EXHIBIT 10.1
NOTE PURCHASE AGREEMENT, dated as of July 23, 2002, by and between
V-ONE CORPORATION (the "Company"), which is a Delaware corporation with offices
at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the
person (the "Purchaser") whose name and address appears on the signature page of
this Agreement.
W I T N E S S E T H :
- - - - - - - - - - -
WHEREAS, the Company, with the assistance of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & CO., LLC
as placement agent (the "Placement Agent") is arranging for the private
placement ("the Offering") of not less than $1,000,000, and not more than
$1,200,000, principal amount of its 8% Secured Convertible Notes due 180 days
after date (the "Notes"), together with certain Warrants described below, upon
terms not more favorable to the purchasers than the terms and provisions set
forth in this Agreement;
WHEREAS, the Company has, prior to the execution hereof, executed a
Security Agreement and Registration Rights Agreement for the benefit of all
holders of the Notes;
WHEREAS, the Company desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Company, the principal amount of Notes
set forth on the signature page of this Agreement (together with such Warrants),
all upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Company is or will be entering into Note Purchase
Agreements with certain other parties (collectively, the "Third Party
Agreements") providing for, among other things, the issuance and sale by the
Company of not more than $1,200,000 principal amount of Notes (including the
Notes under this Agreement), together with certain warrants (the "Warrants"),
all on terms not more favorable to the purchasers than the terms set forth in
this Agreement; and
WHEREAS, the Company with the assistance of the Placement Agent,
expects to offer, in a private placement (the "Private Placement"), prior to the
maturity date of the Notes, for not less than $3,000,000, shares of its Series E
Convertible Preferred Stock (or some other amount or type of financing);
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
Section 1. ISSUANCE AND SALE OF NOTES AND WARRANTS
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(a) Simultaneously with the execution of this Agreement by the Company
and upon the terms and subject to the conditions hereof, the Company shall issue
and sell to the Purchaser, and the Purchaser shall purchase from the Company,
for a purchase price equal to the face amount of the Note: (i) a Note
(substantially in the form of Exhibit A to this Agreement) in the principal
amount set forth on the signature page which is convertible into the Common
Stock of the Company or any other securities issued by the Company following
this Offering, in accordance with the conversion provisions contained in
paragraph (b) of this Section 1; and (ii)a Warrant having a five year term to
purchase that number of the Company's Common shares equal to 1 share for each
$1.00 of principal amount purchased (substantially in the form of Exhibit B to
this Agreement) in accordance with the exercise provisions contained in
paragraph (c) of this Section 1. The Company shall deliver the Note and Warrant
being acquired by the Purchaser against payment of such purchase price by bank
or certified check payable in wire transfer New York clearinghouse funds to the
order of the escrow agent on behalf of the Company.
(b) The principal amount of the Notes plus accrued interest, shall at
the election of the holder, at any time following the purchase of the Notes, be
applied (in whole or in part) either: (i) towards the purchase of such number of
shares of Company's Common Stock at a conversion price equal to the greater of
$0.25 per share and 60% of the average closing sales price of the Company's
Common Stock, as quoted on NASDAQ, for the five trading day period immediately
preceding the Company's receipt of the holder's notification of conversion (the
"Common Stock Conversion Price"); or, (ii) towards the purchase of other
securities of the Company ("New Securities") which are issued in any round of
financing of the Company that closes after the date of this Agreement ("Other
Permitted Offering") and whose gross proceeds are greater than $3,000,000 at a
conversion price based upon the price at which such other securities are
convertible into the Company's Common Stock. Notwithstanding the foregoing: the
Notes, together with accrued interest, shall be applied (on a mandatory basis)
either: towards the purchase of the Company's Common Stock at a conversion price
equal to the Common Stock Conversion Price or towards the purchase of the
Company's Series E Preferred Stock or the New Securities, at the final closing
of the Private Placement or the Other Permitted Offering in the event gross
proceeds in either case equal or exceed $3,000,000; provided, however, that such
application or conversion shall not be mandatory in the event that gross
proceeds of the Private Placement or the Other Permitted Financing shall equal
or exceed $6,000,000. The conversion price in any such event shall be based upon
the price at which such Series E Preferred Stock or such New Securities are
convertible into Common Stock.
