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EXHIBIT 4.10
ONEWORLD SYSTEMS, INC.
UNIT PURCHASE AGREEMENT
This Unit Purchase Agreement (this "AGREEMENT") is made as of March 3,
1999 by and between OneWorld Systems, Inc., a Delaware corporation (the
"COMPANY"), and the investors listed on Schedule 1.2 attached hereto (the
"INVESTORS").
SECTION 1.
AUTHORIZATION AND SALE OF COMMON STOCK AND SERIES A PREFERRED STOCK
1.1 AUTHORIZATION OF SERIES A PREFERRED AND COMMON STOCK. The Company
has authorized the sale and issuance of up to 3,100,000 shares of its Series A
Preferred Stock (the "SERIES A PREFERRED") and up to 8,060,000 shares of its
Common Stock (the "Common Stock"). The Series A Preferred has the rights,
preferences and privileges provided for in the Certificate of Designation, in
the form attached hereto as Exhibit A (the "CERTIFICATE").
1.2 SALE OF THE COMMON STOCK AND SERIES A PREFERRED. Subject to the
terms and conditions set forth herein, the Company will issue and sell to the
Investors, and each of the Investors will purchase from the Company the shares
(the "SHARES") of Common Stock and Series A Preferred set forth opposite their
respective names on Schedule 1.2. Payment for such shares shall be delivered to
the Company at the Closing (as defined below) by certified check or wire
transfer in the amount set forth beside each Investor's name on Schedule 1.2
hereto.
SECTION 2.
CLOSING DATES; DELIVERY
2.1 CLOSING DATES. The closing of the purchase and sale of the Shares
hereunder (the "CLOSING") shall be held at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company, at 9:00 a.m. on March 3, 1999 or at
such other time and location selected by the parties hereto (such date shall
hereinafter be referred to as the "CLOSING DATE").
2.2 DELIVERY. At the Closing, the Company will deliver to each Investor
certificates, registered in such Investor's name (or the name of its nominee),
representing the Shares to be purchased by such Investor in accordance with the
terms hereof.
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SECTION 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Schedule of Exceptions to the Company's
representations and warranties attached hereto as Schedule 3, the Company
represents and warrants to the Investors as follows:
3.1 ORGANIZATION. Each of the Company and its subsidiaries (as defined
in Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"),
the "Subsidiaries"), is a corporation duly organized and validly existing in
good standing under the laws of the jurisdiction of its organization. Each of
the Company and its Subsidiaries has full power and authority to own, operate
and occupy its properties and to conduct its business as presently conducted and
is registered or qualified to do business and in good standing in each
jurisdiction in which it owns or leases property or transacts business and where
the failure to be so qualified would have a material adverse effect upon the
business, financial condition, prospects, properties or operations of the
Company and its Subsidiaries, considered as one enterprise (a "Material Adverse
Effect"), and no proceeding has been instituted in any such jurisdiction,
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification. The Company does not have any Subsidiaries
nor does it control, directly or indirectly, or own, directly or indirectly, any
shares of stock or any other equity interest of any corporation, partnership or
limited liability company, other than as disclosed in the Company's Annual
Report on Form 10-K ("Annual Report") or the Company's Quarterly Reports on Form
10-Q ("Quarterly Reports," and together with the Annual Report, the "Exchange
Act Reports") filed from time to time with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities and Exchange Act of 1934, as
amended (the "Exchange Act") or identified on Schedule 3.1.
3.2 DUE AUTHORIZATION. The Company has all requisite power and authority
to execute, deliver and perform its obligations under this Agreement and the
Investor Rights Agreement and such agreements have been duly authorized and
validly executed and delivered by the Company and constitute legal, valid and
binding agreements of the Company enforceable against the Company in accordance
with their terms, except as rights to indemnity and contribution may be limited
by state or federal securities laws or the public policy underlying such laws,
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).
