Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
Among
LEVEL 8 SYSTEMS, INC.
and
THE PURCHASERS LISTED ON SCHEDULE I
Dated as of June 28, 1999
exhibit 10.1, page 1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated as of June
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28, 1999 among Level 8 Systems, Inc., a Delaware corporation (the "Company"),
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and the various purchasers identified and listed on Schedule I hereto (each
referred to herein as a "Purchaser" and, collectively, the "Purchasers.")
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WHEREAS, the Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D as promulgated by the United States Securities
and Exchange Commission (the "Commission") under Section 4(2) of the Securities
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Act of 1933, as amended (the "Securities Act");
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WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to the Purchasers, and the Purchasers
desire to acquire from the Company, 21,000 shares of the Company's Series A 4%
Convertible Preferred Stock, par value $0.001 per share, liquidation value
$1,000 per share (the "Preferred Stock," at an aggregate purchase price of
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$21,000,000 in the form of Exhibit A annexed hereto, and a stock purchase
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warrant or warrants (each, a "Warrant"), in the form of Exhibit B annexed
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hereto, to purchase an aggregate amount of 2,100,000 shares of the Company's
common stock, par value $0.001 per share (the "Common Stock");
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WHEREAS, contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form of Exhibit C attached hereto (the "Registration Rights
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Agreement") pursuant to which the Company has agreed to provide certain
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registration rights under the Securities Act and the rules and regulations
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promulgated thereunder, and applicable state securities laws; and
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NOW THEREFORE, in consideration of the promises and mutual covenants and
agreements hereinafter, the Company and the Purchasers hereby agree as follows:
exhibit 10.1, page 2
ARTICLE I.
PURCHASE AND SALE
1.1 Purchase and Sale.
On the Closing Date (as defined below), subject to the terms and conditions
set forth herein, the Company shall issue and sell to each Purchaser and each
Purchaser, severally and not jointly, shall purchase from the Company the shares
of Preferred Stock as set forth on Schedule I and a Warrant or Warrants
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exercisable for the amount of Common Stock as set forth on Schedule I for such
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Purchaser. The aggregate purchase price of the shares of Preferred Stock
purchased by the Purchasers shall be $21,000,000 and the aggregate number of
shares of Common Stock for which the Warrant or Warrants will be exercisable
shall be 2,100,000 shares of Common Stock. If this Agreement has been executed
but the Closing shall not have occurred by July 10, 1999, each Purchaser shall
have the right to withdraw from the transaction and shall be paid a termination
fee, by the Company, equal to 1% of its respective purchase amount.
1.2 Closing.
The Closing. The closing of the purchase and sale of the 21,000 shares of
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Preferred Stock and Warrants for an aggregate of 2,100,000 shares of Common
Stock (the "Closing") shall take place at the offices of Akin, Gump, Strauss,
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▇▇▇▇▇ & ▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or by
transmission by facsimile and overnight courier, 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 "Closing Date"). At
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the Closing:
(i) Each Purchaser shall deliver, as directed by the Company, its portion of
the purchase price as set forth next to its name on Schedule I in United
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States dollars in immediately available funds to an account or accounts
designated in writing by the Company;
(ii) The Company shall deliver to each Purchaser a certificate evidencing
the number of shares of Preferred Stock purchased by such Purchaser as set forth
on Schedule I hereto, the Preferred Stock shall have the respective rights,
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preferences, limitations and privileges set forth in Exhibit A attached hereto,
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which shall be incorporated into a Certificate of Designation of Series and a
Statement of Variations of Relative Rights, Preferences and Limitations (the
"Certificate of Designation") to be approved by the Purchasers and the Company's
Board of Directors and filed on or before the Closing with the Secretary of
State of Delaware;
(iii) The Company shall deliver to each Purchaser a Warrant, in the form of
Exhibit B hereto, representing the right to acquire the number of shares of
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Common Stock purchased by such Purchaser as set forth on Schedule I hereto; and
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exhibit 10.1, page 3
(iv) The parties shall execute and deliver each of the documents referred to
in Section 4.1.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company. The Company
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hereby makes the following representations and warranties to each of the
Purchasers:
a. Organization and Qualification. The Company is a corporation duly
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incorporated, validly existing and in good standing under the laws of the State
of Delaware, with the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Except as set forth on Schedule 2.1(a), the Company has no subsidiaries
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(collectively, the "Subsidiaries"). Each of the Subsidiaries (which for
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purposes of this Agreement means any entity in which the Company, directly or
indirectly, owns the majority of such entity's capital stock or holds an
equivalent equity or similar interest) 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. Except as set forth on Schedule 2.1(a), each of the
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Company and the Subsidiaries is duly qualified as a foreign corporation 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 any of this
Agreement or the Transaction Documents (as defined in Section 2.1(b)) or any of
the transactions contemplated hereby or thereby, (y) have or result in a
material adverse effect on the results of operations, assets, prospects, or
financial condition of the Company and its Subsidiaries, taken as a whole or (z)
materially 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"). The Company has furnished to each of the Purchasers
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true and correct copies of the Company's Certificate of Incorporation, as
amended and as in effect on the date hereof (the "Certificate of
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Incorporation"), and the Company's Bylaws, as in effect on the date hereof (the
"Bylaws").
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b. Authorization; Enforcement. The Company has the requisite corporate
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power and authority to enter into and to consummate the transactions
contemplated by this Agreement the Certificate of Designation of Rights,
Preferences and Privileges, the Warrants and the Registration Rights Agreement
(collectively, the "Transaction Documents"), and otherwise to carry out its
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obligations hereunder and thereunder. The execution and delivery of each of
this Agreement and 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 corporate action by the Company. Each of this
Agreement and 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 and
except that rights to indemnification and contribution may be limited by Federal
or state securities laws or public policy relating thereto.
exhibit 10.1, page 4
c. Capitalization. As of the date hereof, the authorized capital stock of
the Company is as set forth in Schedule 2.1(c). All of such outstanding shares
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of capital stock have been, or upon issuance will be, validly authorized and
issued, fully paid and nonassessable and were issued in accordance with the
registration provisions of the Securities Act, or pursuant to valid exemptions
therefrom. Except as disclosed in Schedule 2.1(c) or the SEC Documents, (i) no
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shares of the Company's capital stock are subject to preemptive 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
Transaction Document, as defined in Section 2.1(b) above, (ii) there are no
outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, or giving any Person (as defined below)
any right to subscribe for or acquire, any shares of capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, (iii) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the Securities Act (except the Registration Rights
Agreement), (iv) there are no outstanding securities of the Company or any of
its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries, (v) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the shares of Common Stock as described in this
Agreement and (vi) except as specifically disclosed in the SEC Documents (as
defined in Section 2.1(k)), to the Company's knowledge, no Person (as defined
below) 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
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obligation binding upon the Company beneficial ownership of in excess of 5% of
the Common Stock. "Person" means an individual or corporation, partnership,
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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. Authorization and Validity; Issuance of Shares. The shares of Common
Stock issuable upon conversion of the Preferred Stock (the "Conversion Shares")
and exercise of the Warrants (the "Warrant Shares", and together with the
Conversion Shares the "Underlying Shares") are and will at all times hereafter
continue to be duly authorized and reserved for issuance and will be validly
issued, fully paid and non-assessable, free and clear of all liens, encumbrances
and Company rights of first refusal, other than liens and encumbrances created
by the Purchasers (collectively, "Liens") and will not be subject to any
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preemptive or similar rights other than as granted pursuant to the Transaction
Documents.
