CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement"),
dated as of _____________, 1998, between uniView Technologies
Corporation, a Texas corporation (the "Company"), and
________________________, referred to herein as a "Purchaser" and are
collectively referred to herein as the "Purchasers."
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 desire to acquire from the Company, shares of the
Company's 5% Series 1998-A1 Convertible Preferred Stock, par value $1.00
per share (the "Series 1998-A1 Preferred"), the Company's 5% Series 1998-
A2 Convertible Preferred Stock, par value $1.00 per share (the "Series
1998-A2 Preferred") and the Company's 5% Series 1998-A3 Convertible
Preferred Stock, par value $1.00 per share (the "Series 1998-A3
Preferred" and together with the Series 1998-A1 Preferred and the Series
1998-A2 Preferred, the "Preferred Stock").
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company and each Purchaser agree as follows:
ARTICLE I
PURCHASE AND SALE OF PREFERRED SHARES
1.1 Purchase and Sale.
(a) Subject to the terms and conditions set forth herein, the
Company shall issue and sell to the Purchasers, and the Purchasers,
severally and not jointly, shall purchase from the Company: (i) 80 shares
of Series 1998-A1 Preferred (the "Series 1998-A1 Shares"); (ii) up to 80
shares of Series 1998-A2 Preferred (the "Series 1998-A2 Shares"); and
(iii) up to 80 shares of Series 1998-A3 Preferred (the "Series 1998-A3
Shares" and together with the Series 1998-A1 Shares and the Series 1998-
A2 Shares, the "Shares"). Notwithstanding anything to the contrary set
forth in this Agreement, the aggregate number of Shares to be sold
hereunder shall not exceed 240 (the "Maximum Share Amount").
(b) The Series 1998-A1 Preferred shall have the respective rights,
preferences and privileges set forth in Exhibit A attached hereto (the
"Series 1998-A1 Terms"), which shall be incorporated into a Certificate
of Designation (the "Series 1998-A1 Designation") to be approved by the
Purchasers and the Company's Board of Directors and filed on or prior to
the Series 1998-A1 Closing (as defined below) by the Company with the
Secretary of State of Texas. The Series 1998-A2 Preferred and Series 1998-
A3 Preferred shall have respective rights, preferences and privileges
identical to the Series 1998-A1 Terms, mutatis mutandis, and shall rank
pari passu with the Series 1998-A1 Preferred with regard to dividends,
liquidation, voting rights and any other preferential rights designated
therein, except that the Conversion Price (as defined below) for
conversion of the Series 1998-A2 Shares and Series 1998-A3 Shares shall
be determined as of the Original Issue Date (as defined below) for such
Series 1998-A2 and Series 1998-A3 Shares.
The Series 1998-A2 Preferred and Series 1998-A3 Preferred shall be
authorized pursuant to certificates of designation identical to the
Series 1998-A1 Designation, mutatis mutandis, prepared by the Company,
subject to the approval of the Purchasers, and filed at or prior to the
Series 1998-A2 Closing Date (as defined below) and Series 1998-A3 Closing
Date (as defined below), as applicable, by the Company with the Secretary
of State of Texas (such certificates of designation, together with the
Series 1998-A1 Designation, are referred to as the "Certificates of
Designation").
For purposes of this Agreement, "Conversion Price," "Original Issue
Date," "Conversion Date" "Trading Day" and "Per Share Market Value" shall
have the meanings set forth in Exhibit A; and "Market Price" at any date
shall mean the average Per Share Market Value for the five (5) Trading
Days immediately preceding such date.
1.2 Purchase Price. The purchase price per Share shall be $25,000.
1.3 The Closings.
(a) The Series 1998-A1 Closing.
(i) The closing of the purchase and sale of the Series 1998-A1
Shares (the "Series 1998-A1 Closing") shall take place at the offices of
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P. ("Akin, Gump"), ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, immediately following the execution
hereof or such later date or different location as the parties shall
agree, but not prior to the date that the conditions set forth in Section
4.1 have been satisfied or waived by the appropriate party. The date of
the Series 1998-A1 Closing is hereinafter referred to as the "Series 1998-
A1 Closing Date." At the Series 1998-A1 Closing, the Company shall sell
and issue to the Purchasers, and the Purchasers shall, severally and not
jointly, purchase from the Company, Eighty (80) Series 1998-A1 Shares for
an aggregate purchase price of $2,000,000 (the "Series 1998-A1 Purchase
Price").
(ii) At the Series 1998-A1 Closing, (a) immediately after
receipt of the Purchase Price therefor, the Company shall deliver to each
Purchaser stock certificates representing the Series 1998-A1 Shares
purchased by such Purchaser as set forth next to such Purchaser's name on
Schedule 1 attached hereto, each registered in the name of such
Purchaser, and all other documents, instruments and writings required to
have been delivered at or prior to the Series 1998-A1 Closing by the
Company pursuant to this Agreement and the Registration Rights Agreement,
dated the date hereof, by and between the Company and the Purchasers, in
the form of Exhibit B (the "Registration Rights Agreement"), and (b) each
Purchaser shall deliver to the Company the portion of the Series 1998-A1
Purchase Price set forth next to its name on Schedule 1, in United States
dollars in immediately available funds by wire transfer to an account
designated in writing by the Company for such purpose on or prior to the
Series 1998-A1 Closing Date, and all documents, instruments and writings
required to have been delivered at or prior to the Series 1998-A1 Closing
by such Purchaser pursuant to this Agreement and the Registration Rights
Agreement.
(b) The Series 1998-A2 Closing.
