COMMON STOCK PURCHASE AGREEMENT
DATED AS OF JUNE 7, 2000
AMONG
OBJECTSOFT CORPORATION
AND
THE PURCHASERS LISTED ON EXHIBIT A
TABLE OF CONTENTS
PAGE
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ARTICLE I Purchase and Sale of Stock..............................................................................1
Section 1.1 Purchase and Sale of Common Shares.....................................................1
Section 1.2 The Common Shares......................................................................1
Section 1.3 Purchase Prices, Execution and Closing.................................................1
Section 1.4 Escrow.................................................................................2
ARTICLE II Representations and Warranties.........................................................................2
Section 2.1 Representations and Warranties of the Company..........................................2
Section 2.2 Representations and Warranties of the Purchasers......................................10
ARTICLE III Covenants 13
Section 3.1 Securities Compliance.................................................................13
Section 3.2 Registration and Listing..............................................................13
Section 3.3 Inspection Rights.....................................................................--
Section 3.4 Compliance with Laws..................................................................14
Section 3.5 Keeping of Records and Books of Account...............................................14
Section 3.6 Other Agreements......................................................................14
Section 3.7 Transfer Agent Instructions...........................................................14
ARTICLE IV Conditions 15
Section 4.1 Conditions Precedent to the Obligation of the Company to Sell the Common Shares at
Closing...........................................................................15
Section 4.2 Conditions Precedent to the Obligation of the Purchasers to Purchase the Common Shares
at the Closing....................................................................16
ARTICLE V Registration Rights; Transfer Agreement; Voting........................................................17
Section 5.1 Registration Rights...................................................................17
Section 5.2 Transfer Restrictions.................................................................17
ARTICLE VI Stock Certificate Legend..............................................................................18
Section 6.1 Legend................................................................................18
ARTICLE VII Termination..........................................................................................19
Section 7.1 Termination by Mutual Consent.........................................................19
Section 7.2 Other Termination.....................................................................19
Section 7.3 Effect of Termination.................................................................19
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TABLE OF CONTENTS (CONT'D)
PAGE
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ARTICLE VIII Indemnification.....................................................................................20
Section 8.1 General Indemnity.....................................................................20
Section 8.2 Indemnification Procedure.............................................................20
ARTICLE IX Miscellaneous.........................................................................................21
Section 9.1 Fees and Expenses.....................................................................21
Section 9.2 Specific Enforcement, Consent to Jurisdiction.........................................21
Section 9.3 Entire Agreement; Amendment...........................................................22
Section 9.4 Notices...............................................................................22
Section 9.5 Waivers...............................................................................23
Section 9.6 Headings..............................................................................23
Section 9.7 Successors and Assigns................................................................23
Section 9.8 No Third Party Beneficiaries..........................................................23
Section 9.9 Governing Law.........................................................................23
Section 9.10 Survival..............................................................................24
Section 9.11 Counterparts..........................................................................24
Section 9.12 Publicity.............................................................................24
Section 9.13 Severability..........................................................................24
Section 9.14 Further Assurances....................................................................24
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COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of
June 7, 2000, by and among ObjectSoft Corporation, a corporation organized under
the laws of the State of Delaware (the "Company") (NASDAQ: "OSFT"), and each of
the Purchasers whose names are set forth on Exhibit A hereto (individually, a
"Purchaser" and collectively, the "Purchasers").
WHEREAS, the parties desire that, upon the terms and subject
to the conditions contained herein, the Company shall issue and sell to the
Purchasers and the Purchasers shall purchase up to $1,000,000 of the Company's
common stock, $.0001 par value per share (the "Common Stock"); and
WHEREAS, such purchase and sale will be made in reliance upon
the provisions of Section 4(2) and Rule 506 of Regulation D ("Regulation D") of
the United States Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"), or upon such other
exemption from the registration requirements of the Securities Act as may be
available with respect to any or all of the purchases of Common Stock to be made
hereunder.
The parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
Section 1.1 Purchase and Sale of Common Shares. Upon the following
terms and subject to the conditions contained herein, the Company shall issue
and sell to the Purchasers, and the Purchasers shall purchase from the Company,
an aggregate of 931,620 shares of Common Stock (the "Common Shares"), at a price
per share equal to $1.0734. The aggregate price of the Common Shares shall be
$1,000,000.
Section 1.2 The Common Shares. The Company has authorized and has
reserved and covenants to continue to reserve, free of preemptive rights and
other similar contractual rights of stockholders, a sufficient number of its
authorized but unissued shares of its Common Stock, to effect the issuance of
the Common Shares.
Section 1.3 Purchase Prices, Execution and Closing. In consideration of
and in express reliance upon the representations, warranties, covenants, terms
and conditions of this Agreement, the Company agrees to issue and sell to the
Purchasers and the Purchasers, severally but not jointly, agree to purchase the
Common Shares set forth opposite their respective names on Exhibit A. The
aggregate purchase price of the Common Shares being acquired by each Purchaser
is set forth opposite such Purchaser's name on Exhibit A (for each such
Purchaser, a "Purchase Price", and collectively referred to as the "Purchase
Prices"). The closing of the purchase and sale of the Common Shares (the
"Closing") to be acquired by the Purchasers from
the Company shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, The Chrysler
Building, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., eastern
time, on (i) the date on which the last to be fulfilled or waived of the
conditions set forth in Article IV hereof and applicable to the Closing shall be
fulfilled or waived in accordance herewith or (ii) such other time and place or
on such date as the Purchasers and the Company may agree upon (the "Closing
Date").
Section 1.4 Escrow. On or before the Closing Date, (a) the Company
shall execute and deliver to the escrow agent (the "Escrow Agent") identified in
the Escrow Agreement attached hereto as Exhibit B (the "Escrow Agreement") all
applicable agreements, documents, instruments and writings required pursuant to
Section 4.2 herein (collectively, the "Closing Documents"), to be delivered by
the Company, including, without limitation, certificates for the number of
Common Shares set forth opposite each Purchaser's name on Exhibit A, as
applicable, registered in such Purchaser's name and (b) each of the Purchasers
shall pay by wire transfer of immediately available funds into escrow in
accordance with the Escrow Agreement such Purchaser's Purchase Price, as
applicable, and execute and deliver all applicable agreements, documents,
instruments and writings required pursuant to Section 4.1, to be delivered by
such Purchaser. In regard to the Closing, the Escrow Agent shall give notice (by
telephone or other means) (an "Escrow Agent Notice") to the parties hereto when
the Escrow Agent has received all of the Closing Documents and wire transfer the
funds constituting the Purchase Prices and deliver the other Closing Documents
to the Company pursuant to the terms of the Escrow Agreement. As soon thereafter
as is practicable on the Closing Date, the Escrow Agent shall deliver the
Company's Closing Documents to the Purchasers, including applicable certificates
for the Common Shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the Company. In order to
induce the Purchasers to enter into this Agreement and to purchase the Common
Shares, the Company hereby, makes the following representations and warranties
to the Purchasers:
(a) Organization, Good Standing and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power to own,
lease and operate its properties and assets and to conduct its business as it is
now being conducted and to enter into this Agreement and to perform its
obligations hereunder. The Company does not have any subsidiaries or own
securities of any kind in any other entity, except as set forth in Schedule
2.1(g) hereto. The Company and each subsidiary is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary except for any jurisdiction(s) (alone or in the
aggregate) in which the failure to be so qualified will not have a Material
Adverse Effect (as defined hereinafter) on the Company's financial condition.