3.3 NON-CONTRAVENTION. Except as set forth on Schedule 3.3, the
execution and delivery of the Agreement and the Investor Rights Agreement, the
issuance and sale of the Shares to be sold by the Company under the Agreement,
the fulfillment of the terms of the Agreement and the Investor Rights Agreement
and the consummation of the transactions contemplated hereby and thereby will
not (A) conflict with or constitute a violation of, or default (with the passage
of time or otherwise)
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under, or give to others any rights of termination, amendment, acceleration or
cancellation of, (i) any material bond, debenture, note or other evidence of
indebtedness, or under any material lease, contract, indenture, mortgage, deed
of trust, loan agreement, joint venture or other agreement or instrument to
which the Company or any Subsidiary is a party or by which it or any of its
Subsidiaries or their respective properties are bound, (ii) the charter, by-laws
or other organizational documents of the Company or any Subsidiary, or (iii) any
law, administrative regulation, ordinance, judgement, injunction, or order of
any court or governmental agency, arbitration panel or authority applicable to
the Company or any Subsidiary or their respective properties, or (B) result in
the creation or imposition of any lien, encumbrance, claim, security interest or
restriction whatsoever upon any of the material properties or assets of the
Company or any Subsidiary or an acceleration of indebtedness pursuant to any
obligation, agreement or condition contained in any material bond, debenture,
note or any other evidence of indebtedness or any material indenture, mortgage,
deed of trust or any other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them is bound or to which any of the
property or assets of the Company or any Subsidiary is subject. No consent,
waiver, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency, or
other governmental body in the United States is required for the execution and
delivery of the Agreements and the valid issuance and sale of the Shares to be
sold pursuant to the Agreements, other than such as have been made or obtained,
and except for any securities filings required to be made under federal or state
securities laws.
3.4 CAPITALIZATION. The capitalization of the Company as of December 31,
1998 is as set forth in Schedule 3.4. The Company has not issued any capital
stock since that date other than pursuant to the Company's employee benefit
plans. The Shares to be sold pursuant to this Agreement have been duly
authorized, and when issued and paid for in accordance with the terms of the
Agreement will be duly and validly issued, fully paid and nonassessable. The
outstanding shares of capital stock of the Company have been duly and validly
issued and are fully paid and nonassessable, have been issued in compliance with
all federal and state securities laws, and were not issued in violation of any
preemptive rights or similar rights to subscribe for or purchase securities.
Except as set forth in Schedule 3.4, there are no outstanding rights (including,
without limitation, preemptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any unissued shares of capital
stock or other equity interest in the Company or any Subsidiary, or any
contract, commitment, agreement, understanding or arrangement of any kind to
which the Company is a party or of which the Company has knowledge and relating
to the issuance or sale of any capital stock of the Company or any Subsidiary,
any such convertible or exchangeable securities or any such rights, warrants or
options. Without limiting the foregoing, no preemptive right, co-sale right,
registration right, right of first refusal or other similar right exists with
respect to the Shares or the issuance and sale thereof. No further approval or
authorization of any stockholder, the Board of Directors of the Company or
others is required for the issuance and sale of the Shares. Except as set forth
on Schedule 3.1, the Company owns the entire equity interest in each of its
Subsidiaries, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest, other than as described in the Company
audited financial statements contained in the Company's Annual Report. Except as
contemplated hereby, there are no stockholders agreements,
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voting agreements or other similar agreements with respect to the Common Stock
to which the Company is a party or, to the knowledge of the Company, between or
among any of the Company's stockholders.
3.5 LEGAL PROCEEDINGS. There is no action, suit, notice of violation,
proceeding or investigation pending or, to the best actual 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, governmental or
administrative agency or regulatory authority (Federal, state, county, local or
foreign) which (i) relates to or challenges the legality, validity or
enforceability of the Agreement or the Investor Rights Agreement or the Shares,
(ii) could, individually or in the aggregate, have a Material Adverse Effect or
(iii) could, individually or in the aggregate, adversely impair the ability of
the Company to perform fully on a timely basis its obligations under the
Agreement or the Investor Rights Agreement.
3.6 NO VIOLATIONS. Neither the Company nor any Subsidiary, except as
listed on Schedule 3.6, is in violation of its charter, bylaws, or other
organizational document, or in violation of any law, administrative regulation,
ordinance or order of any court or governmental agency, arbitration panel or
authority applicable to the Company or any Subsidiary, which violation,
individually or in the aggregate, would be reasonably likely to have a Material
Adverse Effect, or is in default in any material respect in the performance of
any obligation, agreement or condition contained in any bond, debenture, note or
any other evidence of indebtedness in any indenture, mortgage, deed of trust or
any other agreement or instrument to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary is bound or by which the
properties of the Company or any Subsidiary are bound or affected, and there
exists no condition which, with the passage of time or otherwise, would
constitute a material default under any such document or instrument or result in
the imposition of any material penalty or the acceleration of any material
indebtedness.
3.7 GOVERNMENTAL PERMITS, ETC. Each of the Company and its Subsidiaries
has all necessary franchises, licenses, certificates and other authorizations
from any foreign, federal, state or local government or governmental agency,
department, or body that are currently necessary for the operation of the
business of the Company and its Subsidiaries as currently conducted, except
where the failure to currently possess could not reasonably be expected to have
a Material Adverse Effect on the Company.
