WAIVER AGREEMENT
This Waiver Agreement ("Agreement") dated as of the 22nd day of
September, 1998, by and between V-ONE Corporation, a Delaware corporation
("Company"), and Advantage Fund II Ltd., a British Virgin Islands corporation
("Fund").
WITNESSETH
WHEREAS, pursuant to that certain Certificate of Designations dated
December 8, 1997 ("Certificate"), the Company authorized 4,000 shares of Series
A Convertible Preferred Stock, par value $.001 per share ("Preferred Stock"),
the rights, preferences and privileges of which are set forth in the
Certificate; and
WHEREAS, pursuant to that certain Subscription Agreement dated as of
December 3, 1997 by and between the Company and the Fund ("Subscription
Agreement"), the Company issued and sold to the Fund 4,000 shares of Preferred
Stock ("Advantage Shares"); and
WHEREAS, the Fund currently holds 2,462 Advantage Shares; and
WHEREAS, pursuant to the Certificate, the Fund has the right to convert
the Advantage Shares into a certain number of shares of Common Stock, $.001 par
value per share, of the Company ("Common Stock") or in certain circumstances to
require the Company to redeem the Advantage Shares; and
WHEREAS, the Company desires to induce the Fund to agree not to
exercise certain of its rights under the Certificate;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. For the period beginning on the date of this Agreement and ending on
November 20, 1998 ("Term") as long as the Company is in compliance with its
obligations to the Fund under the Certificate, the Subscription Agreement, the
Registration Rights Agreement dated as of December 3, 1997, as amended by
Amendment No. 1 (as hereinafter defined) between the Company and the Fund (as
amended, the "Registration Rights Agreement"), and any other agreements between
the Company and the Fund, as the Certificate and such agreements are amended by
this Agreement:
(a) the Fund hereby waives its right to convert the Advantage
Shares into shares of Common Stock and warrants to purchase Common
Stock pursuant to Section 10(a) of the Certificate; and
(b) the Fund hereby waives its right to require the Company to
redeem the Advantage Shares pursuant to Section 7(a)(2) of the
Certificate.
2. The parties agree that the Company shall have the right, at its
option, to redeem the Advantage Shares at a price of $1,300 per share at any
time during the Term without regard to any contrary provisions in the
Certificate. If the Advantage Shares are redeemed, all accrued dividends on the
Advantage Shares shall be waived by the Fund (without any additional payment by
the Company).
3. For the period beginning on December 8, 1997 and ending on November
20, 1998, the Fund hereby waives its right to an adjustment to the "Ceiling
Price" and the "Conversion Percentage" (as such terms are defined in the
Certificate) and waives its right to the "Periodic Amount" pursuant to Section
2(c) of the Registration Rights Agreement. The term "Periodic Amount" is defined
in such Section 2(c).
4. The Fund agrees that none of the transactions contemplated by this
Agreement shall give rise to an "Optional Redemption Event" under the
Certificate (as such term is defined in the Certificate).
5. On the date hereof, the Fund shall receive (a) warrants ("New
Warrants") to purchase 100,000 shares of Common Stock at an exercise price of
$2.125 per share, the term of which New Warrants shall expire on September 21,
2003, and (b) warrants ("Conversion Warrants") to purchase 389,441 shares of
Common Stock at an exercise price of $4.77 per share, the term of which
Conversion Warrants shall expire on September 21, 2003. The New Warrants and the
Conversion Warrants (collectively, "Additional Warrants") shall be in the form
attached hereto as Exhibit A.
6. The Fund agrees not to sell, transfer or otherwise dispose of
(collectively "transfer") any of the Advantage Shares unless, prior to any such
proposed transfer, (i) the Company is furnished with written notice of the name
and address of such transferee, (ii) at or before the time the Company receives
the written notice contemplated by clause (i) of this sentence, the transferee
agrees in writing for the benefit of the Company to be bound by all of the
provisions contained in this Agreement (including without limitation Exhibit D
hereto) following such transfer, (iii) such transfer shall have been made in
accordance with the applicable requirements of the Subscription Agreement, the
Certificate, the Securities Act of 1933, as amended ("1933 Act"), and applicable
state securities laws, and (iv) the further transfer of such the Advantage
Shares by the transferee (and any subsequent transferees) is restricted pursuant
to the provisions of this Agreement.
7. The Fund agrees that, whether or not the Advantage Shares are
redeemed during the Term or otherwise, if some or all of the Advantage Shares
are, on or after the date hereof, converted into shares of Common Stock pursuant
to Section 10 of the Certificate or otherwise, no "Warrants" (as such term is
defined in the Certificate) shall be issued to the Fund or any subsequent holder
of the Advantage Shares upon such conversion. The Fund and the Company agree to
deliver a letter to the Company's transfer agent and registrar (American Stock
Transfer & Trust Company), in the form attached hereto as Exhibit D, to this
effect and instructing such transfer agent and registrar to issue shares of
Common Stock upon exercise of the Additional Warrants.
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8. On the date hereof and as conditions to the effectiveness hereof,
the Company and the Fund shall enter into Amendment No. 1 in the form attached
hereto as Exhibit B ("Amendment No. 1") to the Registration Rights Agreement and
the Company shall deliver to the Fund an opinion of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
substantially in the form attached hereto as Exhibit C.