e. No Conflicts. The execution, delivery and performance of this Agreement
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and each of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including the
issuance of the Underlying Shares) do not and will not (i) conflict with or
exhibit 10.1, page 5
violate any provision of the Certificate of Incorporation, Bylaws or other
organizational documents of the Company, except where such conflict or violation
has not resulted or would not reasonably result, individually or in the
aggregate, in a Material Adverse Effect, (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, patent, patent license or instrument
(evidencing a Company or Subsidiary debt or otherwise) to which the Company or
any Subsidiary is a party or by which any property or asset of the Company or
any Subsidiary is bound or affected, except where such conflict or violation has
not resulted or would not reasonably result, individually or in the aggregate,
in a Material Adverse Effect, or (iii) result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or any Subsidiary is
subject (including Federal and state securities laws and regulations and the
rules and regulations of the principal market or exchange on which the Common
Stock is traded or listed) applicable to the Company or any of its Subsidiaries,
or by which any material property or asset of the Company or any Subsidiary is
bound or affected, except where such conflict has not resulted or would not
reasonably result, individually or in the aggregate, in a Material Adverse
Effect.
f. Consents and Approvals. Except as specifically set forth on Schedule
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2.1(f), neither the Company nor any Subsidiary is required to obtain any
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consent, waiver, authorization or order of, give any notice to, or make any
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filing or registration with, any court or other federal, state, local or other
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governmental authority, regulatory or self regulatory agency, or other Person in
connection with the execution, delivery and performance by the Company of this
Agreement or the Transaction Documents, other than (i) the filing of a
registration statement with the Commission, which shall be filed in accordance
with and in the time periods set forth in the Registration Rights Agreement,
(ii) the application(s) or any letter(s) acceptable to the Nasdaq National
Market ("Nasdaq") for the listing of the Underlying Shares with Nasdaq (and with
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any other national securities exchange or market on which the Common Stock is
then listed), and (iii) any filings, notices or registrations under applicable
state securities laws (together with the consents, waivers, authorizations,
orders, notices and filings referred to on Schedule 2.1(f), the "Required
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Approvals"), except where failure to do so has not resulted or would not
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reasonably result, individually, or in the aggregate, in a Material Adverse
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Effect.
g. Litigation; Proceedings. Except as specifically set forth on Schedule
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2.1(g) or in the SEC Documents, there is no action, suit, notice of violation,
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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 this Agreement or the Transaction Documents or (ii)
would 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
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in default under or in violation of any indenture, loan or other 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 and which is required to be included
as an exhibit to any SEC Document (as defined in Section 2.1(k)) or will be
exhibit 10.1, page 6
required to be included as an exhibit to the Company's next filing under either
the Securities Act or Exchange Act (ii) is in violation of any order of any
court, arbitrator or governmental body applicable to it, (iii) is in violation
of any statute, rule or regulation of any governmental authority to which it is
subject, (iv) is in default under or in violation of its Certificate of
Incorporation, Bylaws or other organizational documents, respectively in each
case, except where such violations have not resulted or would not reasonably
result, individually or in the aggregate, in a Material Adverse Effect. The
business of the Company and its Subsidiaries is not being conducted, and shall
not be conducted, in violation of any law, ordinance, rule or regulation of any
governmental entity, except where such violations have not resulted or would not
reasonably result, individually or in the aggregate, in a Material Adverse
Effect.
i. Disclosure; Absence of Certain Changes. None of this Agreement, the
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Schedules to this Agreement, the Transaction Documents hereby contained,
contains, or will contain at the time it was or is so furnished any untrue
statement of a material fact or omitted, omits or will omit at such time to
state any material fact necessary in order to make the statements made herein
and therein, in light of the circumstances under which they were made, not
misleading. Except as disclosed on Schedule 2.1(i) or in SEC Documents filed on
▇▇▇▇▇, since December 31, 1998, there has been no material adverse change and no
material adverse development in the business, properties, operations, financial
condition, liabilities or results of operations or, insofar as can reasonably be
foreseen, prospects of the Company or the Subsidiaries. The Company has not
taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy law nor does the Company or any of its
Subsidiaries have any knowledge or reason to believe that its creditors intend
to initiate involuntary bankruptcy proceedings.
j. Private Offering. The Company and all Persons acting on its behalf have
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not made, directly or indirectly, and will not make, offers or sales of any
securities or solicited any offers to buy any security under circumstances that
would require registration of the Preferred Stock, the Warrants or the
Underlying Shares or the issuance of such securities under the Securities Act.
Subject to the accuracy and completeness of the representations and warranties
of the respective Purchasers contained in Section 2.2, the offer, sale and
issuance by the Company to the Purchasers of the Preferred Stock, the Warrants
and the Underlying Shares is exempt from the registration requirements of the
Securities Act.
k. SEC Documents; Financial Statements. The Common Stock of the Company is
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registered pursuant to Section 12(g) of the Exchange Act. Since December 31,
1998, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it, with the Commission, pursuant to Section
13, 14 or 15(d) of the Exchange Act (the foregoing materials and all exhibits
included therein and financial statements and schedules thereto and documents
(other than exhibits to such documents) incorporated by reference therein being
collectively referred to herein as the "SEC Documents"), on a timely basis or
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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 applicable
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
exhibit 10.1, page 7
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. All agreements to which the Company or any
Subsidiary is a party or to which the property or assets of the Company or any
Subsidiary are subject and which are required to be filed as exhibits to the SEC
Documents have been filed as exhibits to the SEC Documents as required. As of
their respective dates, the financial statements of the Company included in the
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published 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 United States
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, immaterial year-end audit adjustments.