(i) Subject to the terms and conditions set forth in Section
4.2 and elsewhere in this Agreement, the Company shall, if the average
Per Share Market Value for the thirty Trading Days prior to the date of
the Series 1998-A2 Subsequent Financing Notice is greater than $1.50,
have the right to deliver a written notice to the Purchasers (a "Series
1998-A2 Subsequent Financing Notice") requiring the Purchasers to
purchase Series 1998-A2 Shares. The Company may deliver a Series 1998-A2
Subsequent Financing Notice no earlier than 90 days after the Series 1998-
A1 Closing Date and no later than 180 days after the Series 1998-A1
Closing Date (such 180th day, the "Series 1998-A2 Closing Expiration
Date") and such Series 1998-A2 Subsequent Financing Notice shall set
forth the dollar amount of Series 1998-A2 Shares that the Company intends
to sell to the Purchasers, provided, however, that the minimum amount of
such sale and purchase shall be $1,000,000 and the maximum amount of such
sale and purchase shall be $2,000,000; provided, further, that the
Purchasers shall not be required to purchase any Series 1998-A2 Shares if
the average Per Share Market Value for the thirty Trading Days prior to
the date of the Series 1998-A2 Closing is less than $1.50. If, at the
Series 1998-A2 Expiration Date, the Company has not delivered the Series
1998-A2 Subsequent Financing Notice to the Purchasers, then the
Purchasers shall have the option to purchase the Series 1998-A2 Shares
subject to the terms and conditions of this Agreement. The Purchasers
must deliver written notice (the "Series 1998-A2 Purchase Notice") to the
Company of their intent to purchase the Series 1998-A2 Shares within ten
days after the Series 1998-A2 Closing Expiration Date, which Series 1998-
A2 Purchase Notice shall set forth the dollar amount of Series 1998-A2
Shares to be purchased, subject to the limitations on such amount set
forth above. At the Series 1998-A2 Closing each Purchaser shall be
obligated (subject to the terms and conditions herein) to purchase such
portion of such Series 1998-A2 Shares as equals such Purchaser's pro rata
portion of the purchase price for the Series 1998-A1 Shares issued and
sold at the Series 1998-A1 Closing. The closing of the purchase and sale
of the Series 1998-A2 Shares (the "Series 1998-A2 Closing") shall take
place in the same manner as the Series 1998-A1 Closing, on such date
indicated in the Series 1998-A2 Subsequent Financing Notice or Series
1998-A2 Purchase Notice, as applicable (which may not be subsequent to
the fifth (5th) Trading Day after receipt by the Purchasers of the Series
1998-A2 Subsequent Financing Notice or receipt by the Company of the
Series 1998-A2 Purchase Notice, as applicable, or as otherwise agreed to
by the parties); provided that in no case shall the Series 1998-A2
Closing take place unless and until the conditions listed in Section 4.2
have been satisfied or waived by the appropriate party. The date of the
Series 1998-A2 Closing is hereinafter referred to as the "Series 1998-A2
Closing Date" and the purchase price paid for the Series 1998-A2 Shares
is hereinafter referred to as the "Series 1998-A2 Purchase Price.")
(ii) At the Series 1998-A2 Closing, (a) immediately after
receipt of the Purchase Price therefor, the Company shall deliver (A) to
each Purchaser (1) a pro rata portion of the Series 1998-A2 Shares
(determined by reference to the amount of Series 1998-A1 Shares issued
and sold at the Series 1998-A1 Closing) to be issued and sold thereat (or
such other amount upon which the parties may agree), registered in the
name of the appropriate Purchaser, (2) the legal opinion referenced in
Section 4.2(l), substantially in the form attached hereto as Exhibit C,
and (3) all other documents, instruments and writings required to have
been delivered at or prior to the Series 1998-A2 Closing by the Company
to the Purchasers pursuant to this Agreement; and (b) each Purchaser
shall deliver to the Company (1) the purchase price for the Series 1998-
A2 Shares being purchased by it at the Series 1998-A2 Closing in United
States dollars in immediately available funds by wire transfer to an
account designated in writing by the Company for such purpose on or prior
to the Series 1998-A2 Closing Date and (2) all documents, instruments and
writings required to have been delivered at or prior to the Series 1998-
A2 Closing by such Purchaser pursuant to this Agreement.
(c) The Series 1998-A3 Closing.
(i) Subject to the terms and conditions set forth in Section
4.2 and elsewhere in this Agreement, the Company shall, if the average
Per Share Market Value for the thirty Trading Days prior to the date of
the Series 1998-A3 Subsequent Financing Notice is greater than $1.50 have
the right to deliver a written notice to the Purchasers (a "Series 1998-
A3 Subsequent Financing Notice") requiring the Purchasers to purchase
Series 1998-A3 Shares. The Company may deliver a Series 1998-A3
Subsequent Financing Notice no earlier than 90 days after the Series 1998-
A2 Closing Date and no later than 180 days after the Series 1998-A2
Closing Date (such 180th day, the "Series 1998-A3 Closing Expiration
Date") and such Subsequent Financing Notice shall set forth the dollar
amount of Series 1998-A3 Shares that the Company intends to sell to the
Purchasers, provided, however, that the minimum amount of such sale and
purchase shall be $1,000,000 and the maximum amount of such sale and
purchase shall be $2,000,000; provided, further, that the Purchasers
shall not be required to purchase any Series 1998-A3 Shares if the
average Per Share Market Value for the thirty Trading Days prior to the
date of the Series 1998-A3 Closing is less than $1.50. If, at the Series
1998-A3 Expiration Date, the Company has not delivered the Series 1998-A3
Subsequent Financing Notice to the Purchasers, then the Purchasers shall
have the option to purchase the Series 1998-A3 Shares subject to the
terms and conditions of this Agreement. The Purchasers must deliver
written notice (the "Series 1998-A3 Purchase Notice") to the Company of
their intent to purchase the Series 1998-A3 Shares within ten days after
the Series 1998-A3 Closing Expiration Date, which Series 1998-A3 Purchase
Notice shall set forth the dollar amount of Series 1998-A3 Shares to be
purchased, subject to the limitations on such amount set forth above. At
the Series 1998-A3 Closing each Purchaser shall be obligated (subject to
the terms and conditions herein) to purchase such portion of such Series
1998-A3 Shares as equals such Purchaser's pro rata portion of the
purchase price for the Series 1998-A1 Shares issued and sold at the
Series 1998-A1 Closing. The closing of the purchase and sale of the
Series 1998-A3 Shares (the "Series 1998-A3 Closing") shall take place in
the same manner as the Series 1998-A1 Closing on such date indicated in
the Series 1998-A3 Subsequent Financing Notice or Series 1998-A3 Purchase
Notice, as applicable (which may not be subsequent to the fifth (5th)
Trading Day after receipt by the Purchasers of the Series 1998-A3
Subsequent Financing Notice or Series 1998-A3 Purchase Notice, as
applicable, or as otherwise agreed to by the parties); provided that in
no case shall the Series 1998-A3 Closing take place unless and until the
conditions listed in Section 4.2 have been satisfied or waived by the
appropriate party. The date of the Series 1998-A3 Closing is hereinafter
referred to as the "Series 1998-A3 Closing Date."
(ii) At the Series 1998-A3 Closing, (a) immediately after
receipt of the Purchase Price therefor, the Company shall deliver (A) to
each Purchaser (1) a pro rata portion of the Series 1998-A3 Shares
(determined by reference to the amount of Series 1998-A1 Shares issued
and sold at the Series 1998-A1 Closing) to be issued and sold thereat (or
such other amount upon which the parties may agree), registered in the
name of the appropriate Purchaser, (2) the legal opinion referenced in
Section 4.1(xii), substantially in the form attached hereto as Exhibit C,
and (3) all other documents, instruments and writings required to have
been delivered at or prior to the Series 1998-A3 Closing by the Company
to the Purchasers pursuant to this Agreement; and (b) each Purchaser
shall deliver to the Company (1) the purchase price for the Series 1998-
A3 Shares being purchased by it at the Series 1998-A3 Closing in United
States dollars in immediately available funds by wire transfer to an
account designated in writing by the Company for such purpose on or prior
to the Series 1998-A3 Closing Date and (2) all documents, instruments and
writings required to have been delivered at or prior to the Series 1998-
A3 Closing by such Purchaser pursuant to this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company. The
Company hereby makes the following representations and warranties to the
Purchasers:
(a) Organization and Qualification. The Company is a corporation,
duly incorporated, validly existing and in good standing under the laws
of the State of Texas, 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) (collectively the "Subsidiaries"). Each of the
Subsidiaries is a corporation, duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the full corporate 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
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, would
not, individually or in the aggregate, (x) adversely affect the legality,
validity or enforceability of the Preferred Stock or any of the
Transaction Documents (as defined below), (y) have or result in a
material adverse effect on the results of operations, assets, prospects,
or financial condition of the Company and the Subsidiaries, taken as a
whole or (z) adversely impair the Company's ability to perform fully on a
timely basis its obligations under any Transaction Document (any of (x),
(y) or (z), being a "Material Adverse Effect").