For the purposes of this Agreement, "Material Adverse Effect" means any adverse
effect on the business, operations, properties, prospects, assets or financial
condition of the Company or its subsidiaries and which is material to such
entity or other entities controlling or controlled by such entity or which is
likely to materially hinder the
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performance by the Company of its obligation hereunder and under the other
Transaction Documents (as defined in Section 2.1(b) hereof).
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Escrow Agreement, the Registration Rights Agreement attached hereto as Exhibit C
(the "Registration Rights Agreement") and the Transfer Agent Instructions (as
defined in Section 3.14 hereof) (collectively, the "Transaction Documents") and
to issue and sell the Common Shares in accordance with the terms hereof. The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action, and no
further consent or authorization of the Company or its Board of Directors or
stockholders is required. This Agreement has been duly executed and delivered by
the Company. The Registration Rights Agreement will have been duly executed and
delivered by the Company on or before the Closing Date. Each of the Transaction
Documents constitutes, or shall constitute when executed and delivered, a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor's rights and remedies or by other
equitable principles of general application.
(c) Capitalization. The authorized capital stock of the Company and
the shares thereof issued and outstanding as of May 31, 2000 are set forth on
Schedule 2.1(c) hereto. All of the outstanding shares of the Company's Common
Stock and any other security of the Company have been duly and validly
authorized. Except as set forth in this Agreement or the Registration Rights
Agreement, as disclosed in the SEC Documents (as hereinafter defined)) or as set
forth on Schedule 2.1(c) hereto, no shares of Common Stock or any other
securities issued by the Company are entitled to preemptive rights or
registration rights and there are no outstanding options, warrants, scrip,
rights to subscribe to, call or commitments of any character whatsoever relating
to, or securities or rights convertible into, any shares of capital stock of the
Company. Furthermore, except as set forth in this Agreement or the Registration
Rights Agreement, as disclosed in the SEC Documents or as set forth on Schedule
2.1(c), there are no contracts, commitments, understandings, or arrangements by
which the Company is or may become bound to issue additional shares of the
capital stock of the Company or options, securities or rights convertible into
shares of capital stock of the Company. Except as disclosed in the SEC Documents
or as set forth on Schedule 2.1 (c) hereto, the Company is not a party to or
bound by any agreement or understanding granting registration or anti-dilution
rights to any person with respect to any of its equity or debt securities.
Except for customary transfer restrictions contained in agreements entered into
by the Company in order to sell restricted securities, as disclosed in the SEC
Documents or set forth on Schedule 2.1(c) hereto, the Company is not a party to,
and it has no knowledge of, any agreement or understanding restricting the
voting or transfer of any shares of the capital stock of the Company. Except as
set forth on Schedule 2.1(c) hereto, the offer and sale of all capital stock,
convertible securities, rights, warrants, or options of the Company issued prior
to the Closing complied with all applicable federal and state securities laws,
and no holder of such securities has a right of rescission or claim for damages
with respect thereto which could have a Material Adverse Effect. The Company has
furnished or made available to the Purchasers true and correct copies of the
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Company's Certificate of Incorporation as in effect on the date hereof (the
"Articles"), and the Company's Bylaws as in effect on the date hereof (the
"Bylaws").
(d) Issuance of Shares. The Common Shares to be issued at the
Closing have been duly authorized by all necessary corporate action and, when
paid for or issued in accordance with the terms hereof, the Common Shares shall
be validly issued and outstanding, fully paid and nonassessable and entitled to
all applicable rights and preferences set forth in the Articles.
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated herein and therein do not and will not (i) violate any
provision of the Company's Articles or Bylaws, (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, mortgage, deed of trust,
indenture, note, bond, license, lease agreement, instrument or obligation to
which the Company is a party or by which any of its respective properties or
assets are bound, (iii) create or impose a lien, mortgage, security interest,
charge or encumbrance of any nature whatsoever on any property of the Company
under any agreement or any commitment to which the Company is a party or by
which the Company is bound or by which any of its respective properties or
assets are bound, or (iv) result in a violation of any federal, state, local or
foreign statute, rule, regulation, order, judgment or decree (including federal
and state securities laws and regulations) applicable to the Company or any of
its subsidiaries or by which any property or asset of the Company or any of its
subsidiaries are bound or affected, except, in all cases other than violations
pursuant to clause (i) above, for such conflicts, defaults, terminations,
amendments, acceleration, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect. The business
of the Company and its subsidiaries is not being conducted in violation of any
laws, ordinances or regulations of any governmental entity, except for possible
violations which singularly or in the aggregate do not and will not have a
Material Adverse Effect. The Company is not required under federal, state or
local law, rule or regulation to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under the
Transaction Documents, or issue and sell the Common Shares in accordance with
the terms hereof or thereof (other than any filings which may be required to be
made by the Company with the Securities and Exchange Commission (the
"Commission") or state securities administrators subsequent to a Closing, and
any registration statement which may be filed pursuant hereto); provided that,
for purposes of the representation made in this sentence, the Company is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Purchasers herein.
(f) Commission Documents, Financial Statements. The Company has made
available to the Purchasers through the SEC's ▇▇▇▇▇ site or otherwise prior to
the date hereof (and by their signatures hereto, the Purchasers acknowledge that
they have reviewed to their satisfaction) copies of the Company's (i) Form
10-KSB for the year ended December 31, 1998, (ii) Form 10-KSB for the year ended
December 31, 1999, (iii) Form 10-QSB for the quarter ended March 31, 2000, (iv)
Registration Statements on Form S-3 (Registration Nos. 333-92685, 333-92201,
333-30724 and 333-36944), (v) Current Report on Form 8-K filed January 4, 2000,
and (vi) Definitive Proxy Statements filed September 15, 1999 and April 26, 2000
(collectively,
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the "SEC Documents"). The financial statements of the Company furnished to the
Purchasers comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis 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 operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(g) Subsidiaries. Schedule 2.1(g) hereto sets forth each subsidiary
of the Company showing the jurisdiction of its incorporation or organization and
showing the percentage of the Company's ownership of the outstanding stock or
other interests of such subsidiary. For the purposes of this Agreement,
"subsidiary" shall mean any corporation or other entity of which at least a
majority of the securities or other ownership interest having ordinary voting
power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other subsidiaries. All of the
outstanding shares of capital stock of each subsidiary have been duly authorized
and validly issued, and are fully paid and non-assessable. Except as disclosed
on Schedule 2.1(g) there are no outstanding preemptive, conversion or other
rights, options, warrants or agreements granted or issued by or binding upon any
subsidiary for the purchase or acquisition of any shares of capital stock of any
subsidiary or any other securities convertible into, exchangeable for or
evidencing the rights to subscribe for any shares of such capital stock. Neither
the Company nor any subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of the
capital stock of any subsidiary or any convertible securities, rights, warrants
or options of the type described in the preceding sentence. Neither the Company
nor any subsidiary is party to, nor has any knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of any
subsidiary.