3.8 INTELLECTUAL PROPERTY. Subject to the matters discussed under "Risk
Factors" in the Company's Exchange Act Reports, (i) each of the Company and its
Subsidiaries owns or possesses sufficient rights to use all material patents,
patent rights, trademarks, copyrights, licenses, inventions, trade secrets,
trade names and know-how (collectively, "Intellectual Property") that are
necessary for the conduct of its business as now conducted, except where the
failure to currently own or possess would not have a Material Adverse Effect on
the Company, (ii) neither the Company nor any of its Subsidiaries has received
any notice of, or has any knowledge of, any infringement of or conflict with
asserted rights of the Company or any of its Subsidiaries by others with respect
to any
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Intellectual Property, except as would not have a Material Adverse Effect on the
Company, (iii) neither the Company nor any of its Subsidiaries has received any
notice of, or has any knowledge of, any infringement of or conflict with
asserted rights of a third party with respect to any Intellectual Property that,
individually or in the aggregate, would have a Material Adverse Effect on the
Company. None of the Company's trademarks, trade names, service marks, service
▇▇▇▇ registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade secrets or
other intellectual property rights have expired or terminated, or are expected
to expire or terminate within two years from the date of this Agreement.
3.9 FINANCIAL STATEMENTS. The financial statements of the Company and
the related notes contained in the Company's Exchange Act Reports comply as to
form in all material respects with all applicable accounting requirements and
the published rules and regulations of the Commission with respect thereto, and
present fairly, in accordance with generally accepted accounting principles, the
financial position of the Company and its Subsidiaries as of the dates
indicated, and the results of its operations and cash flows for the periods
therein specified. Such financial statements (including the related notes) have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods therein specified, except
that the unaudited financial statements contained in the Company's Quarterly
Reports do not contain all of the notes required pursuant to generally accepted
accounting principals.
3.10 NO MATERIAL ADVERSE EFFECT. Except as disclosed in Schedule 3.10 or
otherwise disclosed, since December 31, 1998, there has not been any event or
occurrence which has caused or resulted in a Material Adverse Effect, including,
without limitation, (i) the incurrence of any obligation, direct or contingent,
that is material to the Company and its Subsidiaries considered as one
enterprise, except obligations incurred in the ordinary course of business, (ii)
any dividend or distribution of any kind declared, paid or made on the capital
stock of the Company or any of its Subsidiaries, (iii) any loss or damage
(whether or not insured) to the physical property of the Company or any of its
Subsidiaries, (iv) any amendment to the Company's charter or by-laws, (v) any
sale of a material asset of the Company or any of its Subsidiaries, (vi) any
capital expenditure of the Company or any of its Subsidiaries in excess of
$50,000, or (vii) any agreement, approval, commitment or authorization to do any
of the foregoing, except as contemplated herein.
3.11 DISCLOSURE. The Company has fully provided each Investor with all
information requested by such Investor in deciding whether to purchase the
Shares. Such information provided, as of the date of such information and on the
date hereof, did not and does not contain an untrue statement of a material
fact, or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Company makes
no representation or warranty with respect to any forward-looking statements
made within such information provided.
3.12 FOREIGN CORRUPT PRACTICES. Neither the Company nor any of its
Subsidiaries, nor, to the knowledge of the Company or any Subsidiary, any agent
or other person acting on behalf of the Company or any of its Subsidiaries, have
(i) directly or indirectly, used any corporate funds for
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unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity; (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; (iii) failed to disclose
fully any contribution made by the Company or made by any person acting on its
behalf and of which the Company is aware in violation of law; (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended; or (v) made any unlawful bribe, rebate, payoff, influence, kick-back
or other unlawful payment.
3.13 NO MANIPULATION OF STOCK. The Company has not taken and will not
take, any action designed to or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.
3.14 ACCOUNTING CONTROLS. The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances 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 accountability for
assets, (iii) access to assets is permitted only in accordance with management's
general or specific authorization, and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
3.15 COMPLIANCE WITH FLORIDA STATUTES. The Company has complied with all
provisions of Florida Statutes Section 517.075, and the regulations thereunder,
relating to doing business with the Government of Cuba or with any person or
affiliate located in Cuba.