9. The Fund represents and warrants to the Company that:
(a) The Advantage Shares are owned by the Fund free and clear of
any and all liens and/or encumbrances;
(b) Each of this Agreement and Amendment No. 1 has been duly and
validly authorized by the Fund, this Agreement has been, and Amendment
No. 1 will be, duly executed and delivered on behalf of the Fund and
this Agreement is, and Amendment No. 1, when executed and delivered by
the Fund, will be, valid and binding obligations of the Fund
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement
of creditors' rights generally;
(c) The Fund is acquiring the Additional Warrants and will purchase
the shares of Common Stock issuable on exercise of the Additional
Warrants (collectively, the "Shares") for its own account for
investment only and not with a view to, or for sale in connection with,
the distribution thereof;
(d) On the date hereof the Fund is, and on each date the Additional
Warrants are exercised the Fund will be, an "accredited investor" as
that term is defined in Rule 501 of the General Rules and Regulations
under the 1933 Act by reason of Rule 501(a)(3);
(e) All subsequent offers and sales of the Additional Warrants and
the Shares by the Fund shall be made pursuant to registration of such
securities being offered and sold under the 1933 Act or pursuant to an
exemption from registration;
(f) The Fund has no present intention of distributing or selling
the Additional Warrants or the Shares;
(g) The Fund understands that the Additional Warrants are being
offered and sold, and the Shares are being offered, to it in reliance
on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is
relying upon the truth and accuracy of, and the Fund's compliance with,
the representations, warranties, agreements, acknowledgments and
understandings of the Fund set forth herein in order to determine the
availability of such exemptions and the eligibility of the Fund to
acquire the Additional Warrants and to receive an offer of the Shares;
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(h) The Fund and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the
Additional Warrants and the offer of the Shares that have been
requested by the Fund; the Fund and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and have
received complete and satisfactory answers to any such inquiries;
without limiting the generality of the foregoing, the Fund has had the
opportunity to obtain and to review the Company's (1) Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, (2) Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1998 and June 30,
1998 and (3) proxy statement for the Company's 1998 Annual Meeting of
Stockholders (collectively, "SEC Reports"), in each case as filed with
the Securities and Exchange Commission ("SEC"); and the Fund
understands that its investment in the Shares involves a high degree of
risk;
(i) The Fund has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and
risks of an investment in the Additional Warrants and the Shares, and
is able to bear the economic risk of this investment for an indefinite
period of time; and
(j) The Fund understands that no United States federal or
state agency or any other government or governmental agency has passed
on or made any recommendation or endorsement of the Shares.
10. The Company represents and warrants to the Fund that:
(a) This Agreement, Amendment No. 1 and the Additional Warrants
have been duly and validly authorized by the Company, this Agreement
has been, and Amendment No. 1 and the Additional Warrants will be, duly
executed and delivered on behalf of the Company and this Agreement is,
and Amendment No. 1 and the Additional Warrants, when executed and
delivered by the Company, will be, valid and binding obligations of the
Company enforceable in accordance with their respective terms, subject
as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement
of creditors' rights generally;
(b) The shares of Common Stock, when issued on exercise of the
Additional Warrants, will be duly and validly issued, fully paid and
nonassessable;
(c) The execution and delivery of this Agreement by the Company and
the consummation by the Company of the issuance of the Additional
Warrants as contemplated by this Agreement and the other transactions
contemplated by this Agreement and Amendment No. 1 do not and will not
conflict with or result in a breach by the Company of any of the terms
or provisions of, or constitute a default under, the certificate of
incorporation or the by-laws of the Company, or any indenture,
mortgage, deed of trust or other material agreement or instrument to
which the Company is a party or by which it or any of its properties or
assets are bound that would have a material adverse effect on the
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Company or any applicable law, rule or regulation or any applicable
decree, judgment or order of any court, United States federal or state
regulatory body, administrative agency or other governmental body
having jurisdiction over the Company or any of its properties or assets
which would have a material adverse effect on the Company;
(d) No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or
stock exchange or market or the stockholders of the Company is required
to be obtained by the Company for (1) the execution, delivery and
performance by the Company of this Agreement and Amendment No. 1
(except such authorization of the SEC as is required with respect to
accelerating the effectiveness of any registration statement filed
pursuant thereto), (2) the issuance of the Additional Warrants as
contemplated by this Agreement, (3) the issuance of the Shares and (4)
the filing of an additional listing application with Nasdaq with
respect to the Shares;
(e) The SEC Reports do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading other than (i) the existence of
this Agreement and the transactions contemplated thereby, (ii) the fact
that an Inconvertibility Notice was required to be sent to the Fund
pursuant to Section 7(a)(2) of the Certificate (and the consequences of
such requirement), and (iii) the Company's financial condition and
results of operations subsequent to June 30, 1998. The Company has not
filed any reports with the SEC under the Securities Exchange Act of
1934, as amended (the "1934 Act"), since August 6, 1998;
(f) Since December 31, 1997, there has been no material adverse
change and no material adverse development in the business, properties,
operations, condition (financial or other), results of operations or
prospects of the Company, except as disclosed in the SEC Reports; and
(g) The Company has timely filed all required forms, reports and
other documents with the SEC. All of such forms, reports and other
documents complied, when filed, in all material respects, with all
applicable requirements of the 1933 Act and the Securities Exchange Act
of 1934, as amended.
11. The Company agrees to file an additional listing application with
respect to the Shares with the Nasdaq National Market within 7 days of the date
of this Agreement.
12. The Fund acknowledges that (a) the Additional Warrants and, except
as provided in Amendment No. 1, the Shares have not been and are not being
registered under the provisions of the 1933 Act and may not be transferred
unless (i) subsequently registered thereunder or (ii) the Fund shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the Additional Warrants
or the Shares to be sold or transferred may be sold or transferred pursuant to
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an exemption from such registration; (b) any resale of the Additional Warrants
or the Shares made in reliance on Rule 144 promulgated under the 1933 Act may be
made only in accordance with the terms of said Rule and further, if said Rule is
not applicable, any such resale of the Additional Warrants or the Shares under
circumstances in which the seller, or the person through whom the resale is
made, may be deemed to be an underwriter, as that term is used in the 1933 Act,
may require compliance with some other exemption under the 1933 Act or the rules
and regulations of the SEC thereunder; and (c) neither the Company nor any other
person is under any obligation to register the Shares (other than pursuant to
Amendment No. 1) or the Additional Warrants under the 1933 Act or to comply with
the terms and conditions of any exemption thereunder (other than pursuant to
Amendment No. 1).