(h) No Material Adverse Change. Since March 31, 2000, the date
through which the most recent report of the Company has been prepared and filed
with the Commission (a copy of which is included in the SEC Documents), the
Company has not experienced or suffered any Material Adverse Effect, except as
disclosed on Schedule 2.1(h) hereto.
(i) No Undisclosed Liabilities. Except as disclosed in the SEC
Documents or set forth on Schedule 2.1(i) hereto, neither the Company nor any of
its subsidiaries has any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) other than those incurred in the ordinary course of the Company's
or its subsidiaries respective businesses since March 31, 2000, and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect.
(j) No Undisclosed Events or Circumstances. No event or circumstance
has occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, prospects, operations or financial condition,
which, under applicable law, rule or
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regulation, requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed.
(k) Intentionally Omitted.
(l) Title to Assets. Each of the Company and its subsidiaries has
good and marketable title to all of its real and personal property, free of any
mortgages, pledges, charges, liens, security interests or other encumbrances,
except for those indicated on Schedule 2.1(l) hereto or such that, individually
or in the aggregate, do not cause a Material Adverse Effect on the Company's
financial condition or operating results. Except as described on Schedule
2.1(l), all said leases of the Company and each of its subsidiaries are valid
and subsisting and in full force and effect.
(m) Actions Pending. There is no action, suit, claim, investigation
or proceeding pending or, to the knowledge of the Company, threatened against
the Company or any subsidiary which questions the validity of this Agreement or
the transactions contemplated hereby or any action taken or to be taken pursuant
hereto or thereto. There is no action, suit, claim, investigation or proceeding
pending or, to the knowledge of the Company, threatened, against or involving
the Company, any subsidiary or any of their respective properties or assets,
except as disclosed in the SEC Documents or as set forth on Schedule 2.1(m)
hereto. There are no outstanding orders, judgments, injunctions, awards or
decrees of any court, arbitrator or governmental or regulatory body against the
Company or any subsidiary or any officers or directors of the Company or
subsidiary in their capacities as such.
(n) Compliance with Law. The business of the Company and the
subsidiaries has been and is presently being conducted in accordance with all
applicable federal, state and local governmental laws, rules, regulations and
ordinances, except as set forth on Schedule 2.1(n) hereto or such that,
individually or in the aggregate, the noncompliance therewith would not have a
Material Adverse Effect. The Company and each of its subsidiaries have all
franchises, permits, licenses, consents and other governmental or regulatory
authorizations and approvals necessary for the conduct of its business as now
being conducted by it unless the failure to possess such franchises, permits,
licenses, consents and other governmental or regulatory authorizations and
approvals, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
(o) Taxes. Except as set forth on Schedule 2.1(o) hereto, the
Company and each of the subsidiaries has accurately prepared and filed all
federal, state and other tax returns required by law to be filed by it, has paid
or made provisions for the payment of all taxes shown to be due and all
additional assessments, and adequate provisions have been and are reflected in
the financial statements of the Company and the subsidiaries for all current
taxes and other charges to which the Company or any subsidiary is subject and
which are not currently due and payable. Except as disclosed on Schedule 2.1(o)
hereto, none of the federal income tax returns of the Company or any subsidiary
have been audited by the Internal Revenue Service. The Company has no knowledge
of any additional assessments, adjustments or contingent tax liability (whether
federal or state) of any nature whatsoever, whether pending or threatened
against the Company or any subsidiary for any period, nor of any basis for any
such assessment, adjustment or contingency.
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(p) Certain Fees. The Company has not employed any broker or finder
or incurred any liability for any brokerage or investment banking fees,
commissions, finders' or structuring fees, financial advisory fees or other
similar fees in connection with the Transaction Documents, except as set forth
on Schedule 2.1(p) hereto.
(q) Disclosure. To the best of the Company's knowledge, neither this
Agreement or the Schedules hereto nor any other documents, certificates or
instruments furnished to the Purchasers by or on behalf of the Company or any
subsidiary in connection with the transactions contemplated by this Agreement or
any of the other Transaction Document contain or will contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made herein or therein, in the light of the circumstances
under which they were made herein or therein, not misleading.
(r) Operation of Business. The Company and each of the subsidiaries
owns or possesses or have sufficient rights to all patents, trademarks, domain
names (whether or not registered) and any patentable improvements or
copyrightable derivative works thereof, websites and intellectual property
rights relating thereto, service marks, trade names, copyrights, licenses and
authorizations, hereto, and all rights with respect to the foregoing, which are
necessary in any material respect for the conduct of its business as now
conducted without any conflict with the rights of others except as disclosed on
Schedule 2.1(r).
(s) Environmental Compliance. Except as disclosed on Schedule 2.1(s)
hereto, the Company and each of its subsidiaries have obtained all material
approvals, authorization, certificates, consents, licenses, orders and permits
or other similar authorizations of all governmental authorities, or from any
other person, that are required under any Environmental Laws. Schedule 2.1(s)
hereto sets forth all material permits, licenses and other authorizations issued
under any Environmental Laws to the Company or its subsidiaries. "Environmental
Laws" shall mean all applicable laws relating to the protection of the
environment including, without limitation, all requirements pertaining to
reporting, licensing, permitting, controlling, investigating or remediating
emissions, discharges, releases or threatened releases of hazardous substances,
chemical substances, pollutants, contaminants or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
material or wastes, whether solid, liquid or gaseous in nature. Except as set
forth on Schedule 2.1(s) hereto, the Company has all necessary governmental
approvals required under all Environmental Laws and used in its business or in
the business of any of its subsidiaries. The Company and each of its
subsidiaries are also in compliance with all other limitations, restrictions,
conditions, standards, requirements, schedules and timetables required or
imposed under all Environmental Laws. Except for such instances as would not
individually or in the aggregate have a Material Adverse Effect, there are no
past or present events, conditions, circumstances, incidents, actions or
omissions relating to or in any way affecting the Company or its subsidiaries
that violate or may violate any Environmental Law after the Closing or that may
give rise to any environmental liability, or otherwise form the basis of any
claim, action, demand, suit, proceeding, hearing, study or investigation (i)
under any Environmental Law, or (ii) based on or related to the manufacture,
processing, distribution, use, treatment, storage (including without limitation
underground storage tanks), disposal, transport
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or handling, or the emission, discharge, release or threatened release of any
hazardous substance. "Environmental Liabilities" means all liabilities of a
person (whether such liabilities are owed by such person to governmental
authorities, third parties or otherwise) whether currently in existence or
arising hereafter which arise under or relate to any Environmental Law.