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and the other Transaction
Documents, and otherwise to carry out its obligations hereunder and
thereunder. This Agreement, the Certificates of Designation, the Warrants
and the Registration Rights Agreement are collectively referred to as the
"Transaction Documents". The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary action on the part of the Company and no further action is
required by the Company. Each of the Transaction Documents has been duly
executed by the Company and when delivered in accordance with the terms
hereof will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or
by other equitable principles of general application. Neither the Company
nor any Subsidiary is in violation of any of the provisions of its
respective articles of incorporation, by-laws or other charter documents.
Prior to each of the closing dates the respective Certificate of
Designation has been filed with the Secretary of State of the State of
Texas and will be in full force and effect, enforceable against the
Company in accordance with the terms thereof.
(c) Capitalization. The authorized, issued and outstanding capital
stock of the Company is set forth in Schedule 2.1(c). No shares of Common
Stock are entitled to preemptive or similar rights, nor is any holder of
the Common Stock entitled to preemptive or similar rights arising out of
any agreement or understanding with the Company by virtue of any of the
Transaction Documents. Except as disclosed in Schedule 2.1(c), there are
no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or, except as a
result of the purchase and sale of the Shares, 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. To the knowledge of the
Company, except as specifically disclosed in the SEC Documents (as
defined below) or Schedule 2.1(c), no Person or group of related Persons
beneficially owns (as determined pursuant to Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) or
has the right to acquire by agreement with or by obligation binding upon
the Company beneficial ownership of in excess of 5% of the Common Stock.
A "Person" means an 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.
(d) Issuance of Shares. The Shares are duly authorized, and when
issued and paid for in accordance with the terms hereof, shall be 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 and, at the Series 1998-A1 Closing Date, the
Series 1998-A2 Closing Date and the Series 1998-A3 Closing Date (each a
"Closing Date"), as the case may be, will have and at all times while the
Shares are outstanding will maintain an adequate reserve of duly
authorized shares of Common Stock to enable it to perform its obligations
under this Agreement, the Warrants and the Certificates of Designation
with respect to the number of Shares issued and outstanding at such
Closing Date and in no circumstances shall such reserved and available
shares of Common Stock be less than the sum of (i) 175% times the maximum
number of shares of Common Stock which would be issuable upon conversion
of the Shares issued pursuant to the terms hereof with respect to the
number of Shares issued and outstanding at such Closing Date were such
conversion effected on the Original Issue Date for such Shares and (ii)
the number of shares Common Stock which would be issuable upon payment of
dividends on the Shares, assuming each Share is outstanding for two
years. The shares of Common Stock issuable upon conversion of the Shares,
which may be issued as payment of dividends on the Shares and which are
issuable upon exercise of the Warrants are collectively referred to
herein as the "Underlying Shares." When issued in accordance with the
Certificates of Designation, 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 this
Agreement and the other Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or violate any provision of
its articles of incorporation, bylaws or other charter documents (each as
amended through the date hereof) or (ii) subject to obtaining the
consents referred to in Section 2.1(f), conflict with, or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument (evidencing a Company debt or otherwise) to which the Company
is a party or by which any property or asset of the Company 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 is subject (including Federal
and state securities laws and regulations), or by which any material
property or asset of the Company is bound or affected, except in the case
of each of clauses (ii) and (iii), such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as
would 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.
(f) Consents and Approvals. Except as specifically set forth in
Schedule 2.1(f), neither the Company nor any 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 approval of the Company's
Board of Directors and the filings of the Certificates of Designation
with respect to the Preferred Stock with the Secretary of State of Texas,
which filings and approvals with respect to each of the Series 1998-A1
Shares, the Series 1998-A2 Shares and the Series 1998-A3 Shares shall be
effected prior to the Series 1998-A1 Closing Date, the Series 1998-A2
Closing Date and the Series 1998-A3 Closing Date, as appropriate, (ii)
the filing of Underlying Shares Registration Statements with the
Securities and Exchange Commission (the "Commission"), which shall be
filed in accordance with and in the time periods set forth in the
Registration Rights Agreement, (iii) the application(s) or any letter(s)
acceptable to the Nasdaq Stock Market for the listing of the Underlying
Shares with the Nasdaq Stock Market (and with any other national
securities exchange or market on which the Common Stock is then listed),
and (iv) any filings, notices or registrations under applicable state
securities laws (together with the consents, waivers, authorizations,
orders, notices and filings referred to in Schedule 2.1(f), the "Required
Approvals").
(g) Litigation; Proceedings. Except as specifically set forth in
Schedule 2.1(g) or as disclosed in the Disclosure Materials (as
hereinafter defined) there is no action, suit, 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, governmental
or administrative agency or regulatory authority (federal, state, county,
local or foreign) which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or the
Preferred Stock or (ii) could reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect.
(h) No Default or Violation. Neither the Company nor any Subsidiary
(i) is in default under or 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 (A) except as specifically
set forth in Schedule 2.1(h), and (B) which could reasonably be expected
to, individually or in the aggregate, have a Material Adverse Effect,
(ii) is in violation of any order of any court, arbitrator or
governmental body applicable to it, or (iii) is in violation of any
statute, rule or regulation of any governmental authority to which it is
subject.
(i) Schedules. The Schedules to this Agreement furnished by or on
behalf of the Company 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.
(j) Private Offering. Neither the Company nor any Person acting on
its behalf has taken or will take any action which might subject the
offering, issuance or sale of the Securities to the registration
requirements of the Securities Act of 1933, as amended (the "Securities
Act").
(k) SEC Documents; Financial Statements; No Adverse Change. The
Company has filed all reports required to be filed by it under the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the three 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 the Schedules to this Agreement, the "Disclosure
Materials") on a timely-basis 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 and the 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;
neither the Company nor any of its subsidiaries is in breach of any
agreement where such breach could reasonably be expected to, individually
or in the aggregate, have a Material Adverse Effect. 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, except as 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 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 year-end audit adjustments. Since the date of the financial
statements included in the Company's last filed Quarterly Report on Form
10-Q for the period ended March 31, 1998, there has been no event,
occurrence or development that has had a Material Adverse Effect which
has not been specifically disclosed to the Purchasers by the Company. The
Company last filed audited financial statements with the Commission on
September 11, 1997, and has not received any comments from the Commission
in respect thereof.