Neither the Company nor any of its Subsidiaries or any of their officers,
directors, employees or agents have provided the Purchasers with any material,
nonpublic information without first identifying to the Purchasers that they were
receiving material, nonpublic information. The Company acknowledges that the
Purchasers will be trading in the securities of the Company in reliance on the
foregoing representation and warranty.
l. Investment Company. The Company is not, and is not controlled by or
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under common control with an affiliate (an "Affiliate") of an "investment
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company" within the meaning of the Investment Company Act of 1940, as amended.
m. Broker's Fees. No fees or commissions or similar payments with respect
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to the transactions contemplated by this Agreement or the Transaction Documents
have been paid or will be payable by the Company to any broker, financial
advisor, finder, investment banker, or bank, other than as set forth in Schedule
2.1(m). 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(m) that may be due in connection with the
transactions contemplated by this Agreement and the Transaction Documents.
n. Form S-3 Eligibility. The Company is, and at the Closing Date will be,
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eligible to register securities (including the Underlying Shares) for resale
with the Commission under Form S-3 (or any successor form) promulgated under the
Securities Act.
o. Listing and Maintenance Requirements Compliance. The principal market on
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which the Common Stock is currently traded is Nasdaq. Except as disclosed on
Schedule 2.1(o), the Company has not since December 31, 1998 received notice
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(written or oral) from Nasdaq (or 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 market or exchange. After giving effect to the
transactions contemplated by this Agreement and the Transaction Documents, the
Company is and will be in compliance with all such maintenance requirements.
p. Intellectual Property Rights. The Company and each of its Subsidiaries
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own or possess adequate rights or licenses to use all trademarks, trademark
applications, trade names and service marks, whether or not registered, and all
patents, patent applications, copyrights, inventions, licenses, approvals,
exhibit 10.1, page 8
governmental authorizations, trade secrets and intellectual property rights
(collectively, "Intellectual Property Rights") which are necessary for use in
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connection with their respective businesses as now conducted and as described in
the SEC Documents. Except as set forth on Schedule 2.1(p), none of the
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Company's Intellectual Property Rights have expired or terminated, or are
expected to expire or terminate within two years from the date of this
Agreement. To the Company's knowledge, neither the Company nor any of its
Subsidiaries has infringed or is infringing on any of the Intellectual Property
Rights of any Person and, except as set forth on Schedule 2.1(p), there is no
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claim, action or proceeding which has been made or brought against, or to the
Company's knowledge, is being made, brought or threatened against, the Company
or its Subsidiaries regarding the infringement of any of the Intellectual
Property Rights, and the Company and its Subsidiaries are unaware of any facts
or circumstances which might give rise to any of the foregoing, except where any
of the foregoing would not have a Material Adverse Effect. The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties.
q. Internal Accounting Controls. The Company and its Subsidiaries maintain
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a system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with United States
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
r. Transactions With Affiliates. Except as set forth on Schedule 2.1(c) or
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Schedule 2.1(r), none of the executive officers or directors of the Company is
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presently a party to any transaction with the Company or any of its Subsidiaries
(other than for services as executive officers and directors) involving an
amount in excess of $60,000, including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any corporation, partnership, trust or entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.
s. Application to Takeover Protection. The Company and its Board of
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Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination or other
similar anti-takeover provision under the Certificate of Incorporation or Bylaws
which is or could become applicable to the Purchasers or the Transaction
Documents as a result of the purchase of the Preferred Stock and the Warrants
pursuant to this Agreement. None of the transactions contemplated by this
Agreement or the Transaction Documents, including the conversion of the Shares
of Preferred Stock and the exercise of the Warrants, will trigger any poison
pill provisions of any of the Company's stockholders' rights or similar
agreements.
exhibit 10.1, page 9
t. Acknowledgement Regarding Purchasers' Purchase of Preferred Stock. The
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Company further acknowledges that no Purchaser is acting as a financial advisor
or fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any statement made by any
Purchaser or any of their respective representatives or agents in connection
with this Agreement and the transactions contemplated hereby is not advice or a
recommendation and is merely incidental to the Purchasers' purchase of the
securities. The Company further represents to each Purchaser that the Company's
decision to enter into this Agreement has been based solely on the independent
evaluation of the Company and its representatives.
u. Seniority; Exclusivity. No class of equity securities of the Company
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will be senior to the Preferred Stock in right of payment, whether upon
liquidation, dissolution or otherwise. So long as any Preferred Stock issued
hereunder remains outstanding, the Company shall not exchange, redeem or covert
any of the Company's capital stock for indebtedness, including convertible debt,
of the Company. The Company shall not issue and sell any Shares of Preferred
Stock, other than to the Purchasers pursuant to this Agreement, without the
prior written consent of each of the Purchasers.
2.2 Representations and Warranties of the Purchasers. Each of the
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Purchasers, severally and not jointly, hereby represents and warrants to the
Company as follows:
a. Organization; Authority. Such Purchaser is a corporation or a limited
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duration company 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 Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder. The purchase by such Purchaser of the
Shares of Preferred Stock and the Warrants 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 of Preferred
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Stock, the Warrants and the Underlying Shares for its own account and not with a
present view to or for distributing or reselling the shares of Preferred Stock,
the Warrants, the Conversion Shares or the Warrant Shares or any part thereof or
interest therein in violation of the Securities Act; provided, however, that by
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making the representations herein, such Purchaser does not agree to hold any of
the shares of Preferred Stock, the Warrants, the Conversion Shares or the
Warrant Shares for any minimum or other specific term and reserves the right to
dispose of the shares of Preferred Stock at any time in accordance with or
pursuant to a registration statement or an exemption under the Securities Act.
exhibit 10.1, page 10
c. Purchaser Status. At the time such Purchaser was offered the Preferred
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Stock and the Warrants, and at the Closing Date and each date such Purchaser
exercises Warrants, (i) it was and will be an "accredited investor" as defined
in Rule 501 under the Securities Act and (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
Preferred Stock, the Warrants and the Common Stock.
d. Reliance. Such Purchaser understands and acknowledges that (i) the
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Preferred Stock, the Warrants and the underlying Shares are being offered and
sold to such 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
representations set forth in this Section 2.2 and such Purchaser hereby consents
to such reliance.
e. Information. Such Purchaser and its advisors, if any, have been
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furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Preferred
Stock and Warrants which have been requested by such Purchaser or its advisors.
Such Purchaser and its advisors, if any, have been afforded the opportunity to
ask questions of the Company. Neither such inquiries nor any other due
diligence investigation conducted by Purchaser or any of its advisors or
representatives shall modify, amend or affect Purchaser's right to rely on the
Company's representations and warranties contained in Section 2.1 above or
representations and warranties of the Company contained in any other transaction
document. Such Purchaser understands that its investment in the Preferred Stock
and Warrants involves a significant degree of risk.
f. Governmental Review. Such Purchaser understands that no United States
--------------------
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Preferred Stock or
Warrants.
g. Residency. Such Purchaser is a resident of the jurisdiction set forth
---------
immediately below such Purchaser's name on Schedule II hereto.