(t) Books and Record Internal Accounting Controls. The records and
documents of the Company and its subsidiaries accurately reflect in all material
respects the information relating to the business of the Company and the
subsidiaries, the location and collection of their assets, and the nature of all
transactions giving rise to the obligations or accounts receivable of the
Company or any subsidiary. The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient, in the judgment of the
Company's board of directors, to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate actions is taken
with respect to any differences.
(u) Intentionally Omitted.
(v) Transactions with Affiliates. Except as disclosed in the SEC
Documents or set forth on Schedule 2.1(v) hereto, there are no loans, leases,
agreements, contracts, royalty agreements, management contracts or arrangements
or other continuing transactions exceeding $100,000 between (a) the Company, any
subsidiary or any of their respective customers or suppliers on the one hand,
and (b) on the other hand, any officer or director of the Company, or any of its
subsidiaries, or any member of the immediate family of such officer or director
or any corporation or other entity controlled by such officer or director, or a
member of the immediate family of such officer or director.
(w) Securities Act of 1933. The Company has complied and will comply
with all applicable federal and state securities laws in connection with the
offer, issuance and sale of the Common Shares hereunder. Neither the Company nor
anyone acting on its behalf, directly or indirectly, has or will sell, offer to
sell or solicit offers to buy any of the Common Shares, or similar securities
to, or solicit offers with respect thereto from, or enter into any preliminary
conversations or negotiations relating thereto with, any person, or has taken or
will take any action so as to bring the issuance and sale of any of the Common
Shares under the registration provisions of the Securities Act and any other
applicable federal and state securities laws. Neither the Company nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with any of the Common
Shares.
(x) Governmental Approvals. Except as set forth on Schedule 2.1(x)
hereto, except for the listing of the Common Shares on the Nasdaq SmallCap
Market and except for the filing of any notice prior or subsequent to the
Closing that may be required under applicable state or federal securities laws
(which, if required, shall be filed on a timely basis), including, but not
limited to, the filing of a registration statement or statements pursuant to the
Registration Rights
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Agreement, no authorization, consent, approval, license exemption of, filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for, or in connection with, the execution or delivery of the Common Shares, or
for the performance by the Company of its obligations under the Transaction
Documents.
(y) Absence of Certain Developments. Except as provided in the SEC
Documents and Schedule 2.1(y) hereto, since March 31, 2000, neither the Company
nor any subsidiary has:
(i) issued any stock, bonds or other corporate securities or any
rights, options or warrants with respect thereto;
(ii) borrowed any amount or incurred or become subject to any
liabilities (absolute or contingent) except current liabilities incurred in the
ordinary course of business which are comparable in nature and amount to the
current liabilities incurred in the ordinary course of business during the
comparable portion of its prior fiscal year, as adjusted to reflect the current
nature and volume of the Company's or such subsidiary's business;
(iii) discharged or satisfied any lien or encumbrance or paid
any obligation or liability (absolute or contingent), other than current
liabilities paid in the ordinary course of business;
(iv) declared or made any payment or distribution of cash or
other property to stockholders with respect to its stock, or purchased or
redeemed, or made any agreements so to purchase or redeem, any shares of its
capital stock;
(v) sold, assigned or transferred any other tangible assets, or
canceled any debts or claims, except in the ordinary course of business;
(vi) sold, assigned or transferred any patent rights,
trademarks, trade names, copyrights, trade secrets or other intangible assets or
intellectual property rights, or disclosed any proprietary confidential
information to any person except to customers in the ordinary course of business
or to the Purchasers or their representatives;
(vii) suffered any substantial losses or waived any rights of
material value, whether or not in the ordinary course of business, or suffered
the loss of any material amount of prospective business;
(viii) made any changes in employee compensation except in the
ordinary course of business and consistent with past practices;
(ix) made capital expenditures or commitments therefor that
aggregate in excess of $100,000 except for the purchase of kiosks;
(x) entered into any other transaction other than in the
ordinary course of business;
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(xi) made charitable contributions or pledges in excess of
$25,000;
(xii) suffered any material damage, destruction or casualty
loss, whether or not covered by insurance;
(xiii) experienced any material problems with labor or
management in connection with the terms and conditions of their employment;
(xiv) effected any two (2) or more events of the foregoing kind
which in the aggregate would be material to the Company or its subsidiaries; or
(xv) entered into an agreement, written or otherwise, to take
any of the foregoing actions.
(z) Use of Proceeds. The net proceeds from the sale of the Common
Shares will be used by the Company for working capital and general corporate
purposes and for the expenses of the transactions contemplated hereby.
(aa) Public Utility Holding Company Act and Investment Company Act
Status. The Company is not a "holding company" or a "public utility company" as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended. The Company is not, and as a result of and immediately upon any Closing
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
(bb) ERISA. No liability to the Pension Benefit Guaranty Corporation
has been incurred with respect to any Plan by the Company or any of its
subsidiaries which is or would be materially adverse to the Company and its
subsidiaries. The execution, delivery and performance of this Agreement and the
other Transaction Documents and the issue and sale of the Common Shares will not
involve any transaction which is subject to the prohibitions of Section 406 of
ERISA or in connection with which a tax could be imposed pursuant to Section
4975 of the Internal Revenue Code of 1986, as amended, provided that, if any of
the Purchasers, or any person or entity that owns a beneficial interest in any
of the Purchasers, is an "employee pension benefit plan" (within the meaning of
Section 3(2) of ERISA) with respect to which the Company is a "party in
interest" (within the meaning of Section 3(14) of ERISA), the requirements of
Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this
Section 2.1 (bb), the term "Plan" shall mean an "employee pension benefit plan"
(as defined in Section 3 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by the Company or
any subsidiary or by any trade or business, whether or not incorporated, which,
together with the Company or any subsidiary, is under common control, as
described in Section 414(b) or (c) of the Code.
Section 2.2 Representations and Warranties of the Purchasers. Each of
the Purchasers hereby makes the following representations and warranties to the
Company with respect solely to itself and not with respect to any other
Purchaser:
(a) Organization and Standing of the Purchasers. If the Purchaser is
an entity, such Purchaser is a corporation, limited liability company or
partnership duly incorporated or
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organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, and such Purchaser was not
formed for the specific purpose of acquiring the Common Shares.
(b) Authorization and Power. The Purchaser has the requisite power
and authority to enter into and perform this Agreement, the Registration Rights
Agreement and the Escrow Agreement and to purchase the Common Shares being sold
to it hereunder. The execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the Escrow Agreement and the documents
contemplated hereby by such Purchaser and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate, limited liability company or partnership action, as
applicable (if the Purchaser is an entity), and no further consent or
authorization of such Purchaser or its Board of Directors, stockholders,
members, managers or partners, as the case may be, is required. Each of this
Agreement, the Registration Rights Agreement and the Escrow Agreement will have
been duly executed and delivered by the Purchasers on the Closing Date. Each of
this Agreement, the Registration Rights Agreement and the Escrow Agreement
constitutes, or shall constitute when executed and delivered, a valid and
binding obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, or similar laws relating to, or affecting generally the
enforcement of, creditors' rights or remedies or by other equitable principles
of general application.