(l) Seniority. No class of equity securities of the Company is
senior to the Preferred Stock in right of payment, whether upon
liquidation, dissolution or otherwise.
(m) Investment Company. The Company is not, and is not controlled
by or under common control with an affiliate (an "Affiliate") of, an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
(n) Certain Fees. Except for fees payable to ______________
("_________") pursuant to the section entitled "Fees and Expenses" of the
letter agreement (the "Term Letter") dated June 19, 1998 between the
Company and ______________, and fees payable to the Company's placement
agent in connection with this transaction, no fees or commissions will be
payable by the Company to any broker, financial advisor, finder,
investment banker, or bank with respect to the transactions contemplated
by this Agreement. The Purchasers shall have no obligation with respect
to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section 2.1(n) that may
be due in connection with the transactions contemplated by this
Agreement. The Company shall indemnify and hold harmless each of the
Purchasers, its employees, officers, directors, agents, and partners, and
their respective Affiliates (as such term is defined under Rule 405
promulgated under the Securities Act), 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.
(o) Solicitation Materials. The Company has not (i) distributed any
offering materials in connection with the offering and sale of the Shares
or the Underlying Shares other than the Disclosure Materials and any
amendments and supplements thereto or (ii) solicited any offer to buy or
sell the Shares or the Underlying Shares by means of any form of general
solicitation or advertising. None of the Disclosure Materials or any
other information provided to the Purchasers by or on behalf of the
Company contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(p) Form S-3 Eligibility. The Company is, and at each Closing Date
will be, eligible to register securities for resale with the Commission
under Form S-3 promulgated under the Securities Act.
(q) Exclusivity. The Company shall not issue and sell the Preferred
Stock to any Person other than the Purchasers pursuant to this Agreement
other than with the specific prior written consent of each of the
Purchasers.
(r) Listing and Maintenance Requirements Compliance. Except in
connection with the recent change in the Nasdaq minimum bid price
requirement, with which the Company is currently in compliance, the
Company has not in the two years preceding the date hereof received
notice (written or oral) from 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 or market. After
giving effect to the transactions contemplated in this Agreement, the
Company believes that it is in compliance with all such maintenance
requirements.
(s) Patents and Trademarks. The Company has, or has rights to use,
all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and rights
(collectively, the "Intellectual Property Rights") which are necessary
for use in connection with its business, as currently conducted and as
described in the SEC Documents, and which the failure to so have would
have a Material Adverse Effect. Except as disclosed in Schedule 2.1(s),
to the best knowledge of the Company, there is no existing infringement
by another Person of any of the Intellectual Property Rights which are
necessary for use in connection with the Company's business which could
reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect.
(t) Acknowledgment of Dilution. The Company acknowledges that the
issuance of the Underlying Shares upon conversion of the Shares and
payment of dividends thereon in accordance with the Certificates of
Designation may 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 obligation to issue Underlying
Shares upon conversion of the Shares and payment of dividends thereon in
accordance with the Certificates of Designation is unconditional and
absolute regardless of the effect of any such dilution.
(u) Registration Rights; Rights of Participation. Except as
described on Schedule 2.1(u) hereto, (A) the Company has not 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 has not
been satisfied and (B) no Person, including, but not limited to, current
or former shareholders of the Company, underwriters, brokers or agents,
has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by
this Agreement or any other Transaction Document.
(v) Title. Except as disclosed in Schedule 2.1(v), the Company and
the Subsidiaries have good and marketable title in fee simple to all real
property and 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, claims or encumbrances 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 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.
(w) Regulatory Permits. The Company and its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses as described in the SEC Documents except
where the failure to possess such permits would not, individually or in
the aggregate, have a Material Adverse Effect ("Material Permits"), and
neither the Company nor any such Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material
Permit.
2.2 Representations and Warranties of the Purchasers. Each of the
Purchasers, severally and not jointly, hereby represents and warrants to
the Company as follows:
(a) Organization; Authority. Such Purchaser is a corporation duly
incorporated or a limited liability company or limited partnership duly
formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with the requisite power
and authority, corporate or otherwise, to enter into and to consummate
the transactions contemplated hereby and by the Registration Rights
Agreement and otherwise to carry out its obligations hereunder and
thereunder. The purchase by such Purchaser of the Shares hereunder has
been duly authorized by all necessary action on the part of such
Purchaser. Each of this Agreement and the Registration Rights Agreement
has been duly executed and delivered by such Purchaser and constitutes
the valid and legally binding obligation of such Purchaser, enforceable
against such Purchaser, in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.
(b) Investment Intent. Such Purchaser is acquiring the Shares and
the Underlying Shares for its own account for investment purposes only
and not with a view to or for distributing or reselling such Shares or
Underlying Shares or any part thereof or interest therein, without
prejudice, however, to such Purchaser's right, subject to the provisions
of this Agreement and the Registration Rights Agreement, at all times to
sell or otherwise dispose of all or any part of such Shares or Underlying
Shares pursuant to an effective registration statement under the
Securities Act and in compliance with applicable State securities laws or
under an exemption from such registration.
(c) Purchaser Status. At the time such Purchaser was offered the
Shares, and at each Closing Date, (i) it was and will be, an "accredited
investor" as defined in Rule 501 under the Securities Act, or (ii) such
Purchaser either alone or together with its representatives, had and will
have 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 Shares and the Underlying Shares,
and had and will have so evaluated the merits and risks of such
investment.
(d) Ability of Purchaser to Bear Risk of Investment. Such Purchaser
is able to bear the economic risk of an investment in the Shares and the
Underlying Shares and, at the present time, is able to afford a complete
loss of such investment.
(e) Access to Information. Each Purchaser acknowledges receipt of
the Disclosure Materials.
(f) Reliance. Each Purchaser understands and acknowledges that (i)
the Shares are being offered and sold to the Purchaser without
registration under the Securities Act in a private placement that is
exempt from the registration provisions of the Securities Act under
Section 4(2) of the Securities Act or Regulation D promulgated thereunder
and (ii) the availability of such exemption, depends in part on, and the
Company will rely upon the accuracy and truthfulness of, the foregoing
representations and such Purchaser hereby consents to such reliance.
The Company acknowledges and agrees that the Purchasers make no
representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this
Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions.
(a) If any Purchaser should decide to dispose of Shares (and upon
conversion thereof any of the Underlying Shares) held by it, each
Purchaser understands and agrees that it may do so only pursuant to an
effective registration statement under the Securities Act, to the Company
or pursuant to an available exemption from the registration requirements
of the Securities Act. In connection with any transfer of any Shares or
any Underlying Shares other than pursuant to an effective registration
statement or to the Company, the Company may require the transferor
thereof to provide to the Company a written opinion of counsel
experienced in the area of United States securities laws selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred securities under the Securities
Act. Notwithstanding the foregoing, the Company hereby consents to and
agrees to register (i) any transfer of Shares by one Purchaser to another
Purchaser, and agrees that no documentation other than executed transfer
documents shall be required for any such transfer, and (ii) any transfer
by any Purchaser to an Affiliate of such Purchaser or to an Affiliate of
another Purchaser, or any transfer among any such Affiliates, provided
that transferee certifies to the Company that it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Any such
transferee shall be bound by the terms of this Agreement and shall have
the rights of a Purchaser under this Agreement and the Registration
Rights Agreement.