(c) The Warrants shall be exercisable to acquire shares of the
Company's Common Stock at an initial exercise price of $0.50 (provided that the
Warrants may not be exercised at any time at an exercise price less than the
greater of book or market value of Common Stock as of the date of this Agreement
as applied under NASDAQ Marketplace Rule 4350(i)(1)(D)) and may not be exercised
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for a period of six months from the date of this Agreement, in all or part
through a cashless exercise (as provided in Exhibit B) or by delivering such
funds via certified check, to the Company, as is required (pursuant to Exhibit
B) to effect their exercise. Notwithstanding the foregoing, The Company shall
have the right to require ("Company's Election") the exercise of the Warrants in
the event that the closing sale prices for the Company's Common Stock, as listed
on the NASDAQ, shall be at or above $3.00 for any 20 consecutive trading days
following the purchase of the Notes. It shall be a condition precedent to the
exercise of the Company's Election, that all shares of Common Stock underlying
the Warrants are registered and are represented by certificates that bear no
restrictive legends. The Company shall notify the holder of the Warrants in
writing of the Company's Election 30 days prior to the date upon which the
Warrants will be required to be exercised. Upon the Company's Election, the
holders of the Warrants shall exercise the Warrant in accordance with its terms
referred to above.
(d) The Company will, prior to the last Closing Date, enter into the
balance of the Third Party Agreements with certain other persons (collectively,
the "Other Purchasers"), under which the Other Purchasers agree to purchase
Notes (and Warrants) from the Company and make the same representations,
warranties and agreements to and with the Company as the Purchaser has made
herein (collectively, the "Purchaser" and the "Other Purchasers" are herein
referred to as the "Purchasers"). The purchase made by each of the Purchasers is
to be a separate purchase and each sale and delivery of Notes (and Warrants) to
a Purchaser is to be a separate sale and delivery by the Company to such
Purchaser.
(e) The Notes and Warrants are to be sold and delivered at two or more
closings (in accordance with the Placement Agency Agreement between the Company
and the Placement Agent) to be held at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇,
P.C., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10 A.M. local business time, on
the following dates of closing (each of which is herein called a "Closing
Date"):
(i) The first Closing Date, at which Notes aggregating not
less than $1,000,000 in principal amount are to be sold and delivered
(including the principal amount, if any, of Notes to be sold and
delivered pursuant to this Agreement on such first Closing Date), shall
be on such date (not later than two business days following the receipt
by the escrow agent of not less than $1,000,000 principal amount) as
the Company may designate without further notice to the Purchaser.
(ii) Additional Closing Dates, at which some or all of the
balance of Notes offered by the Company are to be sold and delivered
(including the Notes to be sold and delivered pursuant to this
Agreement on any such additional Closing Date), shall be on such other
date (not later than July 19, 2002 subject to up to a 15 day extension
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at the discretion of the Company and the Placement Agent) that the
Company and the Placement Agent may designate without further notice to
the Purchaser.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Purchaser as follows:
(a) ORGANIZATION; QUALIFICATION. The Company is a corporation duly
organized and existing, and in good standing, under the laws of the State of
Delaware, with full corporate power and authority to own or lease all of the
assets owned or leased by it and to operate its business as the same is
currently being operated. The Company is duly qualified to do business and is in
good standing in each jurisdiction in which the failure to so qualify will have
a material adverse effect on the business or assets or financial condition of
the Company.
(b) AUTHORITY. The Company has adequate corporate power and authority
to make and perform this Agreement, the Security Agreement and all other
agreements contemplated hereby, and the Company has adequate corporate power and
authority to issue all of the Notes and all of the Warrants, and all of the
shares of the Company's Common Stock issuable upon the Conversion of the Notes
(the "Conversion Shares") and the exercise of the Warrants (the "Warrant
Shares"), hereunder or thereunder. (The Notes, the Warrants, the Conversion
Shares and the Warrant Shares are hereinafter called, collectively, the
"Securities.") The issuance of the Securities, and all other securities
previously issued or reserved for issuance by the Company, have been duly
authorized by all necessary corporate action on behalf of the Company (except
for the filing of a Certificate of Designation with the Delaware Secretary of
State defining the precise terms of the Series E Convertible Preferred Stock
issuable in the Private Placement). Upon the conversion of all of the Notes, and
the exercise of the Warrants and the payment of the exercise price thereunder,
the Conversion Shares and the Warrant Shares, respectively, will be validly
issued, fully paid and non-assessable. The Company has taken and will take all
necessary corporate action to reserve for issuance upon the conversion of all of
the Notes, and the exercise of all of the Warrants that number of Conversion
Shares issuable upon such conversion and Warrant Shares issuable upon such
exercise.
