EXHIBIT 4.1
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement"), dated as
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of August 31, 2000, among Dataware Technologies, Inc., a Delaware corporation
(the "Company"), and the investors signatory hereto (each such investor is a
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"Purchaser" and all such investors are, collectively, the "Purchasers").
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WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to the Purchasers and the Purchasers,
severally and not jointly, desire to purchase from the Company shares of the
Company's 8% Series C Convertible Preferred Stock, par value $.01 per share (the
"Preferred Stock"), which are convertible into shares of the Company's common
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stock, par value $.01 per share (the "Common Stock"), and certain other
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securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:
ARTICLE I
PURCHASE AND SALE
1.1 The Closing.
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(a) The Closing (i) Subject to the terms and conditions set forth in
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this Agreement the Company shall issue and sell to the Purchasers and the
Purchasers shall, severally and not jointly, purchase an aggregate of 350 shares
of Preferred Stock ("Shares") and certain Common Stock purchase warrants as
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described below in this Section for an aggregate purchase price of $3,220,000.
The closing of the purchase and sale of such securities (the "Closing") shall
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take place at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
("▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇"), ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
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immediately following the execution hereof or such later date as the parties
shall agree. The date of the Closing is hereinafter referred to as the "Closing
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Date."
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(ii) At the Closing, the parties shall deliver or shall cause to be
delivered the following: (A) the Company shall deliver (1) to each Purchaser (i)
an executed Escrow Agreement, in the form of Exhibit C (the "Escrow Agreement"),
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(ii) a stock certificate registered in the name of such Purchaser, representing
a number of Shares equal to the quotient obtained by dividing the aggregate
stated value indicated below such Purchaser's name on the signature page to this
Agreement by 10,000, (iii) a Common Stock purchase warrant, in the form of
Exhibit B, registered in the name of such Purchaser, pursuant to which such
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Purchaser shall have the right to acquire the number of shares of Common Stock
indicated below such Purchaser's name on the signature page to this Agreement
(each, a "Warrant" and, collectively, the "Warrants"), and (iv) the legal
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opinion of ▇▇▇▇▇▇ & Dodge LLP, outside counsel to the Company in mutually agreed
form, and (2) to the Escrow Agent under the Escrow Agreement, (i) an Executed
Escrow Agreement, and (ii) to hold and disburse in accordance with the terms of
the Escrow Agreement, stock certificates representing 2,142,395 shares of Common
Stock for issuance to the Purchasers
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upon conversion of the Shares; and (B) each Purchaser shall deliver to the
Company (i) the purchase price indicated below such Purchaser's name on the
signature page to this Agreement in United States dollars in immediately
available funds by wire transfer to an account designated in writing by the
Company for such purpose and (ii) a executed Escrow Agreement.
1.2 Terms of Preferred Stock. The Preferred Stock shall have the
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rights, preferences and privileges set forth in Exhibit A, and shall be
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incorporated into a Certificate of Designation (the "Certificate of
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Designation") to be filed prior to the Closing by the Company with the Secretary
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of State of Delaware, in form and substance mutually agreed to by the parties.
1.3 Certain Defined Terms. For purposes of this Agreement, "Original
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Issue Date" and "Trading Day" shall have the meanings set forth in Exhibit A and
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"Business Day" shall mean any day except Saturday, Sunday and any day which
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shall be a federal legal holiday or a day on which banking institutions in the
State of New York or the Commonwealth of Massachusetts are authorized or
required by law or other governmental action to close. A "Person" means an
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individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Company. The Company hereby
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makes the following representations and warranties to the Purchasers:
(a) Organization and Qualification. The Company is a corporation duly
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incorporated, validly existing and in good standing under the laws of the State
of Delaware, with the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted. The
Company has no subsidiaries other than as set forth in Schedule 2.1(a)
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(collectively, the "Subsidiaries"). Each of the Subsidiaries is an entity, duly
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incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted. Each
of the Company and the Subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, (x)
adversely affect the legality, validity or enforceability of the Securities (as
defined below) or any of this Agreement, the Escrow Agreement, the Certificate
of Designation, or the Warrants (collectively, the "Transaction Documents"), (y)
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have or result in a material adverse effect on the results of operations,
assets, prospects, or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (z) adversely impair the Company's ability to
perform in all material respects on a timely basis its obligations under any of
the Transaction Documents (any of (x), (y) or (z), a "Material Adverse Effect").
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(b) Authorization; Enforcement. The Company has the requisite
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corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company. This
Agreement has been, and when delivered or filed, as the case may be, each of the
other Transaction Documents will have been duly executed by the Company, and
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). Neither the Company nor any Subsidiary is in violation of
any of the provisions of its respective certificate or articles of
incorporation, by-laws or other organizational or charter documents.