(b) Each Purchaser agrees to the imprinting, so long as is required
by this Section 3.1(b), of the following legend on the Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
The Underlying Shares issuable upon conversion of Shares or as
payment of dividends thereon shall not contain the legend set forth above
if the conversion of such Shares or the payment of such dividends occurs
at any time while the Underlying Shares Registration Statement is
effective under the Securities Act or in the event there is not an
effective Underlying Shares Registration Statement at such time, if in
the written opinion of counsel to the Company experienced in the area of
United States securities laws such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission). The Company agrees that it will provide each Purchaser, upon
request, with a certificate or certificates representing Underlying
Shares, free from such legend at such time as such legend is no longer
required hereunder.
3.2 Stop Transfer Instruction. 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 Section
3.1.
3.3 Furnishing of Information. As long as any Purchaser owns Shares
or Underlying Shares, 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 and to
promptly furnish the Purchasers with true and complete copies of all such
filings. As long as any Purchaser owns Shares or Underlying Shares, if
the Company is not required to file reports pursuant to Section 13(a) or
15(d) of the Exchange Act, it will prepare and furnish to the Purchasers
and make publicly available in accordance with Rule 144(c) promulgated
under the Securities Act annual and quarterly financial statements,
together with a discussion and analysis of such financial statements in
form and substance substantially similar to those that would otherwise be
required to be included in reports required by Section 13(a) or 15(d) of
the Exchange Act, as well as any other information required thereby, in
the time period that such filings would have been required to have been
made under the Exchange Act. The Company further covenants that it will
take such further action as any holder of Shares may reasonably request,
all to the extent required from time to time to enable such Person to
sell Underlying Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 promulgated
under the Securities Act, including the legal opinion referenced above in
Section 3.1(b). Upon the request of any such Person, the Company shall
deliver to such Person a written certification of a duly authorized
officer as to whether it has complied with such requirements.
3.4 Blue Sky Laws. In accordance with the Registration Rights
Agreement, the Company shall qualify the Underlying Shares under the
securities or Blue Sky laws of such jurisdictions as the Purchasers may
request and shall continue such qualification at all times through the
third anniversary of the last Closing Date.
3.5 Integration. The Company shall not 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 Shares or the Underlying Shares in a manner
that would require the registration under the Securities Act of the sale
of the Shares or the Underlying Shares to any Purchaser.
3.6 Certain Agreements. As long as any Purchaser owns Shares, the
Company shall not and shall cause the Subsidiaries not to, without the
consent of the holders of all of the Shares then outstanding, (i) amend
its articles of incorporation, bylaws or other charter documents so as to
adversely affect any rights of any Purchaser; (ii) declare, authorize,
set aside or pay any dividend or other distribution with respect to the
Common Stock except as permitted under the Certificates of Designation
and as would not adversely affect the rights of any Purchaser hereunder
or under the Certificates of Designation; (iii) repay, repurchase or
offer to repay, repurchase or otherwise acquire shares of its Common
Stock in any manner, except as may be subject to prior commitments
reflected in the Disclosure Materials; (iv) issue any series of preferred
stock or other securities with rights senior (in respect of liquidations,
dividends, preferences and similar rights) to those of the Shares, or (v)
enter into any agreement with respect to any of the foregoing.
3.7 Listing and Reservation of Underlying Shares.
(a) The Company shall (i) not later than the fifth Business Day
following the applicable Closing Date prepare and file with the Nasdaq
Stock Market (as well as any other national securities exchange or market
on which the Common Stock is then listed) an additional shares listing
application or a letter acceptable to the Nasdaq Stock Market covering
and listing a number of shares of Common Stock which is at least equal to
175% of the maximum number of Underlying Shares then issuable assuming
the payment of all future dividends on the Shares then outstanding were
made in shares of Common Stock, (ii) take all steps necessary to cause
the Underlying Shares to be approved for listing in the Nasdaq Stock
Market (as well as on any other national securities exchange or market on
which the Common Stock is then listed) as soon as possible thereafter,
and (iii) provide to the Purchasers evidence of such listing, and the
Company shall maintain the listing of its Common Stock on such exchange.
(b) The Company shall reserve for issuance upon conversion of the
Shares and for payment of dividends thereupon in shares of Common Stock
pursuant to the terms of the Certificates of Designation the number of
shares to be listed on the Nasdaq Stock Market (and such other national
securities exchange or market on which the Common Stock is then listed or
traded) as set forth in Section 3.7(a). Shares of Common Stock reserved
for issuance upon the conversion of the Shares as set forth in Section
3.7(a) shall be allocated pro rata to each of the Purchasers in
accordance with the amount of Shares issued and delivered to such
Purchaser at each Closing, as applicable.
3.8 No Violation of Applicable Law. Notwithstanding any provision
of this Agreement to the contrary, if the redemption of Shares or
Underlying Shares otherwise required under this Agreement, any applicable
Certificate of Designations or the Registration Rights Agreement would be
prohibited by the relevant provisions of the Texas Business Corporation
Act, such redemption shall be effected as soon as it is permitted under
such law; provided, however, that from the 5th day after such redemption
notice until such redemption price is paid in full, interest on any such
unpaid amount shall accrue at the rate of 15% per annum.
3.9 Notice of Breaches.
(a) Each of the Company and each Purchaser shall give prompt
written notice to the other of any breach of any representation, warranty
or other agreement contained in this Agreement or in the Registration
Rights Agreement, as well as any events or occurrences arising after the
date hereof and prior to, with respect to the Series 1998-A2 Closing, the
Series 1998-A2 Closing Date and with respect to the Series 1998-A3
Closing, the Series 1998-A3 Closing Date, which would reasonably be
likely to cause any representation or warranty or other agreement of such
party, as the case may be, contained herein to be incorrect or breached
as of such Closing Date. However, no disclosure by either party pursuant
to this Section 3.9 shall be deemed to cure any breach of any
representation, warranty or other agreement contained herein or in the
Registration Rights Agreement.
(b) Notwithstanding the generality of Section 3.9(a) the Company
shall promptly notify each Purchaser of any notice or claim (written or
oral) that it receives from any lender of the Company to the effect that
the consummation of the transactions contemplated hereby and by the
Registration Rights Agreement violates or would violate any written
agreement or understanding between such lender and the Company, and the
Company shall promptly furnish by facsimile to the holders of the Shares
a copy of any written statement in support of or relating to such claim
or notice.
(c) The default by any Purchaser of any of its obligations,
representations or warranties under any Transaction Document shall not be
imputed to, and shall have no effect upon, any other Purchaser or affect
the Company's obligations under the Transaction Documents to any non-
defaulting Purchaser.