3.16 REPORTING STATUS. The Company has filed in a timely manner all
documents that the Company was required to file under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), including documents filed pursuant
to Section 13(a) or 15(d) thereof, during the 12 months preceding the date of
this Agreement (the foregoing materials being collectively referred to herein as
the "SEC Documents"). The SEC Documents complied in all material respects with
the SEC's requirements as of their respective filing dates, and the information
contained therein as of the date thereof did not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein in light of the circumstances under
where they were made not misleading:
3.17 LISTING. The Company shall comply with all requirements of the
National Association of Securities Dealers, Inc. with respect to the issuance of
the Shares and the listing thereof.
3.18 YEAR 2000 COMPLIANCE. The information set forth in the Company's
Exchange Act Reports with respect to the Company's efforts regarding Year 2000
matters (i) conforms in all material respects to the guidelines set forth in SEC
Release No. 33-7558 and (ii) accurately describes the status of the Company's
efforts regarding Year 2000 matters. To the Company's knowledge, the
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costs associated with ensuring that the Company is Year 2000 compliant will not
have a Material Adverse Effect on the Company.
3.19 CERTAIN FEES. No fees or commissions will be payable by the Company
to any broker, finder, investment banker or bank with respect to the
consummation of the transactions contemplated hereby. The Company has taken no
action that would require any Investor to pay any such fee or commission.
3.20 PRIVATE OFFERING. Neither the Company nor any person acting on its
behalf has taken or will take any action (including, without limitation, any
offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of the Shares or the
shares of Common Stock issuable upon conversion of the Series A Preferred (the
"Underlying Shares") under the Securities Act) which might subject the offering,
issuance or sale of the Shares or the Underlying Shares to the registration
requirements of Section 5 of the Securities Act.
3.21 SENIORITY. No class of equity securities of the Company is senior
to the Series A Preferred in right of payment, whether upon liquidation,
dissolution or otherwise.
3.22 REAL PROPERTY HOLDING COMPANY. The Company is not a real property
holding company within the meaning of Section 897 of the Internal Revenue code
of 1986, as amended.
3.23 TITLE. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property owned by them and good and marketable
title to 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,
encumbrances and defects except such 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 or any of its Subsidiaries. Any real property and
facilities held under lease by the Company or any of its Subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its Subsidiaries.
SECTION 4.
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor hereby severally represents and warrants to the Company
with respect to the purchase of the Shares as follows:
4.1 EXPERIENCE. It has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests.
Investor is an "accredited investor" as defined in Regulation 501(a) of
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
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4.2 INVESTMENT. It is acquiring the Shares for investment for its own
account, not as a nominee or agent, and not with the view to, or for resale in
connection with, any distribution thereof. It understands that the Shares have
not been, and will not be when issued, registered under the Securities Act by
reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of the
representations as expressed herein.
4.3 RULE 144. It acknowledges that the Shares must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from such registration is available. It is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, which may include, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the Company, the resale occurring not less than one year after a party has
purchased and paid for the security to be sold, the sale being effected through
a "broker's transaction" or in transactions directly with a "market maker" and
the number of shares being sold during any three-month period not exceeding
specified limitations.
4.4 NO PUBLIC MARKET. It understands that no public market now exists
for the Shares, and that a market may never exist for the Shares.
4.5 ACCESS TO DATA. Its officers and agents, to the extent that they
desired, have had an opportunity to discuss the Company's management, business
plan and financial condition with the Company's management. It understands that
a purchase of the Shares involves a high degree of risk, and there can be no
assurance the Company's business objectives will be obtained.
4.6 AUTHORIZATION. This Agreement and the Investors' Rights Agreement,
when executed and delivered by the Investors, will constitute a valid and
legally binding obligation of each such Investor, enforceable in accordance with
its terms, except as rights to indemnity and contribution may be limited by
state or federal securities laws or the public policy underlying such laws,
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).
4.7 AUTHORITY. It has all requisite legal power and authority to enter
into this Agreement and the Investors' Rights Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Investors' Rights Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of it. The execution and delivery of this Agreement
and the Investors Rights Agreement do not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both),
under any provision of the organization documents of such Investor.
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4.8 NO CONFLICTS. The execution, delivery and performance of this
Agreement by such Investor will not breach, cause a default under or otherwise
conflict with or give rise to any acceleration or termination of the charter
documents of such Investor or any material contract or agreement to which such
Investor is a party.