(c) Capitalization. The number of authorized, issued and outstanding
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capital stock of the Company is set forth in Schedule 2.1(c). Except as
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disclosed in Schedule 2.1(c), the Company owns all of the capital stock of each
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Subsidiary. No shares of Common Stock are entitled to preemptive or similar
rights, nor is any holder of the securities of the Company or any Subsidiary
entitled to preemptive or similar rights arising out of any agreement or
understanding with the Company or any Subsidiary by virtue of any of the
Transaction Documents. Except as a result of the purchase and sale of the
Shares and the Warrants and except as disclosed in Schedule 2.1(c), there are no
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outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
The issue and sale of the Shares, Warrants or Underlying Shares (as hereinafter
defined) will not obligate the Company to issue shares of Common Stock or other
securities to any Person other than the Purchaser and will not result in a right
of any holder of Company's securities to adjust the exercise or conversion or
reset price under such securities.
(d) Issuance of the Shares and the Warrants. The Shares and the
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Warrants are duly authorized and, when issued and paid for in accordance with
the terms hereof, will be duly and validly issued, fully paid and nonassessable,
free and clear of all liens, encumbrances and rights of first refusal of any
kind (collectively, "Liens"). The Company has on the date hereof and will, at
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all times while the Shares and the Warrants are outstanding, maintain an
adequate reserve of duly authorized shares of Common Stock, reserved for
issuance to the holders of the Shares and the Warrants, to enable it to perform
its conversion, exercise and other obligations under this Agreement, the
Certificate of Designation and the Warrants. Such number of reserved and
available shares of Common Stock is not less than the sum of (i) 200% of the
number of shares of Common Stock which would be issuable upon conversion in full
of the Shares, assuming (x) such conversion occurred on the Original Issue Date
at the variable conversion price set forth in the Certificate of Designation,
(y) the Shares remain outstanding for three years and (z) all accrued dividends
are added to the Stated Value (as defined in the Certificate of
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Designation) and (ii) the number of shares of Common Stock issuable upon
exercise of the Warrants (such number of shares of Common Stock as contemplated
in clauses (i)-(ii), the "Initial Minimum"). All such authorized shares of
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Common Stock shall be duly reserved for issuance to the holders of the Shares
and the Warrants. The shares of Common Stock issuable upon conversion of the
Shares and upon exercise of the Warrants are collectively referred to herein as
the "Underlying Shares." The Shares, the Warrants and the Underlying Shares are
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collectively referred to herein as, the "Securities." When issued to the Escrow
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Agent in accordance with the Escrow Agreement and issued to the Purchasers in
accordance with the Certificate of Designation and the Warrants, the Underlying
Shares will be duly authorized, validly issued, fully paid and nonassessable,
free and clear of all Liens.
(e) No Conflicts. The execution, delivery and performance of the
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Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other charter documents (each as amended
through the date hereof), or (ii) subject to obtaining the Required Approvals
(as defined below), 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 (with
or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), as could not, individually or in the aggregate, have or
result in a Material Adverse Effect. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
authority, except for violations which, individually or in the aggregate, could
not have or result in a Material Adverse Effect.
(f) Filings, Consents and Approvals. Neither the Company nor any
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Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filing of the Certificate of
Designation with the Secretary of State of Delaware, (ii) the filings required
pursuant to Section 3.9, (iii) the filing with the Securities and Exchange
Commission (the "Commission") of a supplement describing this transaction (the
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"Prospectus Supplement") to the base prospectus included in the Company's
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registration statement on Form S-3 (Commission File No.333-37248) (the
"Underlying Shares Registration Statement"), which shall occur on the Closing
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Date, (iv) the application(s) to the Nasdaq National Market ("NASDAQ") for the
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listing of the Underlying Shares for trading on the NASDAQ (and with any other
national securities exchange or market on which the Common Stock is then
listed) in the time and manner required thereby, (v) applicable Blue Sky
filings, (vi) the consents listed in Schedule 2.1(f), each of which has been
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obtained, and (vii) in all other cases where the failure to obtain such consent,
waiver, authorization or order, or to give such notice or make such filing or
registration could not have or
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result in, individually or in the aggregate, a Material Adverse Effect
(collectively, the "Required Approvals").
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(g) Litigation; Proceedings. There is no action, suit, inquiry,
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notice of violation, proceeding or investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an "Action") which (i)
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adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, individually or in the aggregate, have or result in a
Material Adverse Effect. Except as described in the SEC Documents, (i) neither
the Company nor any Subsidiary, nor any director or officer thereof, is or has
been the subject of any Action involving (A) a claim of violation of or
liability under federal or state securities laws or (B) a claim of breach of
fiduciary duty; (ii) the Company does not have pending before the Commission any
request for confidential treatment of information and the Company has no
knowledge of any expected such request that would be made prior to the 90th day
after the Closing Date; and (iii) there has not been, and to the best of the
Company's knowledge there is not pending or contemplated, any investigation by
the Commission involving the Company or any current or former director or
officer of the Company.
(h) No Default or Violation. Except as set forth on Schedule 2.1(h),
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neither the Company nor any Subsidiary (i) is in default under or in violation
of (and no event has occurred which has not been waived which, with notice or
lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound, (ii) is in violation of
any order of any court, arbitrator or governmental body, or (iii) is in
violation of any statute, rule or regulation of any governmental authority, in
each case of clauses (i), (ii) or (iii) above, except as could not individually
or in the aggregate, have or result in a Material Adverse Effect.