(c) No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Escrow Agreement and the
documents contemplated hereby and thereby and the consummation by such Purchaser
of the transactions contemplated hereby and thereby or relating hereto do not
and will not (i) result in a violation of such Purchaser's charter documents,
bylaws, partnership agreement, operating agreement or other organizational
documents, or (ii) conflict with, constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of any
agreement, indenture or instrument to which such Purchaser is a party, or result
in a violation of any law, rule, or regulation, or any order, judgment or decree
of any court or governmental agency applicable to such Purchaser or its
properties (except for such conflicts, defaults and violations as would not,
individually or in the aggregate, have a material adverse effect on such
Purchaser). Such Purchaser is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement, the Registration Rights Agreement, the Escrow Agreement or
the documents contemplated hereby and thereby or to purchase the Common Shares
in accordance with the terms hereof, provided that for purposes of the
representation made in this sentence, such Purchaser is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein.
(d) Acquisition for Investment. Such Purchaser is purchasing the
Common Shares solely for its own account for the purpose of investment and not
with a view to or for sale in connection with distribution. Such Purchaser does
not have a present intention to sell the Common Shares, nor a present
arrangement (whether or not legally binding) or intention to effect any
distribution of the Common Shares to or through any person or entity; provided,
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however, that by making the representations herein and subject to Section 2.2(f)
and Section 5.2 below, such Purchaser does not agree to hold the Common Shares
for any minimum or other specific term and reserves the right to dispose of the
Common Shares at any time in accordance with federal securities laws applicable
to such disposition. Such Purchaser acknowledges that it is able to bear the
financial risks associated with an investment in the Common Shares and that it
has been given full access to such records of the Company and the subsidiaries
and to the officers of the Company and the subsidiaries as it has deemed
necessary or appropriate to conduct its due diligence investigation.
(e) Accredited Purchasers. Such Purchaser is an "accredited
investor" as defined in Regulation D promulgated under the Securities Act and is
a resident of the jurisdiction indicated on Exhibit A hereto. Purchaser has such
knowledge and experience in financial and business matters that Purchaser is
capable of evaluating the merits and risks of Purchaser's investment in the
Company.
(f) Rule 144. Such Purchaser understands that the Common Shares must
be held indefinitely unless such Shares are registered under the Securities Act
or an exemption from registration is available. Such Purchaser acknowledges that
such Purchaser is familiar with Rule 144 of the rules and regulations of the
Commission, as amended, promulgated pursuant to the Securities Act ("Rule 144"),
and that such Purchaser has been advised that Rule 144 permits resales only
under certain circumstances. Such Purchaser understands that to the extent that
Rule 144 is not available, such Purchaser will be unable to sell any Shares
without either registration under the Securities Act or the existence of another
exemption from such registration requirement.
(g) No Broker-Dealer Affiliation. None of the Purchasers is a
broker-dealer registered with the Commission or an affiliate (as such term is
defined in Rule 144(a) promulgated under the Securities Act) of a broker-dealer
registered with the Commission.
(h) General. Such Purchaser understands that the Common Shares are
being offered and sold in reliance on a transactional exemption from the
registration requirement of federal and state securities laws and the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of such Purchaser set forth
herein in order to determine the applicability of such exemptions and the
suitability of such Purchaser to acquire the Common Shares. Purchaser
understands that no United States federal or state agency or any government or
governmental agency has passed upon or made any recommendation or endorsement of
the Common Shares.
(i) Opportunities for Additional Information. Such Purchaser has had
full opportunity to review, and has reviewed to such Purchaser's full
satisfaction, the SEC Documents. Such Purchaser acknowledges that such Purchaser
has had the opportunity to ask questions of and receive answers from, or obtain
additional information from, the executive officers of the Company concerning
the financial and other affairs of the Company, and to the extent deemed
necessary in light of such Purchaser's personal knowledge of the Company's
affairs, such Purchaser has asked such questions and received answers to the
full satisfaction of such Purchaser, and such Purchaser desires to invest in the
Company.
-12-
(j) No General Solicitation. Such Purchaser acknowledges that the
Common Shares were not offered to such Purchaser by means of any form of general
or public solicitation or general advertising, or publicly disseminated
advertisements or sales literature, including (i) any advertisement, article,
notice or other communication published in any newspaper, magazine, or similar
media, or broadcast over television or radio, or (ii) any seminar or meeting to
which such Purchaser was invited by any of the foregoing means of
communications.
(k) No Commissions or Similar Fees. In connection with the purchase
of the Common Shares by such Purchaser, such Purchaser has not and will not pay,
and has no knowledge of the payment of, any commission or other direct or
indirect remuneration to any person or entity for soliciting or otherwise
coordinating the purchase of such securities, except to such persons or entities
as are duly licensed and/or registered to engage in securities offering and
selling activities (or are exempt from such licensing and/or registration
requirements) under applicable federal laws and the laws of the state(s) in
which such activities have taken place in connection with the transaction
contemplated by this Agreement.
(l) Reliance by the Company. Purchaser understands fully the meaning
and legal consequences of the provisions herein, and agrees to indemnify and
hold harmless the Company, and each other person, if any subject to liability
because of such person's connection with the Company, against all actions,
claims, losses, damages and liabilities arising out of or based upon any false
representation or warranty herein, or any breach by the undersigned of any
provision hereof, and to reimburse the Company and each such other person for
any legal and other expenses incurred by the Company and each such other person
in connection with investigating, defending, and, if appropriate, settling any
action, claim, loss, damage or liability.
ARTICLE III
COVENANTS
The Company covenants with each of the Purchasers, which covenants are
for the benefit of each of the Purchasers and their permitted assignees (as
defined herein) as follows:
Section 3.1 Securities Compliance.
(a) The Company shall notify the Commission in accordance with their
rules and regulations of the transactions contemplated by any of the Transaction
Documents, as may be required, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Common Shares to the
Purchasers or subsequent holders.
(b) The Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
such Purchasers set forth herein in order to determine the applicability of
federal and state securities laws exemptions and the suitability of such
Purchasers to acquire the Common Shares.
Section 3.2 Registration and Listing. The Company will cause a
registration statement registering the Common Shares to be filed no later than
forty-five (45) days after the Closing Date and use its best efforts to cause
the registration statement to be declared effective within (i)
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ninety (90) days after the Closing Date or (ii) five (5) business days of the
date on which the Commission informs the Company that it may request the
acceleration of the effectiveness of the registration statement, whichever date
is the earlier (the "Effectiveness Date"), will comply in all respects with its
reporting and filing obligations under the Securities and Exchange Act of 1934
(the "Exchange Act"), will comply with all requirements related to any
registration statement filed pursuant to this Agreement or the Registration
Rights Agreement, and will not take any action or file any document (whether or
not permitted by the Securities Act or the rules promulgated thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under the Exchange Act or Securities Act, except as
permitted herein. The Company will take all commercially reasonable action
necessary to continue the listing or trading of its Common Stock on the Nasdaq
SmallCap Market.