13. The Fund acknowledges and agrees that the Additional Warrants shall
bear restrictive legends in substantially the following form (and a
stop-transfer order may be placed against transfer of the Additional Warrants):
These securities have not been registered under the
Securities Act of 1933, as amended (the "Act"), or
any state securities laws. The sale to the holder
of these securities and of the shares of common
stock issuable upon exercise of these securities
are not covered by a registration statement under
the Act or registration under state securities
laws. These securities have been acquired, and such
shares of common stock must be acquired, for
investment only and may not be sold, transferred or
assigned in the absence of registration of the
resale thereof or an opinion of counsel reasonably
acceptable to the Company that such registration is
not required.
14. The Fund acknowledges and agrees that, until such time as the
Shares have been registered for resale under the 1933 Act as contemplated by
Amendment No. 1, the certificates for the Shares issued on exercise of the
Additional Warrants shall bear restrictive legends in substantially the
following form (and a stop-transfer order may be placed against transfer of the
Shares):
The securities represented by this certificate have
not been registered under the Securities Act of
1933, as amended (the "Act"), or any state
securities laws. The sale to the holder of these
securities is not covered by a registration
statement under the Act or registration under state
securities laws. These securities have been
acquired for investment only and may not be sold,
transferred or assigned in the absence of
registration of the resale thereof or an opinion of
counsel reasonably acceptable to the Company that
such registration is not required.
15. On the date hereof, the Company shall pay the Fund $10,000 with
respect to the Fund's costs and expenses (including attorneys' fees and
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expenses) incurred and to be incurred by the Fund in connection with this
Agreement, Amendment No. 1 and the transactions contemplated hereby and thereby.
16. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed in the State of New York. The parties irrevocably consent to the
jurisdiction of the United States federal courts and the state courts located in
the State of Maryland in any suit or proceeding based on or arising under this
Agreement or relating to the Additional Warrants or the Shares, and irrevocably
agree that all claims in respect of such suit or proceeding may be determined in
such courts. The parties irrevocably waive the defense of an inconvenient forum
to the maintenance of such suit or proceeding. The parties further agree that
service of process upon either party, mailed by first class mail, shall be
deemed in every respect effective service of process on such party in any such
suit or proceeding. Nothing herein shall affect either party's right to serve
process in any other manner permitted by law. The parties agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
17. Failure by any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
18. Except as expressly provided herein, all of the terms and
provisions of the Certificate shall continue in full force and effect and
nothing contained herein shall be deemed to constitute a waiver by the Fund of
any of its rights under the Certificate, the Subscription Agreement, the
Registration Rights Agreement or any other agreement among the Company and the
Fund.
19. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
V-ONE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President
and Chief Financial Officer
ADVANTAGE FUND II LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------
Inter Caribbean Services Ltd.
Secretary
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EXHIBIT A
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THE SALE TO THE HOLDER OF
THESE SECURITIES AND OF THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THESE SECURITIES ARE NOT COVERED BY A REGISTRATION STATEMENT UNDER THE ACT OR
REGISTRATION UNDER STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED,
AND SUCH SHARES OF COMMON STOCK MUST BE ACQUIRED, FOR INVESTMENT ONLY AND MAY
NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF REGISTRATION OF THE
RESALE THEREOF OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
Right to Purchase ________ Shares of
Common Stock of V-ONE Corporation
V-ONE CORPORATION
Common Stock Purchase Warrant
V-ONE CORPORATION, a Delaware corporation (the "Company"), hereby
certifies that, for value received, ADVANTAGE FUND II LTD., a British Virgin
Islands corporation, or registered assigns (the "Holder"), is entitled, subject
to the terms set forth below, to purchase from the Company at any time or from
time to time after the date hereof, and before 5:00 p.m., New York City time, on
the Expiration Date (as defined herein), fully paid and nonassessable shares of
Common Stock, $.001 par value, of the Company at a purchase price per share
equal to the Purchase Price (as hereinafter defined). The number of such shares
of Common Stock and the Purchase Price are subject to adjustment as provided in
this Warrant.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Business Day" as used herein shall mean a day on
which the New York Stock Exchange is open for business.
(b) The term "Common Stock" includes the Company's Common Stock,
$.001 par value per share, as authorized on the date hereof, and any
other securities into which or for which the Common Stock may be
converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c) The term "Company" shall include V-ONE Corporation and any
corporation that shall succeed to or assume the obligation of V-ONE
Corporation hereunder.
(d) The term "Expiration Date" refers to September 21, 2003.
(e) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person
(corporate or otherwise) that the Holder of this Warrant at any time
shall be entitled to receive, or shall have received, on the exercise
of this Warrant, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or
in replacement of Common Stock or Other Securities pursuant to Section
4.
(f) The term "Purchase Price" shall mean $__________, subject to
adjustment as provided in this Warrant.
1. EXERCISE OF WARRANT.
1.1 EXERCISE AT OPTION OF HOLDER. (a) This Warrant may be
exercised by the Holder hereof in full or in part at any time or from time to
time during the exercise period specified in the first paragraph hereof until
the Expiration Date by surrender of this Warrant and the subscription form
annexed hereto (duly executed) by such Holder, to the Company at its principal
office, accompanied by payment, in cash or by certified or official bank check
payable to the order of the Company in the amount obtained by multiplying (a)
the number of shares of Common Stock designated by the Holder in the
subscription form by (b) the Purchase Price then in effect. On any partial
exercise, the Company will forthwith issue and deliver to or upon the order of
the Holder hereof a new Warrant or Warrants of like tenor, in the name of the
Holder hereof or as such Holder (upon payment by such Holder of any applicable
transfer taxes) may request, providing in the aggregate on the face or faces
thereof for the purchase of the number of shares of Common Stock for which such
Warrant or Warrants may still be exercised.