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
3.1 Transfer Restrictions.
a. If any Purchaser should decide to dispose of the Preferred Stock, the
Warrants, the Conversion Shares or the Warrant Shares held by it, such Purchaser
understands and agrees that it may do so only pursuant to an effective
exhibit 10.1, page 11
registration statement under the Securities Act, to the Company or pursuant to
an available exemption from the registration requirements of the Securities Act
or Rule 144 promulgated under the Securities Act ("Rule 144"). In connection
--------
with any transfer of any Preferred Stock, Warrants, Conversion Shares or Warrant
Shares other than pursuant to an effective registration statement, Rule 144 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 customary for opinions of counsel in comparable transactions
and reasonably acceptable to the Company, to the effect that such transfer does
not require registration of such transferred securities under the Securities
Act; provided, however, that if the Preferred Stock, Warrants, Conversion Shares
-------- -------
or Warrant Shares may be sold pursuant to Rule 144(k), no written opinion of
counsel shall be required from the Purchaser if such Purchaser provides
reasonable assurances that such security can be sold pursuant to Rule 144(k).
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register any transfer by any Purchaser to an Affiliate (as defined in the
Certificate of Designation) of such Purchaser, provided that the 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 agree in writing to
be bound by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement and the Transaction Documents. If a Purchaser provides the
Company with an opinion of counsel, the form and substance of which opinion
shall be customary for opinions of counsel in comparable transactions and
reasonably acceptable to the Company, to the effect that a public sale,
assignment or transfer of the Preferred Stock, the Conversion Shares, the
Warrants and the Warrant Shares may be made without registration under the
Securities Act or the Purchaser provides the Company with reasonable assurances
that the Warrants, the Conversion Shares and the Warrant Shares can be sold
pursuant to Rule 144 without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold, the Company
shall permit the transfer, and, in the case of the Conversion Shares and the
Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by such
Purchaser and without any restrictive legend. Notwithstanding the foregoing or
anything else contained herein to the contrary, the securities may be pledged as
collateral in connection with a bona fide margin account or other lending
arrangement.
b. Each Purchaser agrees to the imprinting, so long as is required by this
Section 3.1(b), of the following legend on the Preferred Stock, the Warrants,
the Conversion Shares and the Warrant 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.
exhibit 10.1, page 12
Neither the Preferred Stock, the Warrants, the Conversion Shares, nor the
Warrant Shares shall contain the legend set forth above (or any other legend)
(i) 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) or (ii) if such Preferred
Stock, Warrants, Conversion Shares or Warrant Shares may be sold pursuant to
Rule 144(k). The Company agrees that it will provide each Purchaser, upon
request, with a certificate or certificates representing shares of Preferred
Stock, Warrants, Conversion Shares or Warrant Shares, free from such legend at
such time as such legend is no longer required hereunder. If such certificate
or certificates had previously been issued with such a legend or any other
legend, the Company shall, upon request and upon the delivery of the legended
certificate(s), reissue such certificate or certificates free of any legend.
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 on transfer set forth in Section 3.1.
3.3 Furnishing of Information. As long as any Purchaser owns the Preferred
--------------------------
Stock, the Warrants, the Conversion Shares or the Warrant Shares, the Company
will cause the Common Stock to continue at all times to be registered under
Section 12 of the Exchange Act or subject to Section 15(d) of the Exchange Act,
will 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, 14 or 15(d) of the Exchange Act and will
not take any action or file any document (whether or not permitted by the
Exchange Act or the rules thereunder) to terminate or suspend such reporting and
filing obligations. As long as any Purchaser owns the Preferred Stock, the
Warrants, the Conversion Shares or the Warrant 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 the holders of a majority of the Preferred Stock, the
Warrants, the Conversion Shares or the Warrant Shares may reasonably request,
all to the extent required from time to time to enable such Person to sell the
Preferred Stock, the Warrants, the Conversion Shares, or the Warrant 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 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 Preferred Stock, the Warrants, the Conversion Shares or the Warrant
Shares in a manner that would require the registration under the Securities Act
exhibit 10.1, page 13
of the sale of the Preferred Stock, the Warrants, the Conversion Shares or the
Warrant Shares to any Purchaser, or to issue securities in such circumstances
that is likely to result in such offering being integrated with the sale of the
Preferred Stock, Warrants and Underlying Shares in such manner that stockholder
approval would be required pursuant to any stockholder approval provision
applicable to the Company or its securities.
3.5 Listing and Reservation of Conversion Shares and Warrant Shares.
a. The Company shall (i) not later than ten (10) business days after the
Closing Date prepare and file with Nasdaq (as well as any other national
securities exchange or market on which the Common Stock is then listed)
additional shares listing applications or letters acceptable to Nasdaq covering
and listing a number of shares of Common Stock which is at least equal to 100%
the maximum number of Underlying Shares then issuable, assuming that the payment
of all future dividends on such 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 on Nasdaq (as well as on any other national securities
exchange or market on which the Common Stock is then listed) as soon as possible
thereafter, (iii) maintain, so long as any other shares of Common Stock shall be
so listed, such listing of all such Underlying Shares, and (iv) provide to the
Purchasers evidence of such listing. Prior to the effectiveness of the
Registration Statement, the Company shall promptly provide to each Purchaser
copies of any notices it receives from Nasdaq regarding the continued
eligibility of the Common Stock for listing on such automated quotation system.
The Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 3.5(a).
b. The Company at all times shall reserve a sufficient number of shares of
its authorized but unissued Common Stock to provide for the full conversion of
the outstanding shares of Preferred Stock and exercise of the outstanding
Warrants. Shares of Common Stock reserved for issuance upon conversion of the
shares of Preferred Stock and the exercise of the Warrants shall be allocated
pro rata to each of the Purchasers in accordance with the number of shares of
Preferred Stock and Warrants issued and delivered to such Purchaser at the
Closing. If at any time the number of shares of Common Stock authorized and
reserved for issuance is insufficient to cover 100% of the number of Conversion
Shares and Warrant Shares issued and issuable upon conversion of the shares of
Preferred Stock and exercise of the Warrants (based on the Conversion Price (as
defined in the Certificate of Designation) of the shares of Preferred Stock in
effect from time to time and the Exercise Price (as defined in the Warrants) of
the Warrants in effect from time to time) without regard to any limitation on
conversions or exercises, the Company will promptly take all corporate action
necessary to authorize and reserve 100% of such shares pursuant to Section 3(b)
of the Registration Rights Agreement, including, without limitation, calling a
special meeting of stockholders to authorize additional shares to meet the
Company's obligations under this Section 3.5(b), in the case of an insufficient
number of authorized shares, and using best efforts to obtain stockholder
approval of an increase in such authorized number of shares.
3.6 Notice of Breaches.
--------------------
a. Prior to the effectiveness of the Registration Statement, the Company and
each Purchaser shall give prompt written notice to the other of any breach
exhibit 10.1, page 14
by it of any representation, warranty or other agreement contained in this
Agreement or in the Transaction Documents, as well as any events or occurrences
arising after the date hereof and prior to the 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 the Closing Date. However, no disclosure by either party pursuant to this
Section 3.6 shall be deemed to cure any breach of any representation, warranty
or other agreement contained herein or in the Transaction Documents.
b. Notwithstanding the generality of Section 3.6(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 or any Subsidiary 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 or any Subsidiary, and the
Company shall promptly furnish by facsimile to the Purchasers 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 this Agreement or the Transaction Documents shall not be
imputed to, and shall have no effect upon, any other Purchaser or affect the
Company's obligations under this Agreement or any Transaction Document to any
non-defaulting Purchaser, except as expressly provided in the Transaction
Documents or to the extent an obligation of the Company can not reasonably be
met as a result of a default by a Purchaser.