(i) Registration Statement. The Registration Statement was declared
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effective by the Commission on May 26, 2000 and the Company has not received
notice that the Commission has issued or intends to issue a stop order with
respect to the Registration Statement or that the Commission otherwise has
suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened in writing to do so.
The Registration Statement (including the information or documents incorporated
by reference therein), as of the time it was declared effective, and any
amendments or supplements thereto, each as of the time of filing, conformed in
all respects to the requirements of the Securities Act and the published rules
and regulations of the Commission and did not contain any untrue statement of
material fact or omit to state any material fact required to be state therein or
necessary to make the statements therein not misleading; and on the Closing Date
the Registration Statement and the Prospectus Supplement will conform in all
respects to the requirements of the Securities Act and the published rules and
regulations of the Commission, and neither of such documents will include any
untrue statement of material fact or omit to state any material fact required to
be stated therein or necessary to make the statement therein not misleading.
The offer and sale of the Shares and the Warrants, and the offer of the
Underlying
5
Shares deemed to be made by virtue of the Shares and the Warrants, are covered
by the Registration Statement.
(j) SEC Documents; Financial Statements. The Company has filed all
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reports required to be filed by it under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to Section 13(a) or 15(d)
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thereof, for the two years preceding the date hereof (or such shorter period as
the Company was required by law to file such material) (the foregoing materials
being collectively referred to herein as the "SEC Documents" and, together with
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the Schedules to this Agreement, the "Disclosure Materials") on a timely basis
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or has received a valid extension of such time of filing and has filed any such
SEC Documents prior to the expiration of any such extension. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933 (the "Securities Act") and the
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Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. All material
agreements to which the Company is a party or to which the property or assets of
the Company are subject have been filed as exhibits to the SEC Documents as
required under the Exchange Act. The financial statements of the Company
included in the SEC Documents comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved ("GAAP"), except as
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may be otherwise specified in such financial statements or the notes thereto,
and fairly present in all material respects the financial position of the
Company and its consolidated subsidiaries as of and for 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, immaterial, year-end audit
adjustments. Since June 30, 2000, except as specifically disclosed in the SEC
Documents, (a) there has been no event, occurrence or development that has or
that could result in a Material Adverse Effect, (b) the Company has not incurred
any liabilities (contingent or otherwise) other than (x) liabilities incurred in
the ordinary course of business consistent with past practice and (y)
liabilities not required to be reflected in the Company's financial statements
pursuant to GAAP or otherwise required to be disclosed in filings made with the
Commission, (c) the Company has not altered its method of accounting or the
identity of its auditors and (d) the Company has not declared or made any
payment or distribution of cash or other property to its stockholders or
officers or directors (other than in compliance with existing Company stock
option and stock purchase plans) with respect to its capital stock, or purchased
or redeemed (or made any agreements to purchase or redeem) any shares of its
capital stock.
(k) Investment Company. The Company is not, and is not an Affiliate
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(as defined in Rule 405 under the Securities Act) of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(l) Certain Fees. No fees or commissions will be payable by the
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Company to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Purchasers shall have no obligation with
respect to any fees incurred by the Company or any other Person
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(other than the Purchasers, if the Purchasers have agreed in writing to pay such
fees) or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this Section that may be due in connection with
the transactions contemplated by this Agreement, except for fees payable to
Cardinal Capital Securities L.L.C. as the Purchasers' agent. Except for such
fees due to Cardinal Capital Securities L.L.C., the Company shall indemnify and
hold harmless the Purchasers, their employees, officers, directors, agents, and
partners, and their respective Affiliates, from and against all claims, losses,
damages, costs (including the costs of preparation and attorney's fees) and
expenses suffered in respect of any such claimed or existing fees incurred by
the Company or any other Person (other than the Purchasers, if the Purchasers
have agreed in writing to pay such fees), as such fees and expenses are
incurred.
(m) Seniority. No class of equity securities of the Company is senior
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to the Shares in right of payment, whether upon liquidation or dissolution, or
otherwise.
(n) Exclusivity. The Company shall not issue and sell the Shares to
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any Person other than the Purchasers without specific prior written consent of
the Purchasers.
(o) Listing and Maintenance Requirements. Except as set forth in the
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SEC Documents or on Schedule 2.1(o), the Company has not, in the two years
preceding the date hereof received notice (written or oral) from the NASDAQ, any
stock exchange, market or trading facility on which the Common Stock is or has
been listed (or on which it has been quoted) to the effect that the Company is
not in compliance with the listing or maintenance requirements of such exchange,
market or trading facility. The Company is, and has no reason to believe that
it will not in the foreseeable future continue to be, in compliance with all
such listing and maintenance requirements.
(p) Patents and Trademarks. The Company and its Subsidiaries have, or
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have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and rights which
are necessary or material for use in connection with their respective businesses
as described in the SEC Documents and which the failure to so have would have a
Material Adverse Effect (collectively, the "Intellectual Property Rights").