(c) CAPITALIZATION. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, par value $0.001 per share, of
which 24,263,082 are issued and outstanding; and 13,333,333 shares of Preferred
Stock, par value $0.001 per share, of which 3,063,904 shares are issued and
outstanding (42,904 Series C, and 3,021,000 Series D). All such
outstandingshares are validly issued, fully paid and non-assessable and are free
and clear of any liens and encumbrances caused by or created by the Company.
Except as described on Exhibit C, there are, and on each of the Closing Dates
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will be, no outstanding options, warrants, agreements or understandings for the
purchase from the Company of any shares of its stock, or for the purchase from
the Company of any securities convertible into or exchangeable for any shares of
its stock. Except as set forth in Exhibit C hereto, there are no cumulative
voting rights or preemptive rights in respect of the shares of capital stock of
the Company. The rights and preferences, and the qualifications, limitations of
the Series E Preferred Stock are described in the Term Sheet annexed as Exhibit
D hereto.
(d) CORPORATE DOCUMENTS. The copies of the Company's Certificate of
Incorporation, Certificates of Designation, and by-laws (all certified by such
Company's Secretary), delivered to the Placement Agent, are true, correct and
complete copies, as amended as of to the date hereof.
(e) ABSENCE OF MATERIAL MISSTATEMENTS. This Agreement and all documents
delivered to the Purchaser buy or on behalf of the Company in connection with
the private placement of the Notes do not contain an untrue statement of
material fact or omit to state a material fact necessary in order to make the
statements herein, in the light of the circumstances under which they were made,
not misleading.
(f) FINANCIAL STATEMENTS. The Company's balance sheets as at December
31, 2001 AND March 31, 2002 (the "Balance Sheets") and its statements of income
and retained earnings (deficit) (the "Income Statements"), and changes in cash
flows, for the periods then ended, are true and correct in all material respects
and fairly present the Company's financial position and the results of its
operations as of such dates.
(g) NO UNDISCLOSED LIABILITIES. The Company has no material liabilities
except as (i) set forth in the Balance Sheets; (ii) disclosed in this Agreement
and the Appendices hereto; or (iii) incurred in the ordinary course of business
since March 31, 2002.
(h) NO SUBSEQUENT CHANGES. Since March 31, 2002: (i) there has not been
any change in the condition, financial or otherwise, of the Company which could
materially adversely affect its ability to conduct its operations, other than
ongoing losses in the ordinary course, and (ii) the Company has not incurred any
material liabilities or obligations, direct or contingent, not in the ordinary
course of business.
(i) CONTRACTS. Each contract, agreement or other instrument (however
characterized or described) to which the Company (or such subsidiary) is a party
or by which its properties or business is or may be bound or affected is in full
force and effect in all material respects and is enforceable against the parties
thereto in accordance with its terms (subject, as to the enforcement of
remedies, to applicable bankruptcy, insolvency, reorganization, moratorium and
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other laws affecting the rights of creditors generally and the discretion of
courts in granting equitable remedies), and none of such contracts or
instruments has been assigned by the Company, and neither the Company nor any
other party is in default thereunder and no event has occurred which, with the
lapse of time or the giving of notice, or both, would constitute a default
thereunder. None of the material provisions of such contracts or instruments
violates any existing applicable law, rule, regulation, judgment/order or decree
of any governmental agency or court having jurisdiction over the Company or any
of its assets or business.
(j) FINDER'S FEE. The Company has not incurred any liability for any
finder's fees or similar payments in connection with the transactions herein
contemplated except for the fees payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. under the
Placement Agency Agreement.
(k) PRIOR SALES OF SECURITIES. No securities of the Company have been
sold by the Company in violation of the Securities Act of 1933, as amended (the
"Act") or of any State's securities laws.
(l) PROPERTIES. Except as set forth in Exhibit E hereto, the Company
has good and marketable title to all of its properties and assets, free and
clear of all liens, security interests, charges, encumbrances, or restrictions.