(b) Notwithstanding any other provision of this Warrant, in no
event shall the holder of this Warrant be entitled at any time to purchase a
number of shares of Common Stock on exercise of this Warrant in excess of that
number of shares upon purchase of which the sum of (1) the number of shares of
Common Stock beneficially owned by such holder and any person whose beneficial
ownership of shares of Common Stock would be aggregated with such holder's
beneficial ownership of shares of Common Stock for purposes of Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
Regulation 13D-G thereunder (each an "Aggregated Person" and collectively, the
"Aggregated Persons") (other than shares of Common Stock deemed beneficially
owned through the ownership of the unexercised portion of this Warrant, any
warrant containing a restriction similar to this Section 1.1(b) and shares of
Series A Convertible Preferred Stock, $.001 par value, of the Company (the
"Series A Convertible Preferred Stock"), if any, beneficially owned by all such
Aggregated Persons) and (2) the number of shares of Common Stock issuable upon
exercise of the portion of this Warrant with respect to which the determination
in this sentence is being made, would result in beneficial ownership by any
Aggregated Person of more than 4.9% of the outstanding shares of Common Stock.
For purposes of the immediately preceding sentence, beneficial ownership shall
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be determined in accordance with Section 13(d) of the Exchange Act and
Regulation 13D-G thereunder, except as otherwise provided in clause (1) of the
immediately preceding sentence.
1.2 NET ISSUANCE. Notwithstanding anything to the contrary
contained in Section 1.1, the Holder may elect to exercise this Warrant in whole
or in part by receiving shares of Common Stock equal to the net issuance value
(as determined below) of this Warrant, or any part hereof, upon surrender of
this Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the Holder a number of
shares of Common Stock computed using the following formula:
X = Y (A-B)
------
A
Where: X = the number of shares of Common Stock to be issued to the
Holder
Y = the number of shares of Common Stock as to which this
Warrant is to be exercised
A = the current fair market value of one share of Common Stock
calculated as of the last trading day immediately
preceding the exercise of this Warrant
B = the Purchase Price
As used herein, current fair market value of Common Stock as of a
specified date shall mean with respect to each share of Common Stock the average
of the closing bid prices of the Common Stock on the principal securities market
on which the Common Stock may at the time be traded over a period of five
Business Days consisting of the day as of which the current fair market value of
a share of Common Stock is being determined (or if such day is not a Business
Day, the Business Day next preceding such day) and the four consecutive Business
Days prior to such day. If on the date for which current fair market value is to
be determined the Common Stock is not eligible for trading on any securities
market, the current fair market value of Common Stock shall be the highest price
per share which the Company could then obtain from a willing buyer (not a
current employee or director) for shares of Common Stock sold by the Company,
from authorized but unissued shares, as determined in good faith by the Board of
Directors of the Company, unless prior to such date the Company has become
subject to a merger, acquisition or other consolidation pursuant to which the
Company is not the surviving party, in which case the current fair market value
of the Common Stock shall be deemed to be the value received by the holders of
the Company's Common Stock for each share thereof pursuant to the Company's
acquisition.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as
practicable after the exercise of this Warrant, and in any event within three
days thereafter, the Company at its expense (including the payment by it of any
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applicable issue or stamp taxes) will cause to be issued in the name of and
delivered to the Holder hereof, or as such Holder (upon payment by such Holder
of any applicable transfer taxes) may direct, a certificate or certificates for
the number of fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such Holder shall be entitled on such exercise, in such
denominations as may be requested by such Holder, plus, in lieu of any
fractional share to which such Holder would otherwise be entitled, cash equal to
such fraction multiplied by the then current fair market value (as determined in
accordance with subsection 1.2) of one full share, together with any other stock
or other securities any property (including cash, where applicable) to which
such Holder is entitled upon such exercise pursuant to Section 1 or otherwise.
Upon exercise of this Warrant as provided herein, the Company's obligation to
issue and deliver the certificates for Common Stock shall be absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision thereof, the
recovery of any judgment against any person or any action to enforce the same,
any failure or delay in the enforcement of any other obligation of the Company
to the Holder, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder or any other person
of any obligation to the Company or any violation or alleged violation of law by
the Holder or any other person, and irrespective of any other circumstance that
might otherwise limit such obligation of the Company to the Holder in connection
with such exercise. If the Company fails to issue and deliver the certificates
for the Common Stock to the Holder pursuant to the first sentence of this
paragraph as and when required to do so, in addition to any other liabilities
the Company may have hereunder and under applicable law, the Company shall pay
or reimburse the Holder on demand for all out-of-pocket expenses including,
without limitation, fees and expenses of legal counsel incurred by the Holder as
a result of such failure.
3. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK, PROPERTY, ETC.;
RECLASSIFICATION, ETC. In case at any time or from time to time, all the holders
of Common Stock (or Other Securities) shall have received, or (on or after the
record date fixed for the determination of stockholders eligible to receive)
shall have become entitled to receive, without payment therefor,
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate
rearrangement,
other than additional shares of Common Stock (or Other Securities) issued as a
stock dividend or in a stock-split (adjustments in respect of which are provided
for in Section 5), then and in each such case the Holder of this Warrant, on the
exercise hereof as provided in Section 1, shall be entitled to receive the
amount of stock and other securities and property (including cash in the cases
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referred to in subdivisions (b) and (c) of this Section 3) that such Holder
would hold on the date of such exercise if on the date hereof the Holder had
been the holder of record of the number of shares of Common Stock called for on
the face of this Warrant and had thereafter, during the period from the date
hereof to and including the date of such exercise, retained such shares and all
such other or additional stock and other securities and property (including cash
in the case referred to in subdivisions (b) and (c) of this Section 3)
receivable by the Holder as aforesaid during such period, giving effect to all
adjustments called for during such period by Section 4.