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Neither the Company nor any Subsidiary has received a written notice that the
Intellectual Property Rights used by the Company or its Subsidiaries violates or
infringes upon the rights of any Person. To the best knowledge of the Company,
all such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights.
(q) Registration Rights; Rights of Participation. The Company has not
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granted or agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered with the
Commission or any other governmental authority which have not been satisfied. No
Person, has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.
(r) Regulatory Permits. The Company and its Subsidiaries possess all
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certificates, authorizations and permits issued by the appropriate federal,
state or foreign
7
regulatory authorities necessary to conduct their respective businesses as
described in the SEC Documents, except where the failure to possess such permits
could not, individually or in the aggregate, have or result in a Material
Adverse Effect ("Material Permits"), and neither the Company nor any such
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Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
(s) Title. The Company and the Subsidiaries have good and marketable
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title in fee simple to all real property owned by them which is material to the
business of the Company and its Subsidiaries and good and marketable title in
all personal property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its Subsidiaries. Any real property and facilities held under lease
by the Company and its Subsidiaries are held by them under valid, subsisting and
enforceable leases of which the Company and its Subsidiaries are in compliance
and do not interfere with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries.
(t) Labor Relations. No material labor problem exists or, to the
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knowledge of the Company, is imminent with respect to any of the employees of
the Company.
(u) Disclosure. The Company confirms that, except as set forth on
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Schedule 2.1(u), neither it nor any other Person acting on its behalf has
provided any of the Purchasers or its agents or counsel with any information
that constitutes or might constitute material non-public information. The
Company understands and confirms that the Purchasers shall be relying on the
foregoing representations in effecting transactions in securities of the
Company. All disclosure provided to the Purchasers regarding the Company, its
business and the transactions contemplated hereby, including the Schedules to
this Agreement, furnished by or on behalf of the Company are true and correct
and do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
(v) Shareholders Rights Plan. Neither the consummation of the
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transactions contemplated hereby nor the issuance of the Underlying Shares, even
when taken together with shares of Common Stock issued to the Deephaven Private
Placement Trading Ltd. pursuant to the Purchase Agreement dated August 3, 2000,
will cause any Purchaser to be deemed an "Acquiring Person" under the Company's
shareholders rights plan.
2.2 Representations and Warranties of the Purchasers. Each Purchaser
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hereby for itself and for no other Purchaser represents and warrants to the
Company as follows:
(a) Organization; Authority. Such Purchaser is an entity duly
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organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The purchase by such Purchaser of the Securities
hereunder has been duly authorized by all necessary action on the part of such
Purchaser. Each of this Agreement and the Escrow Agreement has been duly
executed by such Purchaser, and when delivered by
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such Purchaser in accordance with the terms hereof, will constitute the valid
and legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(b) Investment Intent. Such Purchaser is acquiring the Securities as
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principal for its own account for investment purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof, without
prejudice, however, to such Purchaser's right at all times to sell or otherwise
dispose of all or any part of such Securities. Nothing contained herein shall
be deemed a representation or warranty by such Purchaser to hold Securities for
any period of time. Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute the
Securities.
(c) Purchaser Status. At the time such Purchaser was offered the
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Securities, it was, and at the date hereof it is, and at each exercise date
under its respective Warrants, it will be, an "accredited investor" as defined
in Rule 501(a) under the Securities Act.
(d) Experience of such Purchaser. Such Purchaser, either alone or
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together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.
(e) Ability of such Purchaser to Bear Risk of Investment. Such
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Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
(f) Access to Information. Such Purchaser acknowledges that it has
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reviewed the Disclosure Materials and has been afforded (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment and to verify the
accuracy and completeness of the information contained in the Disclosure
Materials. Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser's right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company's representations and
warranties contained in the Transaction Documents.
The Company acknowledges and agrees that no Purchaser makes or has
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 2.2.
9
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions. (a) Securities may only be disposed of
---------------------
pursuant to an effective registration statement under the Securities Act, to the
Company or pursuant to an available exemption from or in a transaction not
subject to the registration requirements of the Securities Act, and in
compliance with any applicable federal and state securities laws. As a
condition of any transfer of Shares or Warrants, the transferee must agree in
writing to be bound by the terms of this Agreement and the Certificate of
Designations or Warrants, as applicable. A Purchaser may transfer Shares or
Warrants without the consent of the Company only to up to three non-affiliated
Persons.
(b) Other than a legend indicating the transfer restriction
stated in Section 3.1(a), the certificates evidencing the Securities shall not
contain any legend at any time. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company which enlarge
the restrictions of transfer set forth in this Section.