3.10 Conversion Obligations of the Company. The Company covenants to
convert Shares and to deliver Underlying Shares in accordance with the
terms and conditions and time period set forth in the respective
Certificates of Designation.
3.11 Subsequent Registrations. Other than Underlying Shares and
other "Registrable Securities" (as defined in the Registration Rights
Agreement) to be registered in accordance with the Registration Rights
Agreement, the Company shall not, for a period of not less than 30
Trading Days after the date that the Underlying Shares Registration
Statement relating to the securities issued at the Series 1998-A1 Closing
Date, the Series 1998-A2 Closing Date and the Series 1998-A3 Closing Date
is declared effective by the Commission, without the prior written
consent of the Purchasers, (i) issue or sell any of its or any of its
Affiliates' equity or equity-equivalent securities pursuant to Regulation
S promulgated under the Securities Act, or (ii) register for resale any
securities of the Company. Any days that any Purchaser is unable to sell
Underlying Shares under an Underlying Shares Registration Statement shall
be added to such 30 Trading Day period for the purposes of (i) and (ii)
above.
3.12 Use of Proceeds. The Company shall use all of the proceeds from
the sale of the Shares for working capital and general corporate purposes
and not for the satisfaction of any portion of Company borrowings outside
the normal course of business or to redeem Company equity or equity-
equivalent securities. Pending application of the proceeds of this
placement in the manner permitted hereby, the Company will invest such
proceeds in interest bearing accounts and/or short-term, investment grade
interest bearing securities.
3.13 Reimbursement. In the event that any Purchaser, other than by
reason of its gross negligence or willful misconduct, becomes involved in
any capacity in any action, proceeding or investigation brought by or
against any person, including shareholders of the Company, in connection
with or as a result of the consummation of the transactions contemplated
pursuant to the Transaction Documents, the Company will reimburse such
Purchaser for its legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith. In
addition, with respect to each Purchaser, other than with respect to any
matter in which such Purchaser is a named party, the Company will pay
such Purchaser the charges, as reasonably determined by such Purchaser,
for the time of any officers or employees of such Purchaser devoted to
appearing and preparing to appear as witnesses, assisting in preparation
for hearings, trials or pretrial matters, or otherwise with respect to
inquiries, hearings, trials, and other proceedings relating to the
subject matter of this Agreement. 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 affiliate of each Purchaser and partners, directors,
agents, employees and controlling persons (if any), as the case may be,
of each Purchaser 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, each Purchaser and any such affiliate and
any such person. The Company also agrees that no Purchaser or 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 in connection with or as a result of
the consummation of the Transaction Documents except to the extent that
any losses, claims, damages, liabilities or expenses incurred by the
Company result from the gross negligence or willful misconduct of such
Purchaser or entity in connection with the transactions contemplated by
this Agreement.
ARTICLE IV
CONDITIONS
4.1 (a) Conditions Precedent to the Obligation of the Company to
Sell the Series 1998-A1 Shares. The obligation of the Company to sell the
Series 1998-A1 Shares hereunder is subject to the satisfaction or waiver
by the Company, at or before the Series 1998-A1 Closing, of each of the
following conditions:
(i) Accuracy of the Purchasers' Representations and
Warranties. The representations and warranties of each Purchaser shall be
true and correct in all material respects as of the date when made and as
of the Series 1998-A1 Closing Date, as though made on and as of such
date;
(ii) Performance by the Purchasers. Each Purchaser shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Purchaser at or prior to
the Series 1998-A1 Closing; and
(iii) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement or the Registration Rights
Agreement.
(b) Conditions Precedent to the Obligation of the Purchasers to
Purchase the Series 1998-A1 Shares. The obligation of each Purchaser
hereunder to acquire and pay for the Series 1998-A1 Shares is subject to
the satisfaction or waiver by such Purchaser, at or before the Series
1998-A1 Closing, of each of the following conditions:
(i) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company set forth in this
Agreement and in the Registration Rights Agreement shall be true and
correct in all material respects as of the date when made and as of the
Series 1998-A1 Closing Date as though made on and as of such date;
(ii) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the
Series 1998-A1 Closing;
(iii) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement or the Registration Rights
Agreement;
(iv) Adverse Changes. Since the date of the financial
statements included in the Company's Quarterly Report on Form 10-Q or
Annual Report on Form 10-K, whichever is more recent, last filed prior to
the date of this Agreement, no event which had a Material Adverse Effect
and no material adverse change in the financial condition or prospects of
the Company shall have occurred which is not disclosed in the Disclosure
Materials (for purposes hereof changes in the market price of the Common
Stock may be considered in determining whether there has occurred an
event which has had a Material Adverse Effect or whether a material
adverse change has occurred);
(v) No Suspensions of Trading in Common Stock. The trading in
the Common Stock shall not have been suspended by the Commission or on
the Nasdaq Stock Market which suspension shall remain in effect;
(vi) Listing of Common Stock. The Company shall have filed a
listing application to list the Underlying Shares for trading on the
Nasdaq Stock Market at such time as it is required to do so pursuant to
NASD rules;
(vii) Legal Opinion. The Company shall have delivered to
the Purchasers the opinions of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, the Company's general
counsel, in substantially the form attached hereto as Exhibit C;
(viii) Required Approvals. All Required Approvals shall have
been obtained other than those relating solely to the Series 1998-A2
Shares and the Series 1998-A3 Shares;
(ix) Shares of Common Stock. On or prior to the Series 1998-A1
Closing Date, the Company shall have duly reserved the number of
Underlying Shares required by the Transaction Documents to be reserved
for issuance upon conversion of Series 1998-A1 Shares and payment of
dividends thereon;
(x) Delivery of Stock Certificates. The Company shall have
delivered to the Company's general counsel for delivery to each Purchaser
or such Purchaser's designee upon receipt by the Company of the Purchase
Price therefor, the stock certificate(s) representing the Series 1998-A1
Shares, registered in the name of such Purchaser, each in form
satisfactory to the Purchaser;
(xi) Registration Rights Agreement. The Company shall have
executed and delivered the Registration Rights Agreement;
(xii) Certificates of Designation. The Series 1998-A1
Designation shall have been duly approved by the Company's Board of
Directors and filed with the Secretary of State of Texas, and the Company
shall have delivered a copy thereof to the Purchaser certified as filed
by the office of the Secretary of State of Texas;
(xiii) Change of Control. No Change of Control (as hereafter
defined) shall have occurred between the date hereof and the Series 1998-
A1 Closing Date; and
(xiv) Transfer Agent Instructions. The Irrevocable Transfer
Agent Instructions, in the form of Exhibit D attached hereto, shall have
been delivered to and acknowledged in writing by the Company's transfer
agent.
(xv) Series 1998-A1 Warrant. The Company shall at the Series
1998-A1 Closing, deliver a warrant (the "Series 1998-A1 Warrant"), in the
form attached hereto as Exhibit E, to purchase 100,000 shares of the
Common Stock to the Purchasers. The warrant shall have a term of three
years, an exercise price of $3.00 per share and shall not be redeemable
by the Company.