Section 3.3 Intentionally Omitted.
Section 3.4 Compliance with Laws. The Company shall comply, and cause
each subsidiary to comply, with all applicable laws, rules, regulations and
orders, noncompliance with which could have a Material Adverse Effect.
Section 3.5 Keeping of Records and Books of Account. The Company shall
keep and cause each subsidiary to keep adequate records and books of account, in
which complete entries will be made in accordance with GAAP consistently
applied, reflecting in all material respects all financial transactions of the
Company and its subsidiaries, and in which, for each fiscal year, all proper
reserves for depreciation, depletion, obsolescence, amortization, taxes, bad
debts and other purposes in connection with its business shall be made.
Section 3.6 Other Agreements. The Company shall not enter into any
agreement in which the terms of such agreement would, in any material respect,
restrict or impair the right or ability to perform of the Company or any
subsidiary under any Transaction Document.
Section 3.7 Transfer Agent Instructions. The Company shall issue
irrevocable instructions to its transfer agent, and any subsequent transfer
agent, to issue certificates, registered in the name of each Purchaser or its
respective nominee(s), for the Common Shares in such amounts as specified from
time to time by each Purchaser to the Company upon issuance of the Common Shares
in the form of Exhibit D attached hereto (the "Irrevocable Transfer Agent
Instructions"). Prior to registration of the Common Shares under the Securities
Act, all such certificates shall bear the restrictive legend specified in
Section 6.1 of this Agreement. The Company warrants that no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section 3.7
will be given by the Company to its transfer agent and that the Common Shares
shall otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement and the Registration Rights
Agreement. Nothing in this Section 3.7 shall affect in any way each Purchaser's
obligations and agreements set forth in Section 6.1 to comply with all
applicable prospectus delivery requirements, if any, upon resale of the Common
Shares. If a Purchaser provides the Company with an opinion of counsel, in a
form reasonably acceptable to the Company and its counsel, to the effect that a
public sale, assignment or transfer of the Common Shares may be made without
registration under the Securities Act or the Purchaser provides the Company with
reasonable assurances that the Common Shares can be sold pursuant to Rule 144
without any restriction as to the number of
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securities acquired as of a particular date that can then be immediately sold,
the Company shall permit the transfer, and, in the case of a transfer of the
Common Shares, promptly instruct its transfer agent to issue one (1) or more
certificates in such name and in such denominations as specified by such
Purchaser and without any restrictive legend. The Company acknowledges that a
breach by it of its obligations under this Section 3.7 will cause irreparable
harm to the Purchasers by vitiating the intent and purpose of the transaction
contemplated hereby. Accordingly, the Company acknowledges that the remedy at
law for a breach of its obligations under this Section 3.7 will be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section 3.7, that the Purchasers shall be entitled, in
addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
ARTICLE IV
CONDITIONS
Section 4.1 Conditions Precedent to the Obligation of the Company to
Sell the Common Shares at Closing. The obligation hereunder of the Company to
issue and sell the Common Shares to the Purchasers at the Closing is subject to
the satisfaction or waiver, at or before the Closing, of each of the conditions
set forth below. These conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.
(a) Accuracy of Each Purchaser's Representations and Warranties. The
representations and warranties of each Purchaser shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time, except for representations and warranties that are
expressly made as of a particular date, which shall be true and correct in all
material respects as of such date.
(b) Performance by the Purchasers. Each Purchaser shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Purchaser at or prior to the Closing, including having
paid by wire transfer of funds into escrow in accordance with this Agreement and
the Escrow Agreement the Purchase Price set forth opposite such Purchaser's name
on Exhibit A under the heading "Purchase Prices"; such Purchaser shall have
executed and delivered this Agreement, the Registration Rights Agreement and the
Escrow Agreement to the Escrow Agent on behalf of the Company. The Escrow Agent
shall have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement and the Escrow
Agreement to be performed, satisfied or complied with by the Escrow Agent at or
prior to the Closing, including delivery of all of the Purchaser's Closing
Documents to the Company.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
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Section 4.2 Conditions Precedent to the Obligation of the Purchasers to
Purchase the Common Shares at the Closing. The obligation hereunder of each
Purchaser to acquire and pay for the applicable Common Shares at the Closing is
subject to the satisfaction or waiver, at or before the Closing, of each of the
conditions set forth below. These conditions are for each Purchaser's sole
benefit and may be waived by such Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. Each
of the representations and warranties of the Company shall be true and correct
in all material respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a particular date), which shall be true and correct in all material
respects as of such date.
(b) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.
(c) No Suspension, Etc. From the date hereof to the Closing Date,
trading in the Company's Common Stock shall not have been suspended by the
Commission, and, at any time prior to the Closing Date, trading in securities
generally as reported by Bloomberg Financial Markets ("Bloomberg") shall not
have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by Bloomberg, or on the New
York Stock Exchange, nor shall a banking moratorium have been declared either by
the United States, or New York State authorities, nor shall there have occurred
any material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on, or any
material adverse change in any financial market which, in each case, in the
judgment of such Purchaser, makes it impracticable or inadvisable to purchase
the Common Shares.
(d) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(e) No Proceedings or Litigation. No action, suit or proceeding
before any arbitrator or any governmental authority shall have been commenced,
and no investigation by any governmental authority shall have been threatened,
against the Company, or any of the officers, directors or affiliates of the
Company seeking to restrain, prevent or change the transactions contemplated by
this Agreement, or seeking damages in connection with such transactions.
(f) Opinion of Counsel, Etc. At the Closing, the Purchasers shall
have received an opinion of counsel to the Company, dated the date of such
Closing, in the form of Exhibit E hereto, and the such other certificates and
documents as the Purchaser or its counsel shall reasonably require incident to
the Closing.
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(g) Registration Rights Agreement. Prior to the Closing, the Company
shall have executed and delivered the Registration Rights Agreement to the
Escrow Agent on behalf of each Purchaser.
(h) Stock Certificates. The Company shall have executed and
delivered to the Escrow Agent on behalf of each Purchaser, the certificates (in
such denominations as such Purchaser shall request) for the Common Shares being
purchased by such Purchaser at the Closing.
(i) Resolutions. Prior to the Closing, the Board of Directors of the
Company shall have adopted resolutions consistent with Section 2.1(b) above in a
form reasonably acceptable to each Purchaser (the "Resolutions").
(j) Transfer Agent Instructions. As of the Closing Date, the
Irrevocable Transfer Agent Instructions, in the form of Exhibit D attached
hereto, shall have been delivered to and acknowledged in writing by the
Company's transfer agent. (k) Secretary's Certificate. At the Closing, the
Company shall have delivered to the Escrow Agent on behalf of each Purchaser a
secretary's certificate, dated as of such Closing Date, as to (i) the
Resolutions, (ii) the Articles and (iii) the Bylaws, each as in effect at the
Closing, and (iv) the authority and incumbency of the officers of the Company
executing the Transaction Documents and any other documents required to be
executed or delivered in connection therewith.
