affiliate is an accredited investor (within the meaning
of Regulation D under the Securities Act) and agrees in writing to be bound by
this Agreement. This provision does not limit the Investor's right to transfer
the Securities pursuant to the terms of this Agreement or to assign the
Investor's rights hereunder to any such affiliate transferee pursuant to the
terms of this Agreement. Notwithstanding any assignment as provided herein to an
affiliate of an Investor, each Investor shall thereafter remain fully
responsible and liable for performance of all of its obligations under this
Agreement. Notwithstanding the foregoing, any transferee who purchases the
Securities in a public sale shall not have any rights under this Agreement.
9.8 Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person or entity; provided, however, that the provisions in
Section 2.12 relating to acknowledgments regarding the Placement Agent are
intended for the benefit of the Placement Agent.
9.9 Survival. The representations and warranties of the Company and the
agreements and covenants set forth herein will survive for two (2) years
following the Closing hereunder. The Company makes no representations or
warranties in any oral or written information provided to Investors, other than
the representations and warranties included herein.
9.10 Further Assurances. Each party will do and perform, or cause to be
done and performed, all such further acts and things, and will execute and
deliver all other agreements,
certificates, instruments and documents, as another party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement
and the consummation of the transactions contemplated hereby.
9.11 No Strict Construction. The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
9.12 Equitable Relief. The Company recognizes that, if it fails to
perform or discharge any of its obligations under this Agreement, any remedy at
law may prove to be inadequate relief to the Investors. The Company therefore
agrees that the Investors are entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned Investors and the Company have
caused this Agreement to be duly executed as of the date first above written.
COMPANY:
DAISYTEK INTERNATIONAL CORPORATION
By:
-------------------------------------
Name:
-------------------------------------
Title:
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WIRE TRANSFER INSTRUCTIONS:
Bank Name:
Address:
ABA Number:
Account Number:
SWIFT Code:
Reference:
OMNIBUS SIGNATURE PAGE TO
DAISYTEK INTERNATIONAL CORPORATION
SECURITIES PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Securities Purchase
Agreement to which this Signature Page is attached, which, together with all
counterparts of the Agreement and Signature Pages of the other Investors and the
Company to said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.
[INVESTOR]
Sign Name:
-------------------------------
Print Name:
------------------------------
Title:
-----------------------------------
Address:
Telephone:
Facsimile:
Number of Shares:
Aggregate Purchase Price: $
Name in which Shares Are to Be Held:
Social Security or Tax ID Number:
Number of Shares:
Exhibit A
Transfer Agent Instructions
Exhibit B
Form of Legal Opinion
Exhibit C
Registration Rights Agreement