(xvi) Cancellation Warrant. The Company shall, at the
Series 1998-A1 Closing, issue in the name of the Purchasers a three-year
warrant (the "Cancellation Warrant") to purchase 200,000 shares of Common
Stock at an exercise price of $3.00. The Company shall hold the
Cancellation Warrant in escrow pending such time as the Company enters
into a negotiated agreement approved by the Board of Directors of the
Company and providing for the consolidation or merger of the Company with
or into another person or pursuant to which the shares of Common Stock of
the Company will be converted into shares of stock or other securities,
cash or property and such agreement provides or contemplates that the
issuance and sale of the Series 1998-A2 Shares and Series 1998-A3 Shares
to the Purchasers will not take place. The Cancellation Warrant shall be
delivered to the Purchasers upon the approval by the Board of Directors
of such an agreement or transaction, but shall only become exercisable
upon the closing or consummation of such agreement or transactions. If
such transaction or agreement shall not, after such approval, be
consummated, the Cancellation Warrant shall be returned to escrow with
the Company and the Purchasers' rights under this Agreement to purchase
the Series 1998-A2 Shares and the Series 1998-A3 Shares pursuant to the
provisions of this Agreement will be automatically reinstated.
4.2 Conditions Precedent to the Obligation of the Purchasers to
Purchase the Series 1998-A2 Shares and the Series 1998-A3 Shares. The
obligation of each Purchaser hereunder to acquire and pay for the Series
1998-A2 Shares and the Series 1998-A3 Shares is subject to the
satisfaction or waiver by each Purchaser, at or before the Series 1998-A2
Closing or the Series 1998-A3 Closing, as applicable, of each of the
following conditions:
(a) Series 1998-A1 Closing. The Series 1998-A1 Closing shall have
occurred.
(b) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company contained herein and in the
Registration Rights Agreement shall be true and correct in all material
respects as of the date when made and as of the Series 1998-A2 Closing
Date and the Series 1998-A3 Closing Date, as applicable, as though made
on and as of such date.
(c) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement and the Registration
Rights Agreement to be performed, satisfied or complied with by the
Company at or prior to the Series 1998-A2 Closing Date and the Series
1998-A3 Closing Date, as applicable.
(d) Underlying Shares Registration Statements. With respect to the
Series 1998-A2 Closing, the Underlying Shares Registration Statement with
respect to the Underlying Shares issuable on conversion of all
outstanding Series 1998-A1 Shares and as payment of dividends thereon
shall have been declared effective under the Securities Act by the
Commission; and with respect to the Series 1998-A3 Closing, the
Underlying Shares Registration Statement with respect to the Underlying
Shares issuable on conversion of all outstanding Series 1998-A2 Shares
and as payment of dividends thereon shall have been declared effective
under the Securities Act by the Commission; and on each such Closing Date
such Underlying Shares Registration Statement shall be effective, not
subject to any stop order and not be subject to any suspension pursuant
to Section 3(p) of the Registration Rights Agreement, and shall have been
effective and shall not have been subject to any stop order for the
thirty (30) days prior to such Closing Date and no stop order shall be
pending or threatened as at such Closing Date.
(e) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court of governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement or the Registration Rights
Agreement relating to the issuance or conversion of any of the Shares.
(f) Adverse Changes. During the period which is 10 Trading Days
prior to the date of the delivery of either a Series 1998-A2 Subsequent
Financing Notice or a Series 1998-A3 Subsequent Financing Notice and the
date of the Series 1998-A2 Closing and the Series 1998-A3 Closing,
respectively, the closing bid price on the Common Stock shall not have
decreased by more than 50% from the highest closing bid price during such
period; provided, however, that if the closing bid price shall have so
decreased by more than 50%, but shall have subsequently increased so that
on the applicable Closing Date it is no more than 25% below the highest
closing bid price during such period, then this condition shall be
satisfied.
(g) Litigation. No litigation shall have been instituted or
threatened against the Company which could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.
(h) Management. In the reasonable judgment of each Purchaser, there
have been no substantial changes in the senior management of the Company.
(i) No Suspensions of Trading in Common Stock. The trading in the
Common Stock shall not have been suspended by the Commission or on the
Nasdaq Stock Market (except for any suspension of trading of limited
duration solely to permit dissemination of material information regarding
the Company).
(j) Listing of Common Stock. The Common Stock shall have been at
all times since the Series 1998-A1 Closing Date, and on the Series 1998-
A2 Closing Date and the Series 1998-A3 Closing Date be listed for trading
on the Nasdaq Stock Market.
(k) Change of Control. No Change of Control in the Company shall
have occurred. "Change of Control" means the occurrence of any of (i) an
acquisition after the date hereof by an individual or legal entity or
"group" (as described in Rule 13d5(b)(1) promulgated under the Exchange
Act) of in excess of 50% of the voting securities of the Company, (ii) a
replacement of more than one-half of the members of the Company's board
of directors which is not approved by those individuals who are members
of the board of directors on the date hereof in one or a series of
related transactions, (iii) the merger of the Company with or into
another entity, consolidation or sale of all or substantially all of the
assets of the Company in one or a series of related transactions or (iv)
the execution by the Company of an agreement to which the Company is a
party or by which it is bound, providing for any of the events set forth
above in (i), (ii) or (iii).
(l) Legal Opinion. The Company shall have delivered to the
Purchasers the opinions of the Company's general counsel, in
substantially the form attached hereto as Exhibit C, dated the applicable
Closing Date.
(m) Required Approvals. All Required Approvals shall have been
obtained.
(n) Shares of Common Stock. On each of the Series 1998-A2 Closing
Date and the Series 1998-A3 Closing Date the Company shall have duly
reserved the number of Underlying Shares required by this Agreement to be
reserved for issuance upon conversion of Series 1998-A2 Shares and Series
1998-A3 Shares, respectively, and payment of dividends thereon.
(o) Delivery of Stock Certificates. The Company shall have
delivered to the Company's general counsel for delivery to each Purchaser
or such Purchaser's designee upon receipt of the Company of the Purchase
Price therefor, the stock certificate(s) representing the Shares being
purchased at such Closing, registered in the name of such Purchaser, each
in form satisfactory to such Purchaser.
(p) Performance of Conversion/Exercise Obligations. The Company
shall have delivered Underlying Shares upon conversion of Shares and
otherwise performed its obligations in accordance with the terms,
conditions and timing requirements of each Certificate of Designation.
(q) Common Stock Price. The average Per Share Market Value for the
thirty Trading Days prior to the applicable Closing Date shall have been
at least $1.50 per share.
(r) Transfer Agent Instructions. The Irrevocable Transfer Agent
Instructions, in the form of Exhibit D attached hereto, shall have been
delivered to and acknowledged in writing by the Company's transfer agent.