3.2 Acknowledgment of Dilution. The Company acknowledges that the
--------------------------
issuance of the Underlying Shares upon (i) conversion of the Shares in
accordance with the terms of the Certificate of Designation, and (ii) exercise
of the Warrants in accordance with their terms, will result in dilution of the
outstanding shares of Common Stock, which dilution may be substantial under
certain market conditions. The Company further acknowledges that its
obligations to issue Underlying Shares upon (x) conversion of the Shares in
accordance with the terms of the Certificate of Designation, and (y) exercise of
the Warrants in accordance with their terms, are unconditional and absolute,
subject to the limitations set forth herein, in the Certificate of Designation
or pursuant to the Warrants, regardless of the effect of any such dilution.
3.3 Furnishing of Information. As long as the Purchasers own Securities,
-------------------------
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to Section 13(a) or 15(d) of the
Exchange Act. As long as the Purchasers own Securities, if the Company is not
required to file reports pursuant to such sections, it will prepare and furnish
to the Purchasers and make publicly available in accordance with Rule 144(c)
promulgated under the Securities Act such information as is required for the
Purchasers to sell the Securities under Rule 144 promulgated under the
Securities Act.
3.4 Integration. The Company shall not, and shall use its best efforts to
-----------
ensure that, no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would be integrated with the offer or sale of
the Securities for the purposes of the rules and regulations of NASDAQ.
3.5 Increase in Authorized Shares. If on any date the Company would be,
-----------------------------
if a notice of conversion or exercise (as the case may be) were to be delivered
on such date, precluded from issuing (a) 200% of the number of Underlying Shares
as would then be issuable upon a conversion in full of the Shares, and (b) the
number of Underlying Shares as would then be issuable upon exercise of the
Warrants (the "Current Required Minimum"), in either case, due to
------------------------
10
the unavailability of a sufficient number of authorized but unissued or reserved
shares of Common Stock, then the Board of Directors of the Company shall
promptly prepare and mail to the stockholders of the Company proxy materials
requesting authorization to amend the Company's certificate or articles of
incorporation to increase the number of shares of Common Stock which the Company
is authorized to issue to at least such number of shares as reasonably requested
by the Purchasers in order to provide for such number of authorized and unissued
shares of Common Stock to enable the Company to comply with its issuance,
conversion, exercise and reservation of shares obligations as set forth in this
Agreement, the Certificate of Designation and the Warrants (the sum of (x) the
number of shares of Common Stock then outstanding plus all shares of Common
Stock issuable upon exercise of all outstanding options, warrants and
convertible instruments, and (y) the Current Required Minimum, shall be a
reasonable number). In connection therewith, the Board of Directors shall (a)
adopt proper resolutions authorizing such increase, (b) recommend to and
otherwise use its best efforts to promptly and duly obtain stockholder approval
to carry out such resolutions (and hold a special meeting of the stockholders no
later than the earlier to occur of the 60th day after delivery of the proxy
materials relating to such meeting and the 90th day after request by a holder of
Securities to issue the number of Underlying Shares in accordance with the terms
hereof) and (c) within five Business Days of obtaining such stockholder
authorization, file an appropriate amendment to the Company's certificate of
incorporation to evidence such increase.
3.6 Reservation and Listing of Underlying Shares. (a) The Company shall
--------------------------------------------
(i) in the time and manner required by the NASDAQ and any such other exchange,
market or quotation facility on which the Common Stock is traded, prepare and
file with the NASDAQ (and such other national securities exchange, market or
trading or quotation facility on which the Common Stock is then traded) an
additional shares listing application covering a number of shares of Common
Stock which is not less than the Initial Minimum, and (ii) provide to the
Purchasers evidence of such filing, and the Company shall maintain the listing
of its Common Stock thereon or any Subsequent Market (as defined in the
Certificate of Designation). If the number of Underlying Shares issuable upon
conversion in full of the then outstanding Shares and upon exercise of the then
unexercised portion of the Warrants exceeds 85% of the number of Underlying
Shares previously listed on account thereof with NASDAQ (and any such other
required exchanges, then the Company shall take the necessary actions to
immediately list a number of Underlying Shares as equals no less than the then
Current Required Minimum.
(b) The Company shall maintain a reserve of shares of Common Stock
for issuance upon conversion of the Shares in full and upon exercise in full of
the Warrants in accordance with this Agreement, the Certificate of Designation
and the Warrants, respectively, in such amount as may be required to fulfill its
obligations in full under the Transaction Documents, which reserve shall equal
no less than the then Current Required Minimum.
3.7 Conversion and Exercise Obligations and Procedures. The Company shall
--------------------------------------------------
honor conversion of the Shares and exercise of the Warrants and shall deliver
Underlying Shares in accordance with the respective terms, conditions and time
periods set forth in the Certificate of Designation and Warrants. The
Conversion Notice (as defined in the Certificate of Designation) and Notice of
Exercise under the Warrants set forth the totality of the procedures with
respect to the conversion of the Shares and exercise of the Warrants, including
the form of legal opinion, if necessary, that shall be rendered to the Company's
transfer agent and such other information and
11
instructions as may be reasonably necessary to enable the Purchasers to convert
their Shares and exercise their Warrants as contemplated in the Certificate of
Designation and the Warrants (as applicable).