3.7 Form D. The Company agrees to file a Form D with respect to the
-------
Preferred Stock and Warrants as required by Rule 506 under Regulation D and to
provide a copy thereof to each Purchaser promptly after such filing.
3.8 Future Financings. As long as shares of the Preferred Stock are
------------------
outstanding, except for (i) issuance of the Underlying Shares; (ii) shares of
Common Stock deemed to have been issued by the Company in connection with any
plan which has been approved by the Board of Directors of the Company, pursuant
to which the Company's securities may be issued to any employee, officer,
director or consultant of the Company; (iii) shares of Common Stock issuable
upon the exercise of any options or warrants outstanding on the date hereof and
listed in Schedule 2.1(c) hereto; (iv) the securities to be issued in the
transactions set forth on such Schedule 2.1(c); (v) shares issued in a
transaction registered under the Securities Act; or (vi) shares of Common Stock
issued or deemed to have been issued as consideration for an acquisition by the
Company of a division, assets or business (or stock constituting any portion
thereof) from another Person, if the Company agrees to issue shares of Common
Stock or other securities convertible into or exchangeable or exercisable for
Common Stock (the "New Security") while any shares of Preferred Stock are
-------------
outstanding at an effective price per share which is less (including, without
limitation, any security which is convertible into or exchangeable or
exercisable for Common Stock at a price which may change with the market price
of the Common Stock) than the Conversion Price (as defined in the Certificate of
Designation) of the shares of Preferred Stock as of the date thereof (a "Future
------
Financing"), the Company shall provide to the Purchasers by 5:00 p.m. (New York
---------
time) on or before the third (3rd) Trading Day (as defined below) after the
decision to issue the New Security has been made, written notice of the Future
Financing containing in reasonable detail (i) the proposed terms of the Future
exhibit 10.1, page 15
Financing, (ii) the amount of the proceeds that will be raised and (iii) the
Person with whom such Future Financing shall be effected, and attached to which
shall be a term sheet or similar document relating thereto (the "Future
------
Financing Notice"). Upon receiving the Future Financing Notice, each Purchaser
---------
shall have the pro rata right (based on the purchase price of the shares of
Preferred Stock held by such Purchaser relative to the aggregate purchase price
of shares of Preferred Stock outstanding) to purchase, on the same terms as the
Future Financing, an amount of New Securities (in addition to the New Securities
being issued in the Future Financing) having a purchase price which shall not
exceed the lesser of (i) the aggregate purchase price set forth in Schedule I
----------
hereto opposite such Purchaser's name, or (ii) the aggregate purchase price of
the New Securities being issued in the Future Financing. In the event a
Purchaser desires to exercise the right granted under this Section 3.8, such
Purchaser must notify the Company on or prior to the fifth (5th)Trading Day
after such Purchaser has received the Future Financing Notice. In the event the
terms and conditions of a proposed Future Financing are amended in any material
respect after delivery of the Future Financing Notice but prior to the closing
of the proposed Future Financing to which such Future Financing Notice relates,
the Company shall deliver a new notice to each Purchaser describing the amended
terms and conditions of the proposed Future Financing and each Purchaser
thereafter shall have an option during the two (2) Trading Days period following
delivery of such new notice to purchase its pro rata share (based on the
Purchaser's percentage of the aggregate purchase price of the outstanding shares
of Preferred Stock such Purchaser owns) of the New Securities being offered on
the same terms as contemplated by such proposed Future Financing, as amended, or
to withdraw its election to exercise such right. The foregoing sentence shall
apply to successive amendments to the terms and conditions of any proposed
Future Financing. At the closing for such Future Financing, the transactions
contemplated by this Section 3.8 shall close, subject to the completion of
mutually satisfactory documentation, and the Company shall tender to each
Purchaser certificates representing the New Securities that it agreed to
purchase and the Purchasers shall make payment for the entire purchase price in
immediately available funds at the closing of such sale; provided, however, that
-------- -------
each Purchaser, in lieu of providing cash as consideration for the purchase
price, may retire all or a portion of the outstanding number of and any
dividends owing on the shares of Preferred Stock as payment of the purchase
price for the shares of Common Stock that it desires to purchase pursuant to
this Section 3.8. "Trading Day" shall mean a day on which the Nasdaq (or in the
-----------
event the Common Stock is not traded on Nasdaq, such other securities market on
which the Common Stock is listed) is open for trading.
3.9 Use of Proceeds. The Company shall use the proceeds from the sale of
-----------------
the Preferred Stock and the exercise of the Warrants to acquire assets, reduce
debt and for working capital.
3.10 Transactions with Affiliates. So long as any Preferred Stock or
------------------------------
Warrants are outstanding, the Company shall not, and shall cause each of its
Subsidiaries or affiliated entities not to, enter into, amend, modify or
supplement, or permit any Subsidiary to enter into, amend, modify or supplement,
any agreement, transaction, commitment or arrangement with any of its or any
Subsidiary's officers, directors or persons who were officers or directors at
any time during the previous two years, stockholders who beneficially own 10% or
more of the Common Stock, or Affiliates or any individual related by blood,
marriage or adoption to any such individual or with any entity in which any such
entity or individual owns a 10% or more beneficial interest (each a "Related
-------
Party"), except for (a) customary employment arrangements and benefit programs
--
on reasonable terms consistent with prior practice, (b) any agreement,
exhibit 10.1, page 16
transaction, commitment or arrangement on an arms-length basis on terms no less
favorable than terms which would have been obtainable from a Person other than
such Related Party, (c) any agreement, transaction, commitment or arrangement
which is approved by a majority of the directors of the Company who have no
material financial interest in the matter or (d) transactions pursuant to the
Transaction Documents. "Affiliate" for purposes of this section only means,
---------
with respect to any person or entity, another person or entity that, directly or
indirectly, (i) has a 20% or more equity interest in that person or entity, (ii)
has 20% or more common ownership with that person or entity, (iii) controls or
is controlled by that person or entity, or (iv) shares common control or is
under common control with that person or entity. "Control" or "Controls" for
------- --------
purposes of this section means that a person or entity has the power, direct or
indirect, to conduct or govern the policies of another person or entity.