4. EXERCISE UPON REORGANIZATION, CONSOLIDATION, MERGER, ETC. In
case at any time or from time to time, the Company shall (a) effect a
reorganization, (b) consolidate with or merge into any other person, (c) effect
an exchange of outstanding shares of the Company for securities of any other
person or (d) transfer all or substantially all of its properties or assets to
any other person under any plan or arrangement contemplating the dissolution of
the Company, then, in each such case, as a condition of such reorganization,
consolidation, merger, share exchange, sale or conveyance, the Company shall
cause effective provisions to be made so that the Holder shall have the right
thereafter, by exercising this Warrant (in lieu of the shares of Common Stock of
the Company purchasable and receivable upon exercise of the rights represented
hereby immediately prior to such transaction) to purchase the kind and amount of
shares of stock and other securities and property (including cash) receivable
upon such reorganization, consolidation, merger, share exchange, sale or
conveyance by a holder of the number of shares of Common Stock that might have
been received upon exercise of this Warrant immediately prior to such
reorganization, consolidation, merger, share exchange, sale or conveyance;
provided, however, that in the event (a) the value of the stock, securities or
other assets or property (determined in good faith by the Board of Directors of
the Company) issuable or payable with respect to one share of Common Stock of
the Company purchasable and receivable upon the exercise of the rights
represented hereby immediately prior to such transaction is in excess of the
Purchase Price hereof in effect at the time of such reorganization,
consolidation, merger, share exchange, sale or conveyance (after giving effect
to any adjustment in such Purchase Price required to be made under the terms of
this Warrant), and (b) the securities, if any, to be received in such
reorganization, consolidation, merger, share exchange, sale or conveyance are
publicly traded, then if the Company gives the Holder at least 20 Business Days
(or such lesser period as the Company gives notice of such transaction to the
holders of the outstanding shares of Common Stock) prior notice of such
reorganization, merger, share exchange, sale or conveyance this Warrant shall
expire unless exercised prior to such reorganization, consolidation, merger,
share exchange, sale or conveyance. Any such provision shall include provisions
for adjustments in respect of such shares of stock and other securities and
property that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The provisions of this Section shall
apply to successive reorganizations, consolidations, mergers, share exchanges,
sales and conveyances.
5. ADJUSTMENT FOR EXTRAORDINARY EVENTS. In the event that the
Company shall (i) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (ii) subdivide or reclassify its
outstanding shares of Common Stock, or (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
5
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 5.
The Holder of this Warrant shall thereafter, on the exercise hereof as provided
in Section 1, be entitled to receive that number of shares of Common Stock
determined by multiplying the number of shares of Common Stock that would be
issuable on such exercise as of immediately prior to such issuance by a fraction
of which (i) the numerator is the Purchase Price in effect immediately prior to
such issuance and (ii) the denominator is the Purchase Price in effect on the
date of such exercise.
6. FURTHER ASSURANCES. The Company will take all action that may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of stock, free from all taxes, liens
and charges with respect to the issue thereof, on the exercise of all or any
portion of this Warrant from time to time outstanding.
7. NOTICES OF RECORD DATE, ETC. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend on, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all of the assets of
the Company to or consolidation or merger of the Company with or into
any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder, at least ten days prior to such record date, a notice specifying (i) the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or Other
Securities) shall be entitled to exchange their shares of Common Stock (or Other
Securities) for securities or other property deliverable on such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up, and (iii) the amount and character of
any stock or other securities, or rights or options with respect thereto,
proposed to be issued or granted, the date of such proposed issue or grant and
the persons or class of persons to whom such proposed issue or grant is to be
offered or made. Such notice shall also state that the action in question or the
record date is subject to the effectiveness of a registration statement under
6
the Securities Act of 1933, as amended (the "Securities Act"), or a favorable
vote of stockholders if either is required. Such notice shall be mailed at least
ten days prior to the date specified in such notice on which any such action is
to be taken or the record date, whichever is earlier.
8. RESERVATION OF STOCK, ETC., Issuable on Exercise of Warrants.
The Company will at all times reserve and keep available, solely for issuance
and delivery on the exercise of this Warrant, all shares of Common Stock (or
Other Securities) from time to time issuable on the exercise of this Warrant.
9. Transfer of Warrant. This Warrant shall inure to the benefit of
the successors to and assigns of the Holder. This Warrant and all rights
hereunder, in whole or in part, is registrable at the office or agency of the
Company referred to below by the Holder hereof in person or by his duly
authorized attorney, upon surrender of this Warrant properly endorsed.
10. Register of Warrants. The Company shall maintain, at the
principal office of the Company (or such other office as it may designate by
notice to the Holder hereof), a register in which the Company shall record the
name and address of the person in whose name this Warrant has been issued, as
well as the name and address of each successor and prior owner of such Warrant.
The Company shall be entitled to treat the person in whose name this Warrant is
so registered as the sole and absolute owner of this Warrant for all purposes.
11. EXCHANGE OF WARRANT. This Warrant is exchangeable, upon the
surrender hereof by the Holder hereof at the office or agency of the Company
referred to in Section 10, for one or more new Warrants of like tenor
representing in the aggregate the right to subscribe for and purchase the number
of shares of Common Stock that may be subscribed for purchase hereunder, each of
such new Warrants to represent the right to subscribe for and purchase such
number of shares as shall be designated by said Holder hereof at the time of
such surrender.
12. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
13. Warrant AGENT. The Company may, by written notice to the
Holder, appoint an agent having an office in the United States of America, for
the purpose of issuing Common Stock (or Other Securities) on the exercise of
this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section
11, and replacing this Warrant pursuant to Section 12, or any of the foregoing,
and thereafter any such issuance, exchange or replacement, as the case may be,
shall be made at such office by such agent.
14. REMEDIES. The Company stipulates that the remedies at law of
the Holder of this Warrant in the event of any default or threatened default by
7
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
15. No Rights or Liabilities as a Stockholder. This Warrant shall
not entitle the Holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the Holder hereof to purchase Common Stock, and no mere
enumeration herein of the rights or privileges of the Holder hereof, shall give
rise to any liability of such Holder for the Purchase Price or as a stockholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
16. NOTICES, ETC. All notices and other communications from the
Company to the registered Holder of this Warrant shall be mailed by first class
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such Holder or at the address shown for such Holder on
the register of Warrants referred to in Section 10.