4.9 BROKER'S AND FINDERS' FEES. It has not incurred, and will not incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
4.10 NOT ACTING IN CONCERT. Notwithstanding the fact that immediately
after the Closing, the Investors will hold an aggregate of 64% of the voting
power of the Company on a fully-diluted basis, and the fact that certain of the
Investors are affiliated entities as indicated by the three numbered groupings
of Investors contained in Schedule 1.2 hereto, such Investor is not acting in
concert with any other Investor, or group of Investors, whether affiliated or
otherwise, for the purpose of gaining control over the direction of the Company.
SECTION 5.
CONDITIONS TO CLOSING OF THE INVESTORS
The Investors' obligations to purchase the Shares at the Closing are, at
the option of the Investors, subject to the fulfillment of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects as of the Closing Date and the Company shall have
performed all obligations and conditions required to be performed or observed by
it on or prior to the Closing Date and all documents incident thereto shall be
satisfactory in form and content to the Investors and special counsel to the
Investors.
5.2 OFFICER'S CERTIFICATE. The Company shall have delivered to each
Investor a certificate or certificates, executed by an authorized officer of the
Company, dated the Closing Date, certifying to the fulfillment of the conditions
specified in Section 5.1.
5.3 INVESTOR RIGHTS AGREEMENT. The Company and the Investors shall have
executed and delivered the Investor Rights Agreement substantially in the form
attached hereto as Exhibit B.
5.4 FEES AND EXPENSES. The Company shall pay the fees and expenses of
one counsel to Investors reasonably incurred; provided, however, that under no
circumstances shall such amount exceed $10,000 in the aggregate.
5.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
and instruments incident to such transactions shall have been reasonably
approved by special counsel to the Investors, and the
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Investors and its special counsel shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably
request.
5.6 COMPLIANCE WITH LAWS. The offer and purchase and sale of Shares to
the Investors hereunder shall be legally permitted by all laws and regulations
to which the Company or the Investors are subject.
5.7 LEGAL OPINION. Each Investor shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel to the Company, an opinion, dated as of the
Closing, in the form attached hereto as Exhibit A.
SECTION 6.
CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to sell and issue the Shares at the Closing
Date is, at the option of the Company, subject to the fulfillment as of the
Closing Date of the following conditions:
6.1 REPRESENTATIONS AND COVENANTS. The representations made by the
Investors in Section 4 hereof shall be true and correct when made, and shall be
true and correct on the Closing Date and the Investors shall have performed all
obligations and conditions required to be performed or observed by it on or
prior to the Closing Date and all documents incident thereto shall be
satisfactory in form and content to the Company.
SECTION 7.
COVENANTS
7. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT; SHAREHOLDER
APPROVAL; LISTING.
7.1 REGISTRATION PROCEDURES AND EXPENSES. The Company shall:
(a) subject to receipt of necessary information from the
Investors, prepare and file with the SEC, within sixty (60) days after the
Closing Date, a registration statement (the "Registration Statement") to enable
the resale of the Common Stock purchased hereby by the Investors from time to
time through the automated quotation system of the Nasdaq National Market or
NASD Over the Counter (OTC) Bulletin Board system as applicable, or in
privately-negotiated transactions;
(b) use its reasonable efforts, subject to receipt of
necessary information from the Investors, to cause the Registration Statement to
become effective within 90 days after the Registration Statement is filed by the
Company;
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(c) in each case upon providing written notice thereof to
each Investor at least five (5) days prior thereto, prepare and file with the
SEC such amendments and supplements to the Registration Statement and the
prospectus used in connection therewith (the "Prospectus") as may be necessary
to keep the Registration Statement current and effective for a period not
exceeding, with respect to each Investor's Shares purchased hereunder, the
earlier of (i) the date on which the Investor may sell all Shares then held by
the Investor in accordance with the provisions of Rule 144 of the Securities Act
during any three (3)-month period, or (ii) such time as all Shares purchased by
such Investor in this offering have been sold;
(d) furnish to the Investor with respect to the Shares
registered under the Registration Statement such number of copies of the
Registration Statement, Prospectuses and Preliminary Prospectuses in conformity
with the requirements of the Securities Act and such other documents as the
Investor may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Shares by the Investor; provided, however, that
the obligation of the Company to deliver copies of Prospectuses or Preliminary
Prospectuses to the Investor shall be subject to the receipt by the Company of
reasonable assurances from the Investor that the Investor will comply with the
applicable provisions of the Securities Act and of such other securities or blue
sky laws as may be applicable in connection with any use of such Prospectuses or
Preliminary Prospectuses;
(e) file documents required of the Company for normal blue
sky clearance in states specified in writing by the Investor, provided, however,
that the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented;
(f) bear all expenses in connection with the procedures in
paragraph (a) through (e) of this Section 7.1 and the registration of the Shares
pursuant to the Registration Statement; and
(g) advise the Investors, promptly after it shall receive
notice or obtain knowledge of the issuance of any stop order by the SEC delaying
or suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose; and it will promptly
use its reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued.