(s) Warrants. The Company shall, at each of the Series 1998-A2
Closing and the Series 1998-A3 Closing, deliver a warrant (respectively
the "Series ▇▇▇▇-▇▇ ▇▇▇▇▇▇▇" and the "Series ▇▇▇▇-▇▇ ▇▇▇▇▇▇▇" and,
together with the Series 1998-A1 Warrant and the Cancellation Warrant,
the "Warrants"), in the form attached hereto as Exhibit E, to purchase
100,000 shares of the Common Stock to the Purchasers. Each such warrant
shall have a term of three years, an exercise price of $3.00 per share
and shall not be redeemable by the Company.
(t) Officer's Certificate. On each Closing Date the Company shall
deliver to the Purchasers an Officer's Certificate dated the Closing Date
and signed by an executive officer of the Company confirming the accuracy
of the Company's representations, warranties and covenants as of such
Closing Date and confirming the compliance by the Company with the
conditions precedent set forth in this Section 4.2 as of such Closing
Date.
(u) Beneficial Ownership of Common Stock. No Purchaser would,
after such Series 1998-A2 Closing or Series 1998-A3 Closing, beneficially
own, as calculated in accordance with the provisions of Rule 13d-3
promulgated under the Exchange Act, as such provisions may be amended or
superseded, or any successor statute or rule promulgated by the
Commission, more than 9.999% of the issued and outstanding shares of
Common Stock.
(v) Fees. The Company shall have, concurrent with the delivery of
the Applicable Subsequent Financing Notice or its receipt of the
Applicable Purchase Notice, paid ______________ the sum of $3,000 for
expected reasonable supplementary legal costs associated with such
transactions.
(w) Interim Financings. The Purchasers shall have no obligation to
purchase the Series 1998-A2 Preferred or the Series 1998-A3 Preferred if,
after the Series 1998-A1 Closing or after the Series 1998-A2 Closing,
respectively, the Company has sold or issued, in a private placement
transaction or series of such transactions to a single entity or a group
of entities under common control or which are related such that they
could be considered a single entity, equity or equity equivalent
securities in an amount exceeding $500,000.
ARTICLE V
MISCELLANEOUS
5.1 Fees and Expenses. Except (i) as set forth in the Term Letter
under the caption "Fees and Expenses," (ii) as set forth in the
Registration Rights Agreement and (iii) as otherwise set forth in this
Agreement, 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 Shares pursuant hereto.
5.2 Entire Agreement; Amendments. This Agreement, together with the
Exhibits and Schedules hereto, the Registration Rights Agreement and each
Certificate of Designation (each when filed) 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.
5.3 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed
to have been received (a) upon hand delivery (receipt acknowledged) or
delivery by telex (with correct answer back received), telecopy or
facsimile (with transmission confirmation report) at the address or
number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first
business day following such delivery (if delivered on a business day
after during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or
upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be as set forth below each
parties' name on Schedule 1, and if to any Purchaser with copies to
________________, Attn: ____________, fax: ___________, or such other
address as may be designated in writing hereafter, in the same manner, by
such person.
5.4 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 both the Company and 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 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. Notwithstanding the foregoing, no
such amendment shall be effective to the extent that it applies to less
than all of the holders of the Shares outstanding. The Company shall not
offer or pay any consideration to a Purchaser for consenting to such an
amendment or waiver unless the same consideration is offered to each
Purchaser and the same consideration is paid to each Purchaser which
consents to such amendment or waiver.
5.5 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.
5.6 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 each
of the Purchasers. No Purchaser may assign this Agreement (other than to
an Affiliate of such Purchaser) or any rights or obligations hereunder
without the prior written consent of the Company, except that any
Purchaser may assign its rights hereunder and under the Transaction
Documents without the consent of the Company as long as such assignee
demonstrates to the reasonable satisfaction of the Company its
satisfaction of the representations and warranties set forth in Section
2.2. This provision shall not limit a Purchaser's right to transfer
securities or transfer or assign rights hereunder or under the
Registration Rights Agreement.
5.7 No Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted
successors and assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
5.8 Governing Law. 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 nonexclusive 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,
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.
5.9 Survival. The agreements, covenants, representations,
warranties and provisions contained in this Agreement shall survive the
delivery of the Shares pursuant to this Agreement and each Closing
hereunder and any conversion of Shares.
5.10 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.
5.11 Publicity. The Company and each Purchaser shall consult with
each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and
neither party shall issue any such press release or otherwise make any
such public statement without the prior written consent of the other,
which consent shall not be unreasonably withheld or delayed, except that
no prior consent shall be required if such disclosure is required by law,
in which such case the disclosing party shall provide the other party
with prior notice of such public statement. The Company shall not
publicly or otherwise disclose the names of any of the Purchasers without
each such Purchaser's prior written consent.
5.12 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.
5.13 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the
Purchasers will be entitled to specific performance of the obligations of
the Company under the Transaction Documents. Each of the Company and the
Purchasers (severally and not jointly) agree that monetary damages would
not be adequate compensation for any loss incurred by reason of any
breach of its obligations described in the foregoing sentence and hereby
agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
5.14 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any
other Purchaser hereunder. Nothing contained herein or in any other
agreement or document delivered at any Closing, and no action taken by
any Purchaser pursuant hereto or 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 this Agreement. Each Purchaser shall be
entitled to 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.
5.15 No Reliance. Each party acknowledges that (i) it has such
knowledge in business and financial matters as to be fully capable of
evaluating this Agreement, the other Transaction Documents and the
transactions contemplated hereby and thereby, (ii) it is not relying on
any advice or representation of the other party in connection with
entering into this Agreement, the other Transaction Documents or such
transactions (other than the representations made in this Agreement or
the other Transaction Documents), (iii) it has not received from such
party any assurance or guarantee as to the merits (whether legal,
regulatory, tax, financial or otherwise) of entering into this Agreement
or the other Transaction Documents or the performance of its obligations
hereunder and thereunder, and (iv) it has consulted with its own legal,
regulatory, tax, business, investment, financial and accounting advisors
to the extent that it has deemed necessary, and has entered into this
Agreement and the other Transaction Documents based on its own
independent judgment and on the advice of its advisors as it has deemed
necessary, and not on any view (whether written or oral) expressed by
such party.
5.16 Termination. The Company or any Purchaser may terminate this
Agreement with or without cause at any time after June 30, 1998 upon five
days written notice to the other parties to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Convertible
Preferred Stock Purchase Agreement to be duly executed by their
respective authorized persons as of the date first indicated above.
UNIVIEW TECHNOLOGIES CORPORATION
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
______________
By:
Name:
Title:
______________
By:
Name:
Title:
Company:
uniView Technologies Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: __________________
Purchasers:
_______________________
_______________________
_______________________
Attn: __________________
Fax: ___________________
Portion of Series 1998-A1 Purchase Price - $__________
Series 1998-A1 Shares - _____
_______________________
_______________________
_______________________
Attn: __________________
Fax: ___________________
Portion of Series 1998-A1 Purchase Price - $_________
Series 1998-A1 Shares - ____