All of the material leases and subleases under which the Company holds
properties or assets as lessee or sublessee are in full force and effect, and
the Company is in compliance with such leases and subleases in all material
respects. The Company owns or leases all such properties as are necessary to its
operations as now conducted and as proposed to be conducted. Except as set forth
in Exhibit E, the security interests created by the Security Agreement for the
benefit of the holders of the Notes represent first liens on the assets
described therein.
(m) PATENTS AND OTHER INTANGIBLE ASSETS. The Company (1) owns or has
the right to use, free and clear of all liens, claims and restrictions, all
patents, trademarks, service marks, trade names, copyrights (and licenses with
respect to the foregoing) used in the conduct of its business, to the best of
the Company's knowledge, as now conducted or as proposed to be conducted without
infringing upon or otherwise unlawfully and adversely affecting the right or
claimed right of any person under or with respect to any of the foregoing; and
(2) is not obligated or under any liability whatsoever to make any payments by
way or royalties, fees or otherwise to any owner or licensor of, or other
claimant to, any patent, trademark, trade name, copyright or other intangible
asset, with respect to the use thereof or in connection with the conduct of its
business or otherwise. The Company has not granted any licenses with respect to
any of the foregoing except for licenses granted in the ordinary course of
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business in connection with the sale of the Company's products and services. The
Company owns and has the unrestricted right to use all trade secrets, including
know-how, inventions, designs, processes, and technical data required for, or
incident to, the development, manufacture, operation, and sale of all products
and services sold or proposed to be sold by the Company, free and clear of any
rights, liens or claims of others, including without limitation, all current and
former employees, consultants, officers, directors and shareholders of the
Company, and (to the best of the Company's knowledge) the former employers of
any such person.
(n) INTEGRATION. Neither the Company nor any of its affiliates has
during the six months prior to the date of this Agreement participated, directly
or indirectly, in any offering of securities which is required to be combined or
integrated with the Offering for purposes of Rule 502(c) of Regulation D, so as
to render the exemption provided by Regulation D unavailable with respect to the
offering contemplated hereby.
(o) CONSENTS. No consent, approval, authorization, order, or filing by
or with any court or government authority is required to consummate the
transactions contemplated by this Agreement, except (i) to the extent that the
filing of a Form D with the Securities and Exchange Commission in reliance on
Regulation D under the Act may be required;(ii) that the offer and sale of the
Notes in certain jurisdictions may be subject to the provisions of the
securities or Blue Sky laws of such jurisdictions; and (iii) for any such
consent, approval, authorization, order, or filing that will not result in a
material adverse effect on the business operations of the Company or the rights
of the Purchaser.
(p) VALIDITY. This Agreement, the Registration Rights Agreements, the
Security Agreement, the Notes, and the Warrants, have all been duly executed by
the Company and each is valid and binding upon the Company and each is
enforceable (subject to the limitations of equity jurisdiction and the
restrictions of bankruptcy and other similar law) in accordance with their
respective terms.
(q) NO DEFAULTS. Neither the execution nor delivery of this Agreement,
the Third Party Agreements, the Notes and the Warrants, nor the consummation of
the transactions contemplated hereby or thereby, will conflict with, or result
in any violation of, or constitute a default under any terms of the certificate
of incorporation or by-laws of the Company or any agreement, or other instrument
by which it is bound, or result in the creation of any lien, claim, charge or
encumbrance of any nature whatsoever upon the Company's property or entitle any
creditor to accelerate the time of payment of any of its obligations or
liabilities.
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(r) COMPLIANCE WITH LAWS. The Company and such subsidiary have complied
with all material applicable laws, rules and regulations of all local, state and
Federal governments with respect to the conduct of its business, where a failure
to so comply would have a material adverse effect on the business or assets or
financial condition of the Company (and/or such wholly owned subsidiary), and
the Company (and/or such wholly owned subsidiary) has not received any notice
from any public or governmental authority or any other person citing a violation
of any rule, ordinance, statute or regulation applicable to its business which
violation, if continued unremedied, would have a material adverse effect on its
business or assets or financial condition.
(s) ELIGIBILITY TO FILE FORM S-3. The Company is and will be eligible
in all respects to file a registration statement with the Securities & Exchange
Commission under Form S-3 with respect to the Conversion Shares and the Warrant
Shares.