7.2 TRANSFER OF SHARES AFTER REGISTRATION; SUSPENSION.
(a) The Investor agrees that it will not effect any
disposition of the Shares or its right to purchase the Shares that would
constitute a sale within the meaning of the Securities Act except as
contemplated in the Registration Statement referred to in Section 7.1 and as
described below, and that it will promptly notify the Company of any changes in
the information set forth in the Registration Statement regarding the Investor
or its plan of distribution.
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(b) If any Investor (or any permitted transferee) shall
propose to sell any Shares pursuant to the Registration Statement, it shall
notify Company of its intent to do so at least three (3) full business days
prior to such sale. Such notice shall be deemed to constitute a representation
that any information previously supplied by such Investor or transferee is
accurate as of the date of such notice. At any time within such three (3)
business-day period, the Company may refuse to permit the Investor or transferee
to resell any Shares pursuant to the Registration Statement; provided, however,
that the Company in each case shall use its best reasonable efforts to respond
as rapidly as possible; and provided, however, that in order to exercise this
right, the Company must deliver a certificate in writing to the requesting party
to the effect that a delay in such sale is necessary because a sale pursuant to
such Registration Statement in its then-current form would not be, in the
reasonable judgment of the Company, in the best interests of the Company and its
stockholders. In no event shall such delay exceed thirty (30) calendar days with
respect to any single exercise of the Company's rights hereunder, and provided
further, however, that in no event shall the Company be permitted to exercise
this right more than three times or for more than an aggregate of sixty (60)
calendar days in any single calendar year. In addition, the Company agrees to
use its reasonable best efforts to resolve whatever condition or conditions have
occasioned any such delay on its part, and will promptly end such delay upon
resolution of such condition or conditions.
(c) Provided that a suspension is not then in effect the
Investor may sell Shares under the Registration Statement, provided that it
arranges for delivery of a current Prospectus to the transferee of such Shares.
Upon receipt of a request therefor, the Company has agreed to provide an
adequate number of current Prospectuses to the Investor and to supply copies to
any other parties requiring such Prospectuses.
7.3 INDEMNIFICATION. For the purpose of this Section 7.3:
(i) the term "Selling Stockholder" shall include the
Investor and any affiliate of such Investor;
(ii) the term "Registration Statement" shall include
any final Prospectus, exhibit, supplement or amendment included in or relating
to the Registration Statement (or any of the securities offered thereunder)
referred to in Section 7.1; and
(iii) the term "untrue statement" shall include any
untrue statement or alleged untrue statement, or any omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(a) The Company agrees to indemnify and hold harmless each
Selling Stockholder from and against any losses, claims, damages or liabilities
to which such Selling Stockholder may become subject (under the Securities Act
or otherwise) insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) arise out of, or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, or (ii) any omission or alleged omission to state
therein a material fact
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required to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the company of the
Securities Act, the Exchange Act, any state securities laws or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities laws, (iv) any failure by the Company to fulfill any undertaking
included in the Registration Statement, and the Company will reimburse such
Selling Stockholder for any reasonable legal or other expenses reasonably
incurred in connection with investigating, defending or preparing to defend any
such action, proceeding or claim, provided, however, that the Company shall not
be liable in any such case to the extent that such loss, claim, damage or
liability arises out of, or is based upon, an untrue statement made in such
Registration Statement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Selling Stockholder
specifically for use in preparation of the Registration Statement or the failure
of such Selling Stockholder to comply with its covenants and agreements
contained in 7.2 hereof respecting sale of the Shares or any statement or
omission in any Prospectus that is corrected in any subsequent Prospectus that
was delivered to the Investor prior to the pertinent sale or sales by the
Investor.
(b) The Investor agrees to indemnify and hold harmless the
Company (and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act, each officer of the Company who signs the
Registration Statement and each director of the Company) from and against any
losses, claims, damages or liabilities, joint or several, to which the Company
(or any such officer, director or controlling person) may become subject (under
the Securities Act or otherwise), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, (i) any failure to comply with the covenants and agreements
contained in Section 7.2 hereof respecting sale of the Shares, or (ii) any
untrue statement of a material fact contained in the Registration Statement if
such untrue statement was made in reliance upon and in conformity with written
information furnished by or on behalf of the Investor specifically for use in
preparation of the Registration Statement, and the Investor will reimburse the
Company (or such officer, director or controlling person), as the case may be,
for any legal or other expenses reasonably incurred in investigating, defending
or preparing to defend any such action, proceeding or claim; provided that in no
event shall any indemnity under this Subsection 7.3(b) exceed the net proceeds
from the offering received by the Selling Stockholder.