3.8 Subsequent Financing; Limitation on Registrations. (a) Subject to
-------------------------------------------------
Section 3.8(d) and (e), from the date hereof through the 90th Trading Day
following the Closing Date, the Company will not offer, sell, grant any option
to purchase, or otherwise dispose of (or announce any offer, sale, grant or any
option to purchase or other disposition) any of its or its Affiliates' equity or
equity equivalent securities (including the issuance of any debt or other
instrument at any time over the life thereof convertible into or exchangeable
for Common Stock.
(b) Subject to Section 3.8(d) and (e), the Company shall not, directly
or indirectly, offer, sell, grant any option to purchase, or otherwise dispose
of (or announce any offer, sale, grant or any option to purchase or other
disposition) any of its equity or equity-equivalent securities or securities of
any of its Affiliates that are exchangeable or convertible (directly or
indirectly) for shares of Common Stock, including the issuance of any debt or
other instrument at any time over the life thereof convertible into or
exchangeable for Common Stock (collectively, a "Subsequent Placement") from the
--------------------
date hereof until the expiration of the 180th Trading Day after the Closing
Date, unless (A) the Company delivers to each of the Purchasers a written notice
(the "Subsequent Placement Notice") of its intention to effect such Subsequent
---------------------------
Placement, which Subsequent Placement Notice shall describe in reasonable detail
the proposed terms of such Subsequent Placement, the amount of proceeds intended
to be raised thereunder, the Person with whom such Subsequent Placement shall be
effected, and attached to which shall be a term sheet or similar document
relating thereto and (B) such Purchaser shall not have notified the Company by
6:30 p.m. (New York City time) on the tenth Trading Day after its receipt of the
Subsequent Placement Notice of its willingness to provide (or to cause its sole
designee to provide), subject to completion of mutually acceptable
documentation, financing to the Company on the same terms set forth in the
Subsequent Placement Notice. If the Purchasers shall fail to notify the Company
of their intention to enter into such negotiations within such time period, the
Company may effect the Subsequent Placement substantially upon the terms and to
the Persons (or Affiliates of such Persons) set forth in the Subsequent
Placement Notice; provided, that the Company shall provide the Purchasers with a
--------
second Subsequent Placement Notice, and the Purchasers shall again have the
right of first refusal set forth above in this paragraph (a), if the Subsequent
Placement subject to the initial Subsequent Placement Notice shall not have been
consummated for any reason on the terms set forth in such Subsequent Placement
Notice within 30 Trading Days after the date of the initial Subsequent Placement
Notice with the Person (or an Affiliate of such Person) identified in the
Subsequent Placement Notice. If the Purchasers shall indicate a willingness to
provide financing in excess of the amount set forth in the Subsequent Placement
Notice, then each Purchaser shall be entitled to provide financing pursuant to
such Subsequent Placement Notice up to an amount equal to such Purchaser's pro-
rata portion of the aggregate number of Shares purchased by such Purchaser under
this Agreement, but the Company shall not be required to accept financing from
the Purchasers in an amount in excess of the amount set forth in the Subsequent
Placement Notice.
(c) Except for Common Stock permitted to be issued pursuant to Section
3.8 (e), the Company shall not, for a period of not less than 90 Trading Days
from the Closing Date, without the prior written consent of the Purchasers (i)
issue or sell any of its or any of its
12
Affiliates' equity or equity-equivalent securities pursuant to Regulation S
promulgated under the Securities Act, or (ii) register any securities of the
Company.
(d) With respect to Section 3.8(a) and (b), the 90 and 180 Trading Day
periods shall be extended for the number of Trading Days during such period in
which trading in the Common Stock is suspended by any securities exchange or
market or quotation system on which the Common Stock is then listed.
(e) The restrictions contained in Section 3.8(a), (b) and (c) above,
shall not apply to (i) the granting of options or warrants to employees,
officers and directors of the Company, and the issuance of Common Stock upon
exercise of such options or warrants granted under any stock option plan
heretofore or hereinafter duly adopted by the Company and (ii) issuances of
Common Stock pursuant to a Strategic Transaction (as defined herein). A
"Strategic Transaction" shall mean a transaction or relationship in which the
----------------------
Company issues shares of Common Stock to a Person which is, itself or through
its subsidiaries, an operating company in a business related to the business of
the Company and in which the Company receives material benefits in addition to
the investment of funds, but shall not include a transaction in which the
Company is issuing securities primarily for the purpose of raising capital or to
an entity whose primary business is investing in securities.