(t) USE OF PROCEEDS. The Company and such subsidiary will use the
proceeds of the issuance and sale of the Notes (and Warrants) pursuant to this
Agreement and the Third Party Agreements, after the deduction of related
expenses, in all substantial respects for the purposes set forth in Exhibit F
hereto.
(u) SUBSIDIARIES. Except for 10,000 shares of common stock of Network
Flight Recorder, Inc. representing a 9.9% ownership interest therein, the
Company does not presently own or control, directly or indirectly, any interest
in any other corporation, association or other business entity. The Company is
not a participant in any joint venture, partnership or similar arrangement.
Section 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser represents and warrants to, and agrees with, the Company as follows:
(a) The Purchaser is acquiring the Note and the Warrant, and will
acquire the Conversion Shares issuable upon conversion of the Note and the
Warrant Shares issuable upon exercise of the Warrant, for the Purchaser's own
account, for investment only, and not with a view to, or for resale in
connection with, any distribution. The Purchaser is aware that the Note and the
Conversion Shares and the Warrant and the Warrant Shares are "restricted
securities" and must be held indefinitely unless such securities are
subsequently registered under the Act, or unless an exemption from such
registration is available. The Purchaser also consents to the endorsement, and
will abide by the terms, of a restrictive legend on the Notes, the Warrants and
on the certificates representing the Conversion Shares and the Warrant Shares,
substantially in the forms set forth in Exhibit A and Exhibit B.
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(b) The Purchaser (i) is able to bear the complete loss of the
investment made hereby; (ii) has adequate means of providing for his current
needs and possible personal contingencies, and has no need for the liquidity of
his investment in the Securities; and (iii) is an "accredited" investor as
defined in Rule 501(a) promulgated under the Securities Act of 1933, as amended.
(c) The Purchaser has been informed and understands that this
investment is a highly speculative one and involves a high degree of risk and
illiquidity, that the amount that may be realized on the investment may not
equal the original amount invested. In evaluating such investment the Purchaser
has consulted with his own investment and/or legal and or tax adviser and has
concluded that his proposed investment in the Company is appropriate in light of
his overall investment objectives and financial situation and he has taken full
cognizance of, and understands all of the above risk factors related to the
purchase of the Notes.
(d) All of the representations and warranties of the Purchaser
contained in this Agreement are true and correct, and this Agreement is binding
upon the Purchaser and enforceable against the Purchaser in accordance with its
terms, subject only to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the rights of creditors generally and the
discretion of courts in granting equitable remedies.
(e) Neither the Purchaser nor any affiliate of the Purchaser has made
any agreement or taken any other action causing anyone to become entitled to a
finder's or broker's fee or commission as a result of any of the transactions
contemplated by this Agreement. For purposes of this Agreement, "affiliate,"
with respect to any person, means and includes any other person, directly or
indirectly, controlling, controlled by or under common control with such person.
Section 4. COVENANTS OF THE COMPANY.
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(a) NEGATIVE COVENANTS. So long as any of the Notes remain outstanding,
the Company shall not (without the prior written consent of either the Placement
Agent or the holders of a majority of the principal amount of the Notes
outstanding which the Placement Agent undertakes to grant, obtain or deny in
writing within 15 days after receipt of the Company's written request and which
consent shall be deemed granted if the Placement Agent does not respond within
such 15 day period):
(i) LIENS. Create, incur, or assume any mortgage, deed of
trust, pledge, security interest, lien, charge, or encumbrance of any
nature, upon or with respect to any of its properties, now owned or
hereafter acquired, or assign or otherwise convey any right to receive
income, except: the escrow of the Company's source code in the ordinary
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course of the Company's business, or liens contemplated by this
Agreement, or securing the payment of taxes, assessments or
governmental charges or levies or the claims or demands of suppliers,
mechanics, carriers, warehousers, landlords and other like persons;
(ii) INDEBTEDNESS. Create, incur or assume any indebtedness
for money borrowed except for: other Notes issued under the Third Party
Agreements which (together with the Note payable to the Purchaser) do
not exceed $2,000,000 in aggregate principal amount; and project
financing in the ordinary course of the Company's business.