(l) Escrow Agreement. Prior to the Closing, the Company shall have
executed and delivered the Escrow Agreement to the Escrow Agent on behalf of
each Purchaser.
(m) Officer's Certificate. At the Closing, the Company shall have
delivered to such Purchaser a certificate of an executive officer of the
Company, dated as of the Closing Date, confirming the accuracy of the Company's
representations, warranties and covenants as of the Closing Date and confirming
the compliance by the Company with the conditions precedent set forth in this
Section 4.2 as of the Closing Date.
ARTICLE V
REGISTRATION RIGHTS; TRANSFER AGREEMENT; VOTING
Section 5.1 Registration Rights. At the Closing, the Company and each
of the Purchasers shall enter into a Registration Rights Agreement in the form
attached hereto as Exhibit C (the "Registration Rights Agreement").
Section 5.2 Transfer Restrictions. Each of the Purchasers agrees to be
bound by the following terms and conditions restricting the transfer of Common
Shares. The Purchasers shall not sell or otherwise transfer any Common Shares on
or before the 120th day after the Closing Date. After the 120th day, the
Purchasers shall not sell or otherwise transfer any Common Shares except for
Common Shares which become salable under the following schedule: (a) on the
121st day after the Closing Date, 25% of the original number of Common Shares
purchased by each Purchaser will become salable; and (b) on the 151st day after
the Closing Date and on every 30th
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day thereafter, 6.25% of the original number of Common Shares purchased by each
Purchaser will become salable.
Section 5.3 Agreement to Vote. For so long as the Company has not
committed a material breach of this Agreement and the Exhibits annexed hereto,
and this Agreement has not been terminated, the Purchasers agree to vote all
Common Shares beneficially held by them in favor of all nominees to the
Company's board of directors who are nominated by the then current Board of
Directors of the Company.
ARTICLE VI
STOCK CERTIFICATE LEGEND
Section 6.1 Legend. Each certificate representing the Common Shares, as
applicable and appropriate, shall be stamped or otherwise imprinted with a
legend in substantially the following form (in addition to any legend required
by applicable federal, provincial or state securities or "blue sky" laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE
SECURITIES LAWS OR OBJECTSOFT CORPORATION (THE "COMPANY") SHALL HAVE
RECEIVED AN OPINION IN FORM, SCOPE AND SUBSTANCE REASONABLY ACCEPTABLE
TO THE COMPANY, OF COUNSEL, WHO IS REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES
LAWS IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
VOTING, TRANSFER AND OTHER AGREEMENTS SET FORTH IN A COMMON STOCK
PURCHASE AGREEMENT DATED AS OF JUNE 7, 2000 AMONG THE COMPANY AND
CERTAIN PURCHASERS.
The Company agrees to reissue certificates representing the Common
Shares, without the legend set forth above, if at such time, prior to making any
transfer of any Shares the Purchaser thereof shall give written notice to the
Company describing the manner and terms of such transfer and removal as the
Company may reasonably request and such holder otherwise complies with the terms
of the Transaction Documents (including Section 5.2 hereof). Provided the
aforementioned written notice of intended transfer is given and the transfer
complies with Section 5.2 hereof, the legend set forth above shall be removed
and the Company shall issue a certificate without such legend to the holder of
any Common Shares upon which it is stamped if, unless otherwise required by
federal or state securities laws, (a) the sale of such Common Shares
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is registered under the Securities Act (including registration pursuant to Rule
416 thereunder) as contemplated by the Registration Rights Agreement, (b) such
holder provides the Company with an opinion of counsel, in form, substance and
scope customary for opinions of counsel in comparable transactions, to the
effect that a sale or transfer of such Common Shares may be made without
registration under the Securities Act; or (c) such holder provides the Company
with reasonable assurances that such Common Shares can be sold under Rule
144(k). Each Purchaser agrees that it will only sell Common Shares, including
those represented by a certificate(s) from which the legend has been removed,
pursuant to an effective registration statement, under an exemption from the
registration requirements of the Securities Act or in accordance with Rule
144(k). In the event the above legend is removed from any Common Shares and the
effectiveness of a registration statement covering such Common Shares is
suspended or the Company determines that a supplement or amendment thereto is
required by applicable securities laws, then upon reasonable advance notice to
such Purchaser the Company may require that the above legend be placed on any
such Common Shares that cannot then be sold pursuant to an effective
registration statement, under an exemption from the registration requirements of
the Securities Act or under Rule 144(k) and such Purchaser shall cooperate in
the replacement of such legend. Such legend shall thereafter be removed,
provided the aforementioned written notice of transfer is given and Section 5.2
is complied with, when such Common Shares may again be sold pursuant to an
effective registration statement, under an exemption from the registration
requirements of the Securities Act or under Rule 144(k). The restrictions on
transfer contained in Section 6.1 shall be in addition to, and not by way of
limitation of, any other restrictions on transfer contained in any other section
of this Agreement.
ARTICLE VII
TERMINATION
Section 7.1 Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Closing by the mutual written consent of the
Company and the Purchasers.
Section 7.2 Other Termination. This Agreement may be terminated by the
action of the Board of Directors of the Company or by any one or more of the
Purchasers at any time if the Closing shall not have been consummated by the
Closing Date, as long as the failure to so consummate is not the fault of the
terminating party.
Section 7.3 Effect of Termination. In the event of termination by the
Company or any one or more of the Purchasers of this Agreement or any part
hereof, written notice thereof shall forthwith be given to the other party and
the transactions contemplated by this Agreement and the Registration Rights
Agreement shall be terminated without further action by either party. If this
Agreement is terminated as provided in Section 7.1 or 7.2 herein, this Agreement
shall become void and of no further force and effect, except for Sections 9.1
and 9.2, and Article VIII herein. Nothing in this Section 7.3 shall be deemed to
release the Company or any Purchaser from any liability for any breach under
this Agreement or the Registration Rights Agreement, or to impair the rights of
the Company and the Purchasers to compel specific performance by the other party
of its obligations under this Agreement and the Registration Rights Agreement.
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ARTICLE VIII
INDEMNIFICATION
Section 8.1 General Indemnity. The Company agrees to indemnify and hold
harmless the Purchasers (and their respective directors, officers, affiliates,
agents, successors and assigns) from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorney's fees, charges and disbursements) incurred by
the Purchasers as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Company herein. Each
Purchaser severally but not jointly agrees to indemnify and hold harmless the
Company and its directors, officers, affiliates, agents, successors and assigns
from and against any and all losses, liabilities, deficiencies, costs, damages
and expenses (including, without limitation, reasonable attorneys fees, charges
and disbursements) incurred by the Company as result of any inaccuracy in or
breach of the representations, warranties or covenants made by such Purchaser
herein.