3.9 Certain Securities Laws Disclosures; Publicity. The Company shall:
----------------------------------------------
(i) on the Closing Date issue a press release acceptable to the Purchasers
disclosing the transactions contemplated hereby, (ii) file with the Commission a
Report on Form 8-K disclosing the transactions contemplated hereby within ten
Business Days after the Closing Date, and (iii) on the Closing Date file with
the Commission the Prospectus Supplement. The Company shall, no less than two
Business Days prior to the filing of any disclosure required by clauses (ii) and
(iii) above, provide a copy thereof to the Purchasers for their review. The
Company and the Purchasers shall consult with each other in issuing any other
press releases or otherwise making public statements or filings and other
communications with the Commission or any regulatory agency or stock market or
trading facility with respect to the transactions contemplated hereby and
neither party shall issue any such press release or otherwise make any such
public statement, filings or other communications without the prior written
consent of the other, except if such disclosure is required by law or stock
market or trading facility regulation, in which such case the disclosing party
shall promptly provide the other party with prior notice of such public
statement, filing or other communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the names of the Purchasers, or include the
names of the Purchasers in any filing with the Commission or any regulatory
agency, trading facility or stock market without the prior written consent of
the Purchasers, except to the extent such disclosure (but not any disclosure as
to the controlling Persons thereof) is required by law or stock market
regulations, in which case the Company shall provide the Purchasers with prior
notice of such disclosure.
3.10 Use of Proceeds. The Company shall use the net proceeds from the
---------------
sale of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables in the ordinary course of the Company's business and prior practices),
to redeem any Company equity or equity-equivalent securities or to settle any
outstanding litigation.
13
3.11 Transfer of Intellectual Property Rights. Except in connection with
----------------------------------------
the sale of all or substantially all of the assets of the Company or licensing
arrangements in the ordinary course of the Company's business, the Company shall
not transfer, sell or otherwise dispose of any Intellectual Property Rights, or
allow any of the Intellectual Property Rights to become subject to any Liens not
in existence on the date of this Agreement, or fail to renew such Intellectual
Property Rights (if renewable and it would otherwise lapse if not renewed),
without the prior written consent of the Purchasers.
3.12 Reimbursement. If any Purchaser becomes involved in any capacity in
-------------
any action, proceeding or investigation brought by or against any Person,
including stockholders of the Company, solely as a result of acquiring the
Securities under this Agreement, the Company will reimburse such Purchaser for
its reasonable legal and other expenses (including the cost of any
investigation, preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred. The reimbursement
obligations of the Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any Affiliates of the Purchasers who are actually named in
such action, proceeding or investigation, and partners, directors, agents,
employees and controlling persons (if any), as the case may be, of the
Purchasers and any such Affiliate, and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, the Purchasers and any such Affiliate and any such Person. The Company
also agrees that neither the Purchasers nor any such Affiliates, partners,
directors, agents, employees or controlling persons shall have any liability to
the Company or any Person asserting claims on behalf of or in right of the
Company solely as a result of acquiring the Securities under this Agreement.
3.13 Liquidated Damages. If at any time while the Shares are outstanding
------------------
(provided, that for purposes hereof a Share is outstanding until such time as
the Underlying Shares issuable upon conversion thereof following delivery of a
Conversion Notice under the Certificate of Designation has been issued and
delivered to the converting holder), (i) the Common Stock shall fail to be
listed for trading on the Nasdaq or on a Subsequent Market or shall be suspended
from trading on the Nasdaq or on a Subsequent Market, in either case, for more
than three Trading Days (which need not be consecutive Trading Days), then on
such third Trading Day and each weekly anniversary of such third Trading Day
thereafter until the Common Stock shall be listed for trading on the Nasdaq and
not suspended from trading on the Nasdaq, or (ii) if the Company shall fail to
observe or perform any other material covenant, agreement or warranty contained
in, or otherwise commit any breach of the Transaction Documents, and such
failure or breach shall not, if subject to the possibility of a cure by the
Company, have been remedied within ten Business Days after the date on which
written notice of such failure or breach shall have been given, then on such
tenth Business Day and each weekly anniversary of such tenth Business Day
thereafter until such failure or breach has been cured, the Company shall, in
each case, pay an amount in cash to each Purchaser, as liquidated damages and
not as penalty, equal to the product of (A) $200,000 and (B) the quotient
obtained by dividing (x) the number of Shares issued and sold to such Purchaser
on the Closing Date by (y) the number of Shares issued and sold by the Company
on the Closing Date, provided, that the Company shall not be obligated to pay to
a Purchaser for any single such event in excess of 33% of the purchase price
paid by such Purchaser for Shares (as reflected on such Purchaser's signature
page to this Agreement). Each event contemplated in clauses (i) and (ii) above
is referred to herein as a "Material Event." If the
--------------
14
Company fails to pay such liquidated damages in full pursuant to this Section
within seven days after the date first payable, the Company will pay each
Purchaser to whom such payment has not been made in full interest thereon at a
rate of 18% per annum or such lesser maximum amount that is permitted to be paid
by applicable law, accruing daily until such amount, plus all such interest
thereon, is paid in full. All amounts payable under this section following a
Material Event may, at the option of the Purchasers be paid through additional
"Stated Value" of the Shares.