(iii) MERGERS, ETC. Consolidate with or merge into, or sell,
assign, lease or otherwise dispose of, other than in the ordinary
course of business (whether in one transaction or in a series of
transactions) assets representing 20% or more of the Company's total
assets, whether now owned or hereafter acquired, to any corporation, or
permit any other firm or corporation to merge into the Company
("Merger"), unless the merger agreements and documents ("Merger
Documents") afford each Note holder the option either (i) to have his,
her or its Notes paid in full on the date of such consummation or (ii)
to participate in the Merger by surrendering the holder's Note in
exchange for the securities being offered in the Merger at the adjusted
conversion price based upon the consideration that the holders of the
Company's Common Stock will receive in the Merger.
(iv) DIVIDENDS. Declare or pay any cash dividends, or
purchase, redeem, retire, or otherwise acquire for value any of its
capital stock now or hereafter outstanding, return any capital to its
stockholders or make any distribution of assets to its stockholders.
(v) GUARANTIES. Assume, guarantee, endorse or otherwise become
directly or contingently liable in connection with any obligation of
any other person, firm or corporation (except by endorsement of
negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business or letter of credit
issued on its behalf in the ordinary course of business and with
respect to new leases).
(vi) DISSOLUTION, ETC. Dissolve or adopt a plan of
liquidation of the Company, or take any action to commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it as bankrupt or insolvent or
seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to
10
it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any
substantial part of its assets, or making a general assignment for the
benefit of its creditors.
(vii) CHANGE OF COUNSEL OR AUDITORS. Without the prior written
consent of the Placement Agent, change counsel or auditors which
consent shall not be unreasonably withheld.
(viii) COMPENSATION. Without the prior written consent of the
Company's Compensation Committee increase the compensation payable with
respect to any officer or key employee of the Company.
(b) AFFIRMATIVE COVENANTS. So long as the Note remains outstanding, the
Company agrees to:
(i) ACCOUNTING SYSTEM. Maintain a system of accounting
established and administered in a manner sufficient to permit
preparation of financial statements in accordance with generally
accepted accounting principles consistently applied.
(ii) ANNUAL REPORTS. Furnish to the registered holders of the
Notes as soon as practicable, and in any event within 120 days after
the end of each fiscal year of the Company, an annual report of the
Company on Form 10-K.
(iii) OTHER REPORTS. Furnish reasonably promptly to the
Placement Agent such other publicly filed documents, reports and
financial data as the Placement Agent may reasonably request. This
covenant may be complied with by giving prompt notice to the Placement
Agent by electronic mail to an electronic mail address designated by
the Placement Agent that such report, document or data has been filed
and is available.
(v) TIMELY FILING OF SECURITIES REPORTS; COMPLIANCE WITH LAWS.
File on a timely and current basis all reports required by the Federal
securities laws, and comply in all material respects with all
applicable material Federal, state and local statutes, rules and
regulations and do all things necessary to preserve, renew and keep in
full force and effect and in good standing its corporate existence and
authority necessary to continue its business. Without limiting the
generality of the foregoing, the Company will promptly file notice of
(A) any material adverse change in the business or assets or financial
condition of the Company or such subsidiary, (B) any material
litigation or governmental proceeding pending or, to the knowledge of
the Company, threatened against the Company or such subsidiary or
against any officer, director or key employee of the Company or such
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subsidiary related to the Company or such subsidiary and (C) any notice
of any material default under any of its obligations.
(vi) S-3 REGISTRATION. As provided in the Registration Rights
Agreement, the Company will file an S-3 registration statement
(referred to in Section 2(s)) within 30 days of the first closing
hereunder, and will take all steps necessary and appropriate to keep
such S-3 Registration current until the termination date of the
Warrants.
(vii) BEST EFFORTS. The Company will use its best efforts to
consummate prior to the initial due date of the Notes, an offering of
Preferred Stock with the assistance of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. as Placement
Agent on substantially the terms and conditions set forth on Exhibit G
hereto (or any other financing consented to in writing by the Placement
Agent)
Section 5. PREPAYMENTS OF NOTES.
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The Company may prepay any of the Notes without the written consent of
the registered holder, upon written notice accompanied by the payment of accrued
interest.
Section 6. REGISTRATION, EXCHANGE, PAYMENT.
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(a) The Notes are issuable only as registered Notes without coupons.