Section 8.2 Indemnification Procedure. Any party entitled to
indemnification under this Article VIII (an "indemnified party") will give
written notice to the indemnifying party of any matters giving rise to a claim
for indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VIII except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of the indemnified party a conflict of interest between it
and the indemnifying party may exist with respect of such action, proceeding or
claim, to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. In the event that the indemnifying party advises an
indemnified party that it will contest such a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or
pay such action or claim. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The indemnifying
party shall keep the indemnified party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. The indemnifying party shall not be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent. Notwithstanding anything in this Article VIII to the
contrary, the indemnifying party shall not, without the indemnified party's
prior written consent, settle or compromise any claim or consent
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to entry of any judgment in respect thereof which imposes any future obligation
on the indemnified party or which does not include, as an unconditional term
thereof, the giving by the claimant or the plaintiff to the indemnified party of
a release from all liability in respect of such claim. The indemnification
required by this Article VIII shall be made by periodic payments of the amount
thereof during the course of investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred, so long as the
indemnified party irrevocably agrees to refund such moneys if it is ultimately
determined by a court of competent jurisdiction that such party was not entitled
to indemnification. The indemnity agreements contained herein shall be in
addition to (a) any cause of action or similar rights of the indemnified party
against the indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject to pursuant to the law.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Fees and Expenses. Each party shall pay the fees and
expenses of its advisors, counsel, accountants and other experts, if any, and
all other expenses, incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement, except that
the Company shall (a) pay on the Closing Date to Intercoastal Financial Services
Corp. (the "Placement Agent") six percent of the number of shares of Common
Stock issued to the Purchasers on such Closing Date on the same terms as the
Purchasers (including, without limitation, the agreements set forth in Section
5.2 hereof), (b) pay on the Closing Date to the Placement Agent in cash the
value of two percent of the Purchase Price paid on the Closing Date, and (c) pay
on the Closing Date to the Placement Agent the reasonable attorney's fees and
expenses actually incurred by the Placement Agent, in an amount not to exceed
$5,000, in connection with the preparation, negotiation, execution and delivery
of this Agreement, the other Transaction Documents and the consummation of the
transactions contemplated hereunder and thereunder. The Company shall pay all
stamp or other similar taxes and duties levied in connection with issuance of
the Common Shares pursuant hereto.
Section 9.2 Specific Enforcement, Consent to Jurisdiction.
(a) The remedies provided in this Agreement and the Registration
Rights Agreement shall be cumulative and in addition to all other remedies
available under this Agreement and the Registration Rights Agreement, at law or
in equity (including a decree of specific performance and/or other injunctive
relief), no remedy contained herein shall be deemed a waiver of compliance with
the provisions giving rise to such remedy and nothing herein shall limit a
Purchaser's right to pursue actual damages for any failure by the Company to
comply with the terms of this Agreement or the Registration Rights Agreement.
Amounts set forth or provided for herein and therein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be
received by the Purchasers thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder and thereunder will cause irreparable harm to the holders of the
Common Shares that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, the holders of the Common Shares shall be
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entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.
(b) Each of the Company and the Purchasers (i) hereby irrevocably
submits to the jurisdiction of the United States District Court sitting in the
Southern District of New York and the courts of the State of New York located in
New York county for the purposes of any suit, action or proceeding arising out
of or relating to this Agreement or any of the other Transaction Documents or
the transactions contemplated hereunder or thereunder and (ii) hereby waives,
and agrees not to assert in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the
Purchasers consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
Section 9.2 shall affect or limit any right to serve process in any other manner
permitted by law.
Section 9.3 Entire Agreement; Amendment. This Agreement contains the
entire understanding and agreement of the parties with respect to the matters
covered hereby and, except as specifically set forth herein or in the
Transaction Documents, neither the Company nor any of the Purchasers makes any
representations, warranty, covenant or undertaking with respect to such matters,
and they supersede all prior understandings and agreements with respect to said
subject matter, all of which are merged herein. No provision of this Agreement
may be waived or amended, except that any provision of this Agreement may be
waived or amended by a written instrument signed by the Company and the
Purchasers holding at least two-thirds (2/3) of the Common Shares then
outstanding which continue to be held by the Purchasers, and any provision of
this Agreement may be waived other than by a written instrument signed by the
party against whom enforcement of any such amendment or waiver is sought. No
such amendment shall be effective to the extent that it applies to less than all
of the holders of the Common Shares then outstanding which continue to be held
by the Purchasers. No consideration shall be offered or paid to any person to
amend or consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration is also offered to all of
the parties to the Transaction Documents or holders of Common Shares, as the
case may be.
Section 9.4 Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer back
received), telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company: ObjectSoft Corporation
-▇▇-
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ III
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
The Chrysler Building
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Purchaser: At the address of such Purchaser as set
forth on Exhibit A to this Agreement, with
copies as specified in writing by such
Purchaser:
Any party hereto may from time to time change its address for notices
by giving at least ten (10) days written notice of such changed address to the
other party hereto.
Section 9.5 Waivers. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
Section 9.6 Headings. The article, section and subsection headings in
this Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
Section 9.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.
After each Closing, the assignment by a party to this Agreement of any rights
hereunder shall not affect the obligations of such party under this Agreement.
Section 9.8 No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 9.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the choice of law provisions. This Agreement shall not be
interpreted or construed with any presumption against the party causing this
Agreement to be drafted.
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Section 9.10 Survival. The representations and warranties of the
Company and the Purchasers contained in Article II, with the exception of
Sections 2.1(o) and (s), shall survive the execution and delivery hereof and the
applicable Closing until the date two (2) years from the Closing Date. The
representations, warranties, agreements and covenants set forth in Articles I,
III, V, VII, VIII and IX, and Sections 2.1(o) and (s), of this Agreement shall
survive the execution and delivery hereof and any Closing hereunder
indefinitely.
Section 9.11 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. In the event any signature is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional executed signature pages to be physically
delivered to the other parties within five (5) days of the execution and
delivery hereof.
Section 9.12 Publicity. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of the Purchasers,
unless and until such disclosure is required by law or applicable regulation,
and then only to the extent of such requirement. In addition to the foregoing,
any disclosure of the name of the Purchasers shall be subject to review and
comment by the Purchasers prior to disclosure.
Section 9.13 Severability. The provisions of this Agreement and the
Registration Rights Agreement are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement or the Registration Rights
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement or the Registration
Rights Agreement shall be reformed and construed as if such invalid or illegal
or unenforceable provision, or part of such provision, had never been contained
herein, so that such provisions would be valid, legal and enforceable to the
maximum extent possible.
Section 9.14 Further Assurances. From and after the date of this
Agreement, upon the request of any Purchaser or the Company, each of the Company
and the Purchasers shall execute and deliver such instruments, documents and
other writings as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement, the
Common Shares and the Registration Rights Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorize officer as of the date first above
written.
OBJECTSOFT CORPORATION
By: /s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
Title: Chairman
INTERCOASTAL FINANCIAL SERVICES CORP.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇
Title: President
MOONLIGHT HOLDINGS LTD.
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
-----------------------------------
Name:Gretton Secretarial Services, Ltd.
Title: Director
SHORING INVESTMENTS LTD.
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: Turks & Crilos First Secretarial Ltd.
Title: Secretary
BUENA VISTA ENTERPRISES LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director Title: Director