17. Investment Representations. By acceptance of this Warrant, the
Holder represents to the Company that this Warrant is being acquired for the
Holder's own account and for the purpose of investment and not with a view to,
or for sale in connection with, the distribution thereof, nor with any present
intention of distributing or selling the Warrant or the Common Stock issuable
upon exercise of the Warrant. The Holder acknowledges that the Holder has been
afforded the opportunity to meet with the management of the Company and to ask
questions of, and receive answers from, such management and the Company's
counsel about the business and affairs of the Company and concerning the terms
and conditions of the offering of this Warrant, and to obtain any additional
information, to the extent that the Company possessed such information or could
acquire it without unreasonable effort or expense, necessary to verify the
accuracy of the information otherwise obtained by or furnished to the Holder in
connection with the offering of this Warrant. The Holder asserts that it is an
"accredited investor" as defined in Rule 501(a)(3) under the Securities Act, it
may be considered to be a sophisticated investor, is familiar with the risks
inherent in speculative investments such as in the Company, has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of the investment in this Warrant and the Common
Stock issuable upon exercise of this Warrant, and is able to bear the economic
risk of the investment. The Holder acknowledges and agrees that this Warrant
and, except as otherwise provided in the Registration Rights Agreement dated as
of December 3, 1997 between the original Holder and the Company, as amended or
modified on the date hereof and as subsequently amended or modified from time to
time (the "Registration Rights Agreement"), the Common Stock issuable upon
exercise of this Warrant (if any) have not been (and at the time of acquisition
by the Holder, will not have been or will not be), registered under the
Securities Act or under the securities laws of any state, in reliance upon
certain exemptive provisions of such statutes. The Holder recognizes and
acknowledges that such claims of exemption are based, in part, upon the
representations of the Holder contained herein. The Holder further recognizes
and acknowledges that, because this Warrant and, except as provided in the
Registration Rights Agreement, the Common Stock issuable upon exercise of this
Warrant (if any) are unregistered, they may not be eligible for resale, and may
only be resold in the future pursuant to an effective registration statement
under the Securities Act and any applicable state securities laws, or pursuant
8
to a valid exemption from such registration requirements. Unless the shares of
Common Stock have theretofore been registered for resale or are otherwise exempt
from registration under the Securities Act, the Company may require, as a
condition to the issuance of Common Stock upon the exercise of this Warrant (i)
in the case of an exercise in accordance with Section 1.1 hereof, a confirmation
as of the date of exercise of the Holder's representations pursuant to this
Section 17 or (ii) in the case of an exercise in accordance with Section 1.2
hereof, an opinion (in form and substance reasonably satisfactory to the
Company) of counsel reasonably satisfactory to the Company that the shares of
Common Stock to be issued upon such exercise may be issued without registration
under the Securities Act.
18. LEGEND. Unless theretofore registered for resale under the
Securities Act or otherwise exempt from registration under the Securities Act in
a manner that would no longer require such legend when issued upon exercise of
this Warrant and when resold thereafter, each certificate for shares issued upon
exercise of this Warrant shall bear the following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities laws. The sale to the holder of
these securities is not covered by a registration statement under
the Act or registration under state securities laws. These
securities have been acquired for investment only and may not be
sold, transferred or assigned in the absence of registration of
the resale thereof or an opinion of counsel reasonably acceptable
to the Company that such registration is not required.
19. MISCELLANEOUS. This Warrant and any terms hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement or such change, waiver, discharge
or termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the internal laws of the State of New York. The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability of
any other provision.
9
IN WITNESS WHEREOF, V-ONE Corporation has caused this Warrant to
be executed on its behalf by one of its officers thereunto duly authorized.
Dated: V-ONE CORPORATION
By:
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President and Chief
Financial Officer
10
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO V-ONE CORPORATION
1. The undersigned Holder of the attached original, executed Warrant
hereby elects to exercise its purchase right under such Warrant with respect to
______________ shares of Common Stock, as defined in the Warrant, of V-ONE
Corporation, a Delaware corporation (the "Company").
2. The undersigned Holder (check one):
________ (a) elects to pay the aggregate purchase price for such shares of
Common Stock (the "Exercise Shares") (i) by lawful money of the
United States or the enclosed certified or official bank check
payable in United States dollars to the order of the Company in the
amount of $___________, or (ii) by wire transfer of United States
funds to the account of the Company in the amount of $____________,
which transfer has been made before or simultaneously with the
delivery of this Form of Subscription pursuant to the instructions
of the Company;
or
________ (b) elects to receive shares of Common Stock having a value equal
to the value of the Warrant calculated in accordance with Section
1.2 of the Warrant.
3. Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned or
in such other names as is specified below:
Name:
Address:
Dated:____________ ___, _____
(Signature must conform to name of
Holder as specified on the face of
the Warrant)
(Address)
11
Exhibit B
to
Waiver Agreement
AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT
THIS AMENDMENT NO. 1, dated as of September 22, 1998 (this
"Amendment"), to the Registration Rights Agreement, dated as of December 3,
1997, by and between V-ONE CORPORATION, a Delaware corporation (the "Company"),
and ADVANTAGE FUND II LTD., a British Virgin Islands corporation (the "Initial
Investor").