(c) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying person pursuant to this Section 7.3,
such indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, but the omission to so notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party under this Section 7.3 (except to the extent that such
omission materially and adversely affects the indemnifying party's ability to
defend such action) or from any liability otherwise than under this Section 7.3.
Subject to the provisions hereinafter stated, in case any such action shall be
brought against an indemnified person, the indemnifying person shall be entitled
to participate therein, and, to the extent that it shall elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, shall be entitled to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified person. After notice
from the
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indemnifying person to such indemnified person of its election to assume the
defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof, provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to the indemnified person, for the same
counsel to represent both the indemnified person and such indemnifying person or
any affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person; provided,
however, that unless another such specific conflict of interest between
indemnified parties requires otherwise, no indemnifying person shall be
responsible for the fees and expenses of more than one separate counsel
(together with appropriate local counsel) for all indemnified parties. In no
event shall any indemnifying person be liable in respect of any amounts paid in
settlement of any action unless the indemnifying person shall have approved the
terms of such settlement; provided that such consent shall not be unreasonably
withheld. No indemnifying person shall, without the prior written consent of the
indemnified person, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified person is or could have been a
party and indemnification could have been sought hereunder by such indemnified
person, unless such settlement includes an unconditional release of such
indemnified person from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in this Section
7.3 is unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and the Investors
on the other in connection with the statements or omissions or other matters
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, in the
case of an untrue statement, whether the untrue statement relates to information
supplied by the Company on the one hand or an Investor on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement. The Company and the Investors agree
that it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the Investors
were treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Investor
shall be required to contribute any amount in excess of the amount by which the
net amount received by the Investor from the sale of the Shares to which such
loss relates exceeds the amount of any damages which such Investor has otherwise
been required to pay by reason of such untrue statement. No person guilty of
fraudulent misrepresentation (within the
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meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Investors' obligations in this subsection to contribute
are several in proportion to their sales of Shares to which such loss relates
and not joint.
(e) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel during
the negotiations regarding the provisions hereof including, without limitation,
the provisions of this Section 7.3, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 7.3
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement as required by the Securities Act and the Exchange
Act. The parties are advised that federal or state public policy as interpreted
by the courts in certain jurisdictions may be contrary to certain of the
provisions of this Section 7.3, and the parties hereto hereby expressly waive
and relinquish any right or ability to assert such public policy as a defense to
a claim under this Section 7.3 and further agree not to attempt to assert any
such defense.
7.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent
imposed by this Section 7 upon the transferability of the Shares shall cease and
terminate as to any particular number of the Shares when such Shares shall have
been effectively registered under the Securities Act and sold or otherwise
disposed of in accordance with the intended method of disposition set forth in
the Registration Statement covering such Shares or at such time as an opinion of
counsel satisfactory to the Company shall have been rendered to the effect that
such conditions are not necessary in order to comply with the Securities Act.
7.5 SHAREHOLDER APPROVAl. The Company shall use its reasonable best
efforts to seek shareholder approval for an increase in the authorized number of
shares of Common Stock or a reverse stock split, and to reserve sufficient
shares of Common Stock, to enable the Company to perform it conversion
obligations with respect to the Shares. Upon such action, the Company shall use
its reasonable best efforts to ensure that the Underlying Shares when issued in
accordance with the Certificate of Incorporation shall be duly authorized,
validly issued, fully paid and nonassessable and free and clear of all liens.
7.6 LISTING. Promptly following the Closing, the Company shall use its
best reasonable efforts to cause all of the outstanding shares of the Common
Stock of the Company and the Underlying Shares to be approved for listing in the
Nasdaq National Market or SmallCap Market, as the case may be, and shall provide
to the Investors evidence of such listing when approved and shall use its best
reasonable efforts to maintain the listing of its Common Stock on such exchange.
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SECTION 8.
MISCELLANEOUS
8.1 FURTHER ASSURANCES. The parties hereto shall take all such actions,
and shall execute and deliver all such documents and instruments, as may be
reasonably requested by the other to carry out the purposes and intent of the
provisions of this Agreement.
8.2 GOVERNING LAW. Except as set forth below, this Agreement shall be
governed by and construed in accordance with the laws of the State of
California.