3.11 Transfer Agent Instructions. At each Closing the Company shall issue
-----------------------------
irrevocable instructions to its transfer agent (and shall issue to any
subsequent transfer agent as required), to issue certificates, registered in the
name of each such Purchaser or its respective nominee(s), for the Conversion
Shares and/or the Warrant Shares in such amounts as specified from time to time
by each Purchaser to the Company in a form similar to Exhibit __ attached hereto
(the "Irrevocable Transfer Agent Instructions"). So long as required pursuant
----------------------------------------
to Section 3.1(b), all such certificates shall bear the restrictive legend
specified in Section 3.1(b) of this Agreement. The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 3.11, and stop transfer instructions to give effect to Section
3.1 (in the case of the Conversion Shares and the Warrant Shares, prior to
registration of the Conversion Shares under the Securities Act) will be given by
the Company to its transfer agent. If a Purchaser provides the Company with an
opinion of counsel of a law firm with recognized expertise in securities
addressed to the Company, the form and substance of which opinion shall be
customary for opinions of counsel in comparable transactions, to the effect that
a public sale, assignment or transfer of the Preferred Stock, the Conversion
Shares, the Warrants and the Warrant Shares may be made without registration
under the Securities Act or the Purchaser provides the Company with reasonable
assurances that the Warrants, the Conversion Shares and the Warrant Shares can
be sold pursuant to Rule 144 without any restriction as to the number of
securities acquired as of a particular date that can then be immediately sold,
the Company shall permit the transfer, and, in the case of the Conversion Shares
and the Warrant Shares, promptly instruct its transfer agent to issue one or
more certificates in such name and in such denominations as specified by such
Purchaser and without any restrictive legend. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Purchasers by violating the intent and purpose of the transactions contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 3.11 will be inadequate and agrees,
in the event of a beach or threatened breach by the Company of the provisions of
this Section 3.11, that the Purchasers, shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
3.12 Press Release; Filing of Form 8-K. Subject to the provisions of
--------------------------------------
Section 6.11, the Company shall issue a press release in form and substance
acceptable to the Purchasers promptly following the Closing.
exhibit 10.1, page 17
3.13 Non-public Information Ordinary Course Brokerage and Trading.
------------------------------------------------------------------
Purchasers acknowledge that they may have been provided material non-public
information in connection with the transactions contemplated hereby and that
trading in securities of the Company while in the possession of material
non-public information is prohibited by the federal securities laws. No
Purchaser who is in possession of material non-public information shall trade in
any securities of the Company prior to the third business day after the Company
publicly announces its results of operations for the quarter ended September 30,
1999, or at any time thereafter that such Purchaser is in possession of material
non-public information. Subject to compliance with all applicable securities
laws, Nasdaq regulations, no Purchaser shall be prohibited by the Company from
engaging in its ordinary course brokerage and trading activities in respect of
the Company's Common Stock; provided that the personnel engaged in such
--------
activities have not been involved with the transactions contemplated hereby and
have not been provided with confidential information with respect to the
Company; provided further that Purchasers shall not engage in any ordinary
-------- -------
course brokerage or trading activities in respect of the Company's Common Stock
during the ninety (90) day period commencing on the Closing Date, unless the
Average Price (as defined in the Certificate of Designation) on any given date
as calculated on the basis of 22 consecutive Trading Days rises above 200% of
the Conversion Price (as defined in the Certificate of Designation). No
Purchaser shall engage in any trading activity in the Company's securities in
violation of Regulation M under the Exchange Act.
3.14 Best Efforts. Each of the parties hereto shall use its best efforts to
------------
satisfy each of the conditions to be satisfied by it as provided in Article IV
of this Agreement.
3.15 Corporate Existence. Until such time as all of the Purchasers provide
--------------------
the Company with written notice that they do not beneficially own any shares of
Preferred Stock or Warrants, the Company shall maintain its corporate existence
and shall not sell all or substantially all of the Company's assets, except in
the event of a merger or consolidation or sale of all or substantially all of
the Company's assets, where the surviving or successor entity in such
transaction (i) assumes the Company's obligations hereunder and under the
agreements and instruments entered into in connection herewith and (ii) is a
publicly traded corporation whose common stock is listed for trading on the
Nasdaq, the New York Stock Exchange or the American Stock Exchange.
3.16 No Violation of Applicable Law. Notwithstanding any provision of this
-------------------------------
Agreement to the contrary, if the redemption of shares of Preferred Stock
otherwise required under this Agreement or the Registration Rights Agreement
would be prohibited by the relevant provisions of the Delaware General
Corporation Law, such redemption shall be effected as soon as it is permitted
under such law; provided, however, that from the fifth (5th) day after such
redemption notice until such redemption price is paid in full, interest on any
such unpaid amount shall accrue and be payable at the rate of 15% per annum in
accordance with the applicable Certificate of Designation.
ARTICLE IV.
CONDITIONS
4.1 Closing.
exhibit 10.1, page 18
a. Conditions Precedent to the Obligation of the Company to Sell the Shares
-------------------------------------------------------------------------
of Preferred Stock and Warrants. The obligation of the Company to sell the
-----------------------------------
shares of Preferred Stock and Warrants is subject to the satisfaction or waiver
(with prior written notice to each Purchaser) by the Company, at or before the
Closing Date of each of the following conditions:
(i) Accuracy of the Purchasers' Representations and Warranties. The
--- ----------------------------------------------------------------
representations and warranties of each Purchaser in this Agreement shall be true
and correct in all material respects as of the date when made and as of the
Closing;
(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 before the 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 Transaction Documents.
b. Conditions Precedent to the Obligation of the Purchasers to Purchase the
-------------------------------------------------------------------------
Shares of Preferred Stock and Warrants at the Closing. The obligation of each
-------------------------------------------------------
Purchaser hereunder to acquire and pay for the shares of Preferred Stock and
Warrants at the Closing is subject to the satisfaction or waiver by such
Purchaser, at or before the Closing Date, 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 respects
as of the date when made and as of the Closing Date;
(ii) Performance by the Company. The Company shall have performed, satisfied
---- --------------------------
and complied in all respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or before the Closing Date;
(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 and
the Transaction Documents;
(iv) No Suspensions of Trading in Common Stock. The trading in the Common
---- --------------------------------------------
Stock shall not have been suspended by the Commission, on Nasdaq (except for any
suspension of trading of limited duration solely to permit dissemination of
material information regarding the Company);
(v) Listing of Common Stock. The Common Stock shall have been at all times
--- -------------------------
since the date of this Agreement and on the Closing Date listed for trading on
the Nasdaq;
exhibit 10.1, page 19
(vi) Required Approvals. All Required Approvals shall have been obtained and
---- ------------------
copies thereof delivered to the Purchasers other than those relating solely to
Closing Dates other than the Closing Date;
(vii) Required Filing. The Company shall have filed the Certificate of
----- ----------------
Designation with the Secretary of State of Delaware and it shall have become
effective;
(viii) Shares of Common Stock. The Company shall have duly reserved the
------ -------------------------
number of Underlying Shares issuable upon the exercise of the Warrants or the
conversion of the shares of Preferred Stock acquired by the Purchaser on the
Closing Date;
(ix) 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 shall have occurred (for purposes
hereof, changes in the market price of the Common Stock as compared to the
market generally may be considered as a factor in determining whether there has
occurred an event which has had a Material Adverse Effect);
(x) Litigation. No litigation shall have been instituted or threatened
--- ----------
against the Company which would reasonably be expected to, individually or in
the aggregate, have had a Material Adverse Effect;
(xi) Change of Control. No Change of Control shall have occurred between the
---- -----------------
date hereof and the Closing Date. "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 13d-5(b)(1) promulgated under the Exchange
Act), other than the Purchasers or any of their Affiliates, of in excess of 25%
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 that 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, (iv) the consolidation or sale of all or
substantially all of the assets of the Company in one or a series of related
transactions or (v) 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), (iii) or (iv);
(xii) Transfer Agent Instructions. The Irrevocable Transfer Agent
----- -----------------------------
Instructions, in a form acceptable to the Purchasers, shall have been delivered
to and acknowledged in writing by the Company's transfer agent with a copy
forwarded to each Purchaser;
(xiii) Insider Participation. Current insiders of the Company (which
------ ----------------------
includes officers, directors and owners of at least 10% of the Common Stock)
shall invest a minimum of Two Million Dollars ($2,000,000) excluding conversion
of related-party debt, and more than Seven Million Dollars ($7,000,000)
including conversion of related-party debt, in accordance with the terms of this
Agreement; and
(xiv) Market Decline. The S&P 500 Index shall not have declined by ten
----- ---------------
(10)% or more since the closing price on June 22, 1999.