W I T N E S S E T H:
WHEREAS, the Company and the Initial Investor are parties to a
Registration Rights Agreement, dated as of December 3, 1997 (the "Registration
Rights Agreement"), pursuant to which the Company agreed to provide certain
registration rights under the Securities Act with respect to shares of Common
Stock issuable upon conversion of the Preferred Shares and the exercise of
common stock purchase warrants issuable upon conversion of such Preferred
Shares;
WHEREAS, the Company and the Initial Investor are parties to a Waiver
Agreement, dated the date hereof (the "Waiver Agreement"), pursuant to which the
Company is issuing to the Initial Investor common stock purchase warrants (the
"Additional Warrants") to purchase an aggregate of 489,441 shares (the
"Additional Warrant Shares") of Common Stock; and
WHEREAS, the Company and the Initial Investor wish to amend the
Registration Rights Agreement to cover the shares of Common Stock issuable upon
exercise of the Additional Warrants;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. AMENDMENT OF REGISTRATION RIGHTS AGREEMENT. The Registration Rights
Agreement is hereby amended as follows:
(a) The definition of "Registrable Securities" in Section 1 is amended
to read in its entirety as follows:
"Registrable Securities" means the Conversion Shares, the
Warrant Shares, any shares of Common Stock issued by the Company to any
Investor as a dividend on the Preferred Shares, and the Additional
Warrant Shares.
(b) The definition of "Registration Period" in Section 1 is amended to
read in its entirety as follows:
"Registration Period" means (i) with respect to Registrable
Securities other than the Additional Warrant Shares, the period from
the Closing Date to the earlier of (A) the date which is three years
after the Closing Date and (B) the date on which Investors no longer
beneficially own any such Registrable Securities and (ii) with respect
to the Additional Warrant Shares, the period from the date the
Additional Warrants are issued pursuant to the Waiver Agreement to the
earlier of (A) the date which is three years after such issuance date
and (B) the date on which Investors no longer beneficially own any such
Registrable Securities.
(c) Section 2(a) is amended by deleting the second and third sentences
of Section 2(a) and adding the following in lieu thereof:
With respect to the Additional Warrant Shares, the Company shall
prepare, and on or prior to the date which is 45 days after the date
the Additional Warrants are first issued, file with the SEC a separate
Registration Statement on Form S-3 which covers the resale by the
Initial Investor of the number of shares of Common Stock issuable upon
exercise of the Additional Warrants. If at any time the number of
shares of Common Stock included in (i) the Registration Statement
required to be filed as provided in the first sentence of this Section
2(a) shall be insufficient to cover the number of shares of Common
Stock issuable on conversion in full of the unconverted Preferred
Shares and exercise in full of the Warrants that have been issued prior
to the date of Amendment No. 1 to this Agreement or (ii) the
Registration Statement required to be filed as provided in the second
sentence of this Section 2(a) shall be insufficient to cover the number
of shares of Common Stock issuable on exercise in full of the
Additional Warrants, then promptly, but in no event later than 20 days
after such insufficiency shall occur, the Company shall file with the
SEC an additional Registration Statement on Form S-3 (which shall not
constitute a post-effective amendment to the Registration Statement
filed pursuant to the first or second sentence, as applicable, of this
Section 2(a)) covering such number of shares of Common Stock as shall
be sufficient to permit such conversion or exercise. For all purposes
of this Agreement such additional Registration Statements shall be
deemed to be the Registration Statements required to be filed by the
Company pursuant to Section 2(a) of this Agreement, and the Company and
the Investors shall have the same rights and obligations with respect
to such additional Registration Statements as they shall have with
respect to the initial Registration Statements required to be filed by
the Company pursuant to this Section 2(a). The Registration Statement
required to be filed as provided in the second sentence of this Section
2(a) may also cover the resale of shares of Common Stock held by such
other securityholders as the Company may reasonably desire upon notice
thereof to the Initial Investor.
(d) Section 2(c) is amended to add the following paragraph at the end
thereof:
2
The foregoing provisions of Section 2(c) shall not apply to
the Additional Warrants or the Additional Warrant Shares. With respect
to the Additional Warrants and the Additional Warrant Shares, if (1)
the Registration Statement covering the Additional Warrant Shares which
is required to be filed by the Company pursuant to the second sentence
of Section 2(a) hereof is not ordered effective by the SEC within 100
days after the date the Additional Warrants are issued or (2) such
Registration Statement shall cease to be available for use by any
holder of Additional Warrants which is named therein as a selling
stockholder for any reason (including, without limitation, by reason of
an SEC stop order, a material misstatement or omission in such
Registration Statement or the information contained in such
Registration Statement having become outdated), then upon such
occurrence and on each monthly anniversary thereof for so long as any
such occurrence or circumstances continue, the Company shall promptly
pay to the Initial Investor $10,000 (prorated for any partial month in
which such amount is due); provided, however; that the maximum
aggregate amount paid pursuant to this paragraph shall not exceed
$50,000.
(e) Section 3(a) is deemed amended such that the filing of a
Registration Statement with the SEC with respect to Registrable Securities which
are Additional Warrants Shares shall be required to be made by the Company not
later than 45 days after the date the Additional Warrants are first issued.
2. EFFECTIVENESS OF THIS AMENDMENT. This Amendment shall become
effective on the date and time when the Additional Warrants are issued and
delivered to the Initial Investor in accordance with the Waiver Agreement.
3. CONFIRMATION OF REGISTRATION RIGHTS AGREEMENT. Except as expressly
amended by this Amendment, all of the terms and provisions of the Registration
Rights Agreement shall remain in full force and effect in accordance with its
terms.
4. Miscellaneous. (a) Capitalized terms used in this Amendment and
defined herein shall have the respective meanings provided herein. Capitalized
terms used in this Amendment and not otherwise defined in this Amendment shall
have the respective meanings provided in the Registration Rights Agreement.
(b) This Amendment may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which counterparts
when so executed and delivered, shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one and the same
instrument. This Amendment may be executed and delivered by a party by a
telephone line facsimile transmission bearing a signature on behalf of such
party transmitted by such party to the other party.
3
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed by their respective officers thereunto duly authorized as of day and
year first above written.
V-ONE CORPORATION
By:
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
and Chief Financial Officer
ADVANTAGE FUND II LTD.
By:
---------------------------------
Inter Caribbean Services Ltd.
Secretary
4
EXHIBIT C
September 22, 1998
Advantage Fund II Ltd.