8.3 ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement shall be settled by binding arbitration to be held in San Jose,
California. Such arbitration shall be in accordance with the rules of the
American Arbitration Association, and judgment upon the award may be entered in
any court of competent jurisdiction. The prevailing party or parties in such
arbitration and any ensuing legal action shall be reimbursed by the party or
parties who do not prevail for their reasonable attorneys', accountants' and
experts' fees and the costs of such actions.
8.4 AMENDMENT. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by each of the parties hereto.
8.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be effective upon receipt and
may be delivered in person, by telecopy, express delivery service or U.S. mail,
in which event it may be mailed by first-class, registered or certified mail,
postage prepaid, addressed to:
if to the Company to:
OneWorld Systems, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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if to the Investors:
to the address listed on Schedule 8.5 attached hereto
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Godward LLP
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
8.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to either party upon any breach or default of such
other party under this Agreement, shall impair any such right, power or remedy
of such party nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of either party or any waiver on the part of either party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, or by law or otherwise afforded to either
party, shall be cumulative and not alternative.
8.7 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue full force and effect
without said provision.
8.8 TITLES AND SUBTITLES. The titles of the paragraphs and subparagraphs
of this Agreement are used for convenience only and are not considered in
construing or interpreting this Agreement.
8.9 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
8.10 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be enforceable against the party actually
executing such counterpart, and all of which together shall constitute one
instrument.
8.11 SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of the Company and the Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing.
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8.12 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof, and any and
all other written or oral agreements existing between the parties hereto are
expressly canceled.
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The foregoing Unit Stock Purchase Agreement is hereby executed as of the
date set forth above.
ONEWORLD SYSTEMS, INC.
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Title: President and CEO
INVESTORS:
ACCESS TECHNOLOGY PARTNERS
BROKERS FUND, L.P.
By: H&Q VENTURE MANAGEMENT, L.L.C.
Its: General Partner
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------
Its: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Tax Director, Attorney-in-Fact
-----------------------------------------------
ACCESS TECHNOLOGY PARTNERS, L.P.
By: ACCESS TECHNOLOGY MANAGEMENT, L.L.C.
Its: General Partner
By: H&Q VENTURE MANAGEMENT, L.L.C.
Its: Managing Member
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
Its: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Tax Director, Attorney-in-Fact
-----------------------------------------------
[SIGNATURE PAGE TO THE UNIT PURCHASE AGREEMENT]
20
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ CALIFORNIA
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------
Its: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Tax Director, Attorney-in-Fact
------------------------------------------------
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ EMPLOYEE VENTURE FUND, ▇.▇. ▇▇
By: H&Q VENTURE MANAGEMENT, L.L.C
Its: General Partner
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------
Its: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Tax Director, Attorney-in-Fact
------------------------------------------------
▇▇▇▇▇▇ ▇. CASE III
By: /S/ ▇▇▇▇▇▇ ▇. Case III
------------------------
DELAWARE CHARTER GUARANTEE & TRUST
COMPANY, CUSTODIAN FOR ▇▇▇▇▇▇ ▇. CASE
By: /S/ ▇▇▇▇▇▇ ▇. Case
-----------------------
Name: ▇▇▇▇▇▇ ▇. Case
-----------------------
▇▇▇▇▇▇▇ ▇. CASE
By: /S/ ▇▇▇▇▇▇▇ ▇. Case
-------------------------
[SIGNATURE PAGE TO THE UNIT PURCHASE AGREEMENT]
21
▇▇▇▇▇ ▇▇▇▇▇▇
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
▇▇▇▇ ▇▇▇▇▇▇
By: /S/ ▇▇▇▇▇ ▇▇▇, Attorney-in-Fact
--------------------------------
[SIGNATURE PAGE TO THE UNIT PURCHASE AGREEMENT]
22
INTEGRAL CAPITAL PARTNERS IV, L.P.
By: INTEGRAL CAPITAL MANAGEMENT IV, LLC
Its: General Partner
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
A Manager
INTEGRAL CAPITAL PARTNERS IV MS SIDE FUND, L.P.
By: ICP MS MANAGEMENT, LLC
Its: General Partner
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
A Manager
[SIGNATURE PAGE TO THE UNIT PURCHASE AGREEMENT]
23
▇▇▇▇▇▇▇ FAMILY TRUST, APRIL 19, 1996
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Its: Trustee
----------------------------
[SIGNATURE PAGE TO THE UNIT PURCHASE AGREEMENT]