The Company shall keep at its principal office (or at such other place
designated by it in writing to the outstanding holders of the Notes) a register
in which the Company shall provide for the registration of Notes and the
registration or transfer of Notes. At the option of the holder of any Notes such
notes may be exchanged for other Notes, in an aggregate principal amount equal
to the unpaid principal amount of such surrendered Note, as the case may be,
upon surrender of the Note to be exchanged at the principal office of the
Company. Whenever any Note is so surrendered for exchange, the Company shall
execute and shall deliver, at the expense of the Company, the replacement Note
or Notes which the holder making the exchange is entitled to receive.
(b) Upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of any Note and, in the case of any
such loss, theft or destruction of any Note, and upon delivery of an indemnity
bond (in form and substance, and insured by an insurer, satisfactory to the
Company) by such holder in such reasonable amount as the Company may determine,
or, in the case of any such mutilation, upon surrender and cancellation of such
Note, the Company at its expense will execute and deliver, in lieu thereof, a
replacement Note of like tenor.
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(c) The Company may treat the person or entity in whose name any Note
is registered as the owner and holder of such Note for the purpose of receiving
payment of principal and premiums, if any, and interest on such Note and for all
other purposes whatsoever, whether or not such Note shall be overdue, and the
Company shall not be affected by notice to the contrary. Any reference to this
Agreement to a "holder" of any Note shall refer to the registered holder of such
Note as set forth from time to time in the register kept by the Company referred
to in subsection (a) above. The Company will pay all sums becoming due on any
Note for principal, premium and interest to the holders of the Notes in the
manner provided in Section 5 of this Agreement. Purchaser's registered address
shall be as specified on the signature page of this Agreement, until such time
as Purchaser may designate a different registered address by written notice to
the Company.
Section 7. EVENTS OF DEFAULT.
-----------------
If any of the following events (an "Event of Default") shall occur and
be continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise), then, the holders of a simple majority of aggregate face amount of
the Notes or the Placement Agent may, at their or its option, by notice in
writing to the Company, declare the Note to be, and the Note shall thereupon be
and become, forthwith due and payable together with interest and additional
consideration (if any) due thereon ("Acceleration"):
(a) The Company defaults in the payment of the principal of
the Notes and such default shall continue for 5 calendar days; or
(b) any material representation or warranty made by the
Company herein or in any writing furnished in connection with or
pursuant to this Agreement, or in the Note shall be false in any
material respect on the date as of which made, and the Company fail
within ten days after receiving written notice thereof, to correct such
representation or warranty, or;
(c) except as set forth in paragraph (a) above, the Company
materially defaults in the performance or observance of any material
covenant contained in Section 4 herein or in the Note and fails to cure
such default within 30 days after receiving written notice thereof; or,
(d) The Company defaults in the performance or observance of
any other material agreement, term or condition contained herein and
such default shall not have been remedied within 30 days after written
notice thereof shall have been received by the Company; or,
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(e) The Company makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts generally
as they become due; or
(f) any order, judgment or decree is entered adjudicating the
Company bankrupt or insolvent and such order, judgment or decree
remains unstayed and in effect for more than 60 days; or
(g) The Company petitions or applies to any tribunal for the
appointment of a trustee or receiver, or of any substantial part of the
assets of the Company or commences any proceedings relating to the
Company under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect; or
(h) any such petition or application is filed, or any such
proceedings are commenced, against the Company and the Company by any
act indicates its approval thereof, consent thereto or acquiescence
therein, or an order, judgment or decree is entered appointing any such
trustee or receiver, or adjudicating the Company or such wholly owned
subsidiary bankrupt or insolvent, or approving the petition in any such
proceedings and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(i) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(j) any order, judgment or decree is entered in any
proceedings against the Company decreeing a split-up of the Company
which requires the divestiture of a substantial part of the assets of
the Company and such order, judgment or decree remains unstayed and in
effect for more than 60 days.
(k) The Company shall fail to file an S-3 registration for the
Common Stock underlying the Notes and Warrants within 30 days after the
first closing with respect to the Offering.
In any such event, the interest rate on the Notes shall become 15%,
from the date of Acceleration.
Section 8. CONDITIONS OF PURCHASE.