exhibit 10.1, page 20
c. Documents and Certificates. At the Closing, the Company shall have
----------------------------
delivered to the Purchasers, the following in form and substance reasonably
satisfactory to the Purchasers:
(i) Opinion. An opinion of the Company's legal counsel in the form attached
--- -------
hereto as Exhibit D dated as of the Closing Date;
----------
(ii) Preferred Stock Certificate. A Preferred Stock Certificate(s)
---- -----------------------------
representing the number of shares of Preferred Stock purchased by such Purchaser
----
as set forth next to such Purchaser's name on Schedule I, registered in the name
----------
of such Purchaser, each in form satisfactory to the Purchaser;
(iii) Warrant. A Warrant(s) representing the Warrants purchased by such
----- -------
Purchaser as set forth next to such Purchaser's name on Schedule I, registered
--- ----------
in the name of such Purchaser;
(iv) Registration Rights. The Company shall have executed and delivered the
---- -------------------
Registration Rights Agreement;
(v) Officer's Certificate. 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 and warranties as of such Closing Date and confirming
the compliance by the Company with the conditions precedent set forth in this
Section 4.1(c) as of the Closing Date;
(vi) Secretary's Certificate. A Secretary's Certificate dated the Closing
---- ------------------------
Date and signed by the Secretary or Assistant Secretary of the Company
certifying (A) that attached thereto is a true and complete copy of the
Certificate of Incorporation of the Company, as in effect on the Closing Date,
(B) that attached thereto is a true and complete copy of the by-laws of the
Company, as in effect on the Closing Date and (C) that attached thereto is a
true and complete copy of the Resolutions duly adopted by the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and of the Transaction Documents, and that such Resolutions have not
been modified, rescinded or revoked;
(vii) Certificates of Incorporation. The Company shall have delivered to
----- -------------------------------
each of the Purchasers a copy of a certificate evidencing the incorporation and
good standing of the Company as of a date within ten days of the Closing Date.
The Company shall have delivered to the Purchasers a copy of its Certificate of
Incorporation as certified by the Secretary of State of the State of Delaware
within ten days of the Closing Date;
(viii) Transfer Agent Letter. The Company shall have delivered to each
------ -----------------------
Purchaser a letter from the Company's transfer agent certifying the number of
shares of Common Stock outstanding as of a date within five days of the Closing
Date; and
(ix) Other Documents. The Company shall have delivered to each Purchaser
---- ----------------
such other documents relating to the transactions contemplated by the
Transaction Documents as the Purchasers or its counsel may reasonably request.
exhibit 10.1, page 21
ARTICLE V.
INDEMNIFICATION
5.1 Indemnification. Except to the extent that matters which could be
---------------
covered by this Section 5 are covered by Section 5 of the Registration Rights
Agreement, in consideration of the Purchasers execution and delivery of this
Agreement and the Transaction Documents and acquiring the Preferred Stock,
Conversion Shares, Warrants and Warrant Shares thereunder and in addition to all
of the Company's other obligations under this Agreement and the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Purchaser, its past and present Affiliates and their successors and assigns (in
accordance with the provisions of Section 6.6), each other holder of the
Underlying Shares and all of their stockholders, officers, directors, employees,
members, partners and managers and direct or indirect investors and any of the
foregoing Person's agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the "Indemnities") from and against any and all
-----------
actions, causes of action, suits, claims, losses, proceedings, costs (as
incurred), penalties, fees (including legal fees and expenses), liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnity is a party to the action for which indemnification hereunder is
sought), and including interest, penalties and attorneys' fees and disbursements
(the "Indemnified Liabilities"), incurred by any Indemnity as a result of, or
------------------------
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in this Agreement or in the
Transaction Documents, or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement or the Transaction
Documents, or any other certificate, instrument or document contemplated hereby
or thereby, or (c) any cause of action, suit or claim brought or made, other
than by the Company, against such Indemnity and arising out of or resulting from
(i) the execution, delivery, performance or enforcement of this Agreement or the
Transaction Documents, (ii) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of the issuance of the
Preferred Stock or Warrants or (iii) solely the status of such Purchasers or
holder of the Preferred Stock, the Conversion Shares, the Warrants or the
Warrant Shares as an investor in the Company; provided however, that the Company
-------- -------
shall not be required to provide indemnification for any losses, claims,
damages, liabilities or expenses arising out of the gross negligence or willful
misconduct of a Purchaser. The indemnification 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 the Purchasers and partners, directors, agents, employees and controlling
Persons (if any), as the case may be, of the Purchasers and any such affiliate,
and shall be binding upon and inure to the benefit of any successors, assigns,
heirs and personal representatives of the Company, the Purchasers and any such
affiliate and any such Person. The Company also agrees that neither the
Purchasers nor any such Affiliates, partners, directors, agents, employees or
controlling Persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company in connection with or
as a result of the consummation of this Agreement or any of the Transaction
Documents except to the extent for 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 or the Transaction Documents. To the extent that
the foregoing undertaking by the Company may be unenforceable for any reason,
the Company shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law.
exhibit 10.1, page 22
ARTICLE VI.
MISCELLANEOUS
6.1 Entire Agreement. This Agreement, together with the Exhibits and
-----------------
Schedules hereto and the Transaction Documents 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.