3.14 Shareholder Rights Plan. Subject to compliance by a Purchaser with
-----------------------
the voting agreement in this section, no claim will be made or enforced by the
Company or any other Person under the Company's control (which shall include
members of the board of directors of the Company, senior management of the
Company and their respective affiliates) that such Purchaser is an "Acquiring
Person" under any shareholders rights plan or similar plan or arrangement in
effect on the date hereof or hereafter adopted by the Company, or that such
Purchaser could be deemed to trigger the provisions of any such plan or
arrangement by virtue of receiving Securities or shares of Common Stock under
the Transaction Documents and/or the Purchase Agreement, dated August 3, 2000
with Deephaven Private Placement Trading Ltd. Each Purchaser severally agrees
that, (a) so long as it is the beneficial owner of Shares and (b) so long as it
is the beneficial owner of 5% or more of the issued and outstanding shares of
Common Stock (in each case, as determined pursuant to Section 13(d) of the
Exchange Act), it will vote or cause to be voted any and all such Shares or
Common Stock, as the case may be, as recommended by the Company's Board of
Directors in any meeting of the stockholders of the Company, at any adjournment
thereof and whenever the consent of the stockholders of the Company is
solicited, subject to the prohibition against voting set forth in Section
5(a)(iii)(C) of the Certificate of Designation. Any vote cast or action taken
in contravention of the requirements hereof shall have no force or effect. The
Purchasers' obligations under this Section shall not apply to any vote or other
stockholder action taken on a matter listed in Section 1(b)(iii) or in clauses
(a) through (e) of Section 3 of the Certificate of Designation.
3.15 Additional Prospectus Supplements. If the Company has received the
---------------------------------
Shareholder Approval contemplated in the Certificate of Designation or the
Common Stock is no longer listed for trading on the Nasdaq National Market or
Nasdaq SmallCap Market and the shares of Common Stock covered by the Prospectus
Supplement for issuance upon conversion of Shares is less than 125% of the
shares of Common Stock issuable upon conversion in full of all then outstanding
Shares, then the Company shall within five Business Days of the request therefor
by a holder of Shares prepare and file with the Commission such additional
prospectus supplements to the Registration Statement as are necessary to cover
not less than 150% of the shares of Common Stock then issuable upon conversion
in full of the then outstanding Shares.
ARTICLE IV
MISCELLANEOUS
4.1 Fees and Expenses. At the Closing, the Company shall reimburse
-----------------
the Purchasers for their legal fees and expenses incurred in connection with the
preparation and negotiation of the Transaction Documents by paying to ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ $40,000 for the preparation and negotiation of the Transaction
Documents. The amount contemplated by the immediately preceding sentence shall
be retained by the Purchasers and shall not be delivered to
15
the Company at the Closing. Other than the amount contemplated herein each party
shall pay the fees and expenses of its advisers, 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.
The Company shall pay all stamp and other taxes and duties levied in connection
with the issuance of the Securities.
4.2 Entire Agreement; Amendments. The Transaction Documents,
----------------------------
together with the Exhibits and Schedules thereto contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
4.3 Notices. Any and all notices or other communications or
-------
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 6:30 p.m. (New
York City time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Agreement later than 6:30 p.m. (New
York City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:
If to the Company: Dataware Technologies, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Financial Officer
With copies to: ▇▇▇▇▇▇ & Dodge LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to a Purchaser: To the address set forth under such Purchaser's name
on the signature pages hereto.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4.4 Amendments; Waivers. No provision of this Agreement may be
-------------------
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and each of the Purchasers or, in the case of a
waiver, by the party against whom enforcement of any such waiver is sought. No
waiver 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
16
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right accruing to it thereafter.
4.5 Headings. The headings herein are for convenience only, do not
--------
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
4.6 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Purchasers and the rights of
a Purchaser to transfer Shares and Warrants are subject to the provisions of
Section 3.1(a).
4.7 No Third-Party Beneficiaries. This Agreement is intended for
----------------------------
the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
4.8 Governing Law. The corporate laws of the State of Delaware
-------------
shall govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the Transaction Documents), and hereby irrevocably waives,
and agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) 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
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.
4.9 Survival. The representations, warranties, agreements and
--------
covenants contained herein shall survive the Closing and the delivery and
conversion or exercise (as the case may be) of the Shares and of the Warrants.
4.10 Execution. This Agreement may be executed in two or more
---------
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
17
4.11 Severability. In case any one or more of the provisions of this
------------
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
4.12 Remedies. In addition to being entitled to exercise all rights
--------
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance of each
other's obligations under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agree to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
4.13 Independent Nature of Purchasers' Obligations and Rights. The
--------------------------------------------------------
obligations of each Purchaser under any Transaction Document is several and not
joint with the obligations of any other Purchaser and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert with respect to such obligations or
the transactions contemplated by the Transaction Document. Each Purchaser shall
be entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.
18
IN WITNESS WHEREOF, the parties hereto have caused this Convertible
Preferred Stock Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated above.
DATAWARE TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President and Chief Financial Officer
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES OF PURCHASERS FOLLOW]
19
DEEPHAVEN PRIVATE PLACEMENT TRADING LTD.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
Purchase Price: $3,220,000
Aggregate Stated Value: $3,500,000
Warrants to be issued at Closing: 362,500
Address for Notice:
Deephaven Private Placement Trading Ltd.
c/o Deephaven Capital Management LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
With copies to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
20