----------------------
(a) The Purchaser's obligations to purchase and pay for the Notes
hereunder on each of the Closing Dates shall be subject to: (1) compliance by
the Company with its agreements contained herein and in the Exhibits attached
hereto and in the Security Agreement and Registration Rights Agreements; (2) the
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delivery of a Certificate signed by the President of the Company as to the
continued accuracy on such Closing Date of the representations and statements
made by the Company herein, the absence of any material adverse changes in the
condition of the Company since March 31, 2002 and the absence of any material
transactions not in the ordinary course of the Company's business; (3) the
delivery to the Purchasers of the opinion of general counsel to the Company,
annexed as Exhibit H.
(b) The obligations of the Company to issue and deliver the Note is
subject to (i) the compliance by the Purchaser with any agreements by the
Purchaser contained herein, and (ii) the continued accuracy of the
representations and statements made by the Purchaser herein.
Section 9. MISCELLANEOUS
-------------
(a) SURVIVAL OF REPRESENTATIONS. Notwithstanding any investigations,
the warranties, covenants and agreements made by the Company and the Purchaser,
respectively, herein shall survive the closing of this Agreement. All statements
contained on any schedule, exhibit, certificate or other instrument delivered by
or on behalf of the Company and the Purchaser or in connection with the
transactions contemplated by this Agreement, shall be deemed to be
representations and warranties hereunder.
(b) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify and
defend the Purchaser against and hold the Purchaser harmless from any and all
loss, damage, liability, deficiency, cost and expense, including reasonable
legal fees (collectively, hereinafter referred to as the "Losses") incurred by
the Purchaser resulting from or arising out of any inaccuracy in or breach of
any material representation, warranty, covenant or obligation made or incurred
by the Company herein or in any other agreement, instrument or document
delivered by or on behalf of either Company in connection with the execution and
delivery of this Agreement.
(c) INDEMNIFICATION BY THE PURCHASER. The Purchaser shall indemnify the
Company against and hold the Company harmless from any and all Losses (as
defined above) incurred by the Company or such wholly owned subsidiary resulting
from or arising out of any inaccuracy in or breach of any material
representation, warranty, covenant or obligation made or incurred by the
Purchaser herein or in any other agreement, instrument or document delivered by
or on behalf of the Purchaser in connection herewith.
(d) NOTICES. All notices, demands, consents or other communications
required or permitted to be given hereunder shall be in writing and may be given
by hand delivery, certified or registered mail, or by facsimile transmission,
addressed to or transmitted to the party entitled to receive the same, as
follows:
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If to the Purchaser, to the address set forth on the signature page,
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to the Company, to:
V-One Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, Esq.
or to such other address as any such party may designate by notice to the other
parties. Notices shall be deemed given (i) in the case of hand delivery, when
delivered; (ii) in the case of certified or registered mail, three days after
deposit in the postal system, first class postage pre-paid; and (iii) in the
case of telex or facsimile notices, when sent.
(e) NO ASSIGNMENT. This Agreement is binding upon and inures to the
benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned, amended or modified by the parties
hereto, except by a written agreement executed by the parties and satisfactory
in form to the Company and its counsel; provided, however, that the Purchaser
may assign this Agreement to an affiliate.
(f) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(g) HEADINGS. The headings in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
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(h) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State without regard to its principles
of conflicts of laws.
(i) PURCHASER'S AGENT. The Purchaser irrevocably appoints ▇▇▇▇▇▇ ▇▇▇▇▇▇
& Co., LLC as its agent to take any action, on Purchaser's behalf, which
Purchaser is required or permitted to take pursuant to this Agreement. ▇▇▇▇▇▇
▇▇▇▇▇▇ & Co., LLC shall have sole and exclusive authority to request information
or further assurances and to take action on behalf of the Purchaser, and the
Purchaser shall not be entitled to make such requests or take such actions
individually. Any and all notices, amendments or other documents given, received
or executed by ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., LLC as such agent shall be binding upon the
Purchaser, and the Company shall be entitled to rely upon any communication
received from such agent appearing to be valid on its face with respect to
matters arising under this Agreement concerning the interests of the Purchaser.
[signature page to follow]
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IN WITNESS WHEREOF, this Note Purchase Agreement has been duly executed
by the parties hereto on the date first above written.
V-ONE CORPORATION
By:____________________________
-------------------------------
Signature of Purchaser
-------------------------------
Print Name
Purchaser's Address: The Purchaser is purchasing:
--------------------------
$______________ principal
-------------------------- amount of the Notes.
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