6.2 Notices. Any notices, consents, waivers or other communications
-------
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile, provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party (if received by 5:00 p.m. eastern time ("ET")
where such notice is received) or the first business day following such delivery
(if received after 5:00 p.m. ET where such notice is received); or (iii) one
business day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company:
▇▇▇▇▇ ▇ Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
With a copy to:
Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to the Transfer Agent:
American Stock Transfer & Trust Company
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
exhibit 10.1, page 23
If to ▇▇▇▇▇ ▇▇▇▇▇▇▇ Strategic Growth Fund, Ltd. to:
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
If to ▇▇▇▇▇ ▇▇▇▇▇▇▇ Strategic Growth Fund, L.P. to:
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
With a copy, in the case of Notice to ▇▇▇▇▇ ▇▇▇▇▇▇▇ Strategic Growth Fund,
Ltd., or ▇▇▇▇▇ ▇▇▇▇▇▇▇ Strategic Growth Fund, L.P., to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
If to Advanced Systems Europe B.V. to:
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone:
Facsimile:
Attention:
With copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇
▇▇▇▇▇▇ House
2 Ibn ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇-▇▇▇-▇▇▇▇
Facsimile: 972-3-695-4344
Attention: ▇▇. ▇▇▇▇ Eran
▇▇. ▇▇▇▇ ▇▇▇▇▇
exhibit 10.1, page 24
If to Seneca Capital L.P., to:
c/o Seneca Capital Advisors, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
If to Seneca Capital International, Ltd., to:
c/o Seneca Capital Advisors, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
With a copy, in the case of Notice to Seneca Capital, L.P. or Seneca Capital
International. Ltd., to:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Each party shall provide written notice to the other party of any change in
address or facsimile number in accordance with the provisions hereof.
6.3 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 each of the Purchasers or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a 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 of Preferred Stock outstanding. The
exhibit 10.1, page 25
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.
6.4 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.
6.5 References. References herein to Sections are to Sections of this
-----------
Agreement, unless otherwise expressly provided.
6.6 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. The Purchasers may
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Company, provided, that any assignees must execute and
deliver to the company an instrument expressly making the representations and
warranties set forth in Section 2.2 and agrees to become a party hereto; further
that, prior to the Closing Date, the Purchasers may assign this Agreement its
rights and rights or obligations hereunder only to an Affiliate of such
Purchaser. This provision shall not limit a Purchaser's right to transfer
securities in accordance with all of the terms of this Agreement or the
Transaction Documents.
6.7 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.
6.8 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. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
6.9 Survival. The representations and warranties of the Company and the
--------
Purchasers contained in Sections 2.1 and 2.2, the agreements and covenants set
exhibit 10.1, page 26
forth in Section 3, and the indemnification provisions set forth in Section 5,
shall survive the Closing and any conversion of the shares of Preferred Stock or
exercise of the Warrants regardless of any investigation made by or on behalf of
the such Purchaser or by or on behalf of the Company, except that, in the case
of representations and warranties such survival shall be limited to the period
of four (4) years following the Closing Date on which they were made or deemed
to have been made (other than with respect to any claim by a third party against
the party to this Agreement who seeks to assert a claim based on such
representations and warranties). This section shall have no effect on the
survival of the indemnification provisions of the Registration Rights Agreement.
6.10 Counterparts. 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.
6.11 Publicity. The Company and the Purchasers 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, except to the extent required by law.
The Purchasers and their affiliated companies shall, without further cost, have
the right to use in its advertising, marketing or other similar materials all or
parts of the Company's press releases that focus on the Transaction forming the
subject matter of this Agreement or which make reference to the Transaction.
The Purchasers understand that this grant by the Company only waives objections
that the Company might have to the use of such materials by the Purchasers and
in no way constitutes a representation by the Company that references in such
materials to the activities of third-parties have been cleared or constitute a
fair use.
6.12 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 affected 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.
6.13 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
this Agreement or the Transaction Documents without the showing of economic loss
and without any bond or other security being required. 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 agree to waive in any
action for specific performance of any such obligation the defense that a remedy
at law would be adequate.
exhibit 10.1, page 27
6.14 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
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.
6.15 Payment Set Aside. To the extent that the Company makes a payment or
-------------------
payments to the Purchasers hereunder or pursuant to the Transaction Documents or
the Purchasers enforce or exercise their rights hereunder or thereunder, and
such payment or payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of any
such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
6.16 Further Assurances. Each party shall do and perform, or cause to be
-------------------
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
6.17 Fees and Expenses. Except as set forth in the Registration Rights
-------------------
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; provided, however, that the Company shall pay
-------- -------
▇▇▇▇▇ ▇▇▇▇▇▇▇ Asset Management, LLC an aggregate fee of $30,000 at the Closing
and shall reimburse Seneca Capital, L.P. and Seneca Capital International, Ltd.
at the Closing for the reasonable fees and expenses of their counsel, auditors
and any consultants ("Seneca Expenses") in an amount up to $10,000; provided
---------------- --------
further, that if the Closing does not take place prior to July 10, 1999 due to a
----
decision by the Company, for any reason, then the Company will pay all the
Seneca Expenses within 30 days of receipt of documentation of such expenses.
exhibit 10.1, page 28
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.
▇▇▇▇▇ ▇ SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇ ▇▇▇▇▇▇▇ STRATEGIC
GROWTH FUND, LTD.
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Asset Management LLC
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇, LLC
Its Member
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Principal
▇▇▇▇▇ ▇▇▇▇▇▇▇ STRATEGIC GROWTH FUND, L.P.
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital, LLC
Its General Partner
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Partners, LLC
Its Member
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇.▇▇▇▇▇▇▇
Title: Principal
exhibit 10.1, page 29
ADVANCED SYSTEMS EUROPE B.V.
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman
SENECA CAPITAL, L.P.
By: Seneca Capital Advisors, LLC, its
general partner
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Partner
SENECA CAPITAL INTERNATIONAL, LTD.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Partner
exhibit 10.1, page 30
SCHEDULE I
Number of shares
of Preferred Stock Number of Shares
Name of Purchaser at Closing Date Underlying Warrants
------------------- -------------------- -----------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ Strategic
Growth Fund, L.P. 2,450 245,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ Strategic
Growth Fund, Ltd. 4,550 455,000
Advanced Systems
Europe B.V. 10,000 1,000,000
Seneca Capital, L.P. 1,945 194,540
Seneca Capital International, Ltd. 2,055 205,460
exhibit 10.1, page 31
SCHEDULE II
Name of Purchaser Address
------------------- -------
▇▇▇▇▇ ▇▇▇▇▇▇▇ Strategic Growth Fund, Ltd.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Residence: Grand Cayman, Cayman Islands
▇▇▇▇▇ ▇▇▇▇▇▇▇ Strategic Growth Fund, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Residence: New York, New York
Advanced Systems Europe B.V.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
Fax:
Residence:
Seneca Capital L.P.
c/o Seneca Capital Advisors, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Residence:
Seneca Capital International, Ltd.:
c/o Seneca Capital Advisors, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Residence:
exhibit 10.1, page 32