▇/▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ Antilles
V-ONE CORPORATION
-----------------
Ladies and Gentlemen:
We have acted as counsel to V-ONE Corporation, a Delaware corporation
(the "Company"), in connection with the preparation, execution and delivery of
the Waiver Agreement, dated as of September 22, 1998 (the "Agreement"), between
the Company and Advantage Fund II Ltd., a British Virgin Islands corporation
(the "Fund"). Each capitalized term used herein shall, unless otherwise defined
herein or the context otherwise requires, has the meaning assigned to such term
in the Agreement.
In so acting, we have examined the Agreement, Amendment No. 1, the
warrant relating to the New Warrants and the warrant relating to the Conversion
Warrants (collectively, "Transaction Agreements") and the Company's Certificate
of Incorporation, as in effect on the date hereof ("Certificate of
Incorporation"), and we have examined and considered such corporate records,
certificates and matters of law and have made such inquiries of officers of the
Company, as we have deemed necessary or appropriate as a basis for our opinions
set forth below.
The opinions expressed herein are subject to the following assumptions,
limitations, qualifications and exceptions:
(a) We have assumed, without independent verification, the genuineness
and authenticity of all signatures and original documents, the legal capacity of
all natural persons, the conformity to originals of all documents submitted to
us as copies thereof, the due authorization, execution and delivery (other than
due authorization, execution, and delivery by the Company) of the Transaction
Agreements, the due authorization, execution and delivery of which are
prerequisite to the effectiveness of such documents, and that such documents
constitute legal, valid and binding obligations of the parties thereto (other
than the Company).
(b) We have assumed that each of the parties to the Transaction
Agreements other than the Company (the "Other Parties") has the legal right,
capacity and power to enter into, enforce and perform all of its obligations
Advantage Fund II Ltd.
September 22, 1998
Page 2
under the Transaction Agreements. Furthermore, we have assumed the due
authorization by each of the Other Parties of all requisite action and the due
execution and delivery of the Transaction Agreements by each of the Other
Parties, and that the Transaction Agreements are valid and binding upon each of
the Other Parties and are enforceable against each Other Party in accordance
with their terms.
We express no opinion as to the laws of the United States of America or
any other jurisdiction, other than United States federal law, except, with
respect to paragraphs (1), (2), (3), (4), (5), (8), (9) and (10) below, the laws
of the State of Delaware and, with respect to paragraph (3) below and, to the
extent applicable, paragraphs (4), (5), (6), (8), (9) and (10), the laws of the
State of New York. Notwithstanding the foregoing, we express no opinion as to
the securities or "blue sky" laws of any state, territory or possession of the
United States of America.
With respect to Section 1.1(b) of the New Warrants and of the
Conversion Warrants (collectively "Additional Warrants"), we understand that the
Fund will reach its own conclusion as to whether the Fund and its transferees
will or will not be subject to the reporting requirements of Section 13 of the
Securities Exchange Act of 1934, as amended ("1934 Act"), and the rules and
regulations promulgated thereunder and, consequently, the Fund has not asked us
to express, and we do not express, any opinion on such matter.
In furnishing the opinion regarding the valid existence and good
standing of the Company, we have relied solely upon good standing, certificate
of status of foreign corporation and franchise tax board certificates issued by
representatives of the States of Maryland, New York and California on September
21, 1998, September 17, 1998, September 18, 1998 and September 21, 1998,
respectively, and by representatives of the State of Delaware on September 18,
1998.
References in this opinion to "our knowledge" or "known to us" mean the
conscious awareness of attorneys currently with this firm who have devoted
substantive attention to matters for the Company, without any independent
inquiry or investigation regarding such matters.
Based upon and subject to the foregoing, we are of the opinion that:
(1) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to conduct its
business as currently conducted. The Company has no subsidiaries;
(2) The Company has all requisite corporate power and
authority to enter into the Agreement, Amendment No. 1 and the
Additional Warrants and to consummate the transactions contemplated
Advantage Fund II Ltd.
September 22, 1998
Page 3
thereby. The execution, delivery and performance of the Agreement,
Amendment No. 1 and the Additional Warrants and the consummation of the
transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of the Company;
(3) The Agreement, Amendment No. 1 and the Additional Warrants
have been duly executed and delivered by the Company and constitute
legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms;
provided, however, that the opinion as to enforceability of the
Agreement, Amendment No. 1 and the Additional Warrants is subject to
bankruptcy, insolvency, reorganization, moratorium, liquidation,
receivership, fraudulent conveyance, fraudulent transfer or other
similar laws relating to, or affecting generally, the enforcement of
creditors' rights and remedies or by other equitable principles of
general application and provided further, however, that we express no
opinion as to the enforceability of any indemnification and
contribution provisions contained in the Registration Rights Agreement
as amended by Amendment No. 1;
(4) The shares of Common Stock issuable on exercise of the
Additional Warrants ("Shares") have been duly authorized and, when
issued upon exercise of the Additional Warrants, in accordance with the
terms of the Additional Warrants will be validly issued, fully-paid and
non-assessable;
(5) As of the date hereof, the authorized capital stock of the
Company consists of (a) 33,333,333 shares of Common Stock, and (b)
13,333,333 shares of Preferred Stock of which 4,000 shares have been
designated Series A Convertible Preferred Stock. There are no
preemptive rights of any stockholder of the Company, as such, to
acquire the Shares or the Additional Warrants. To our knowledge, (a)
the Common Stock is listed for trading on the Nasdaq National Market,
(b) no suspension of trading in the Common Stock is in effect or
threatened, and (c) the Company has not been notified since October 24,
1996 by Nasdaq of any failure to meet the criteria for continued
listing and trading on Nasdaq. The authorized shares of Common Stock,
and outstanding options, warrants and other securities to purchase
Common Stock conform in all material respects to the descriptions
thereof contained in the registration statements and reports the
Company has filed with the Securities and Exchange Commission ("SEC");
provided, however, that the descriptions of such options, warrants and
other securities do not describe any anti-dilution adjustments that may
be required as a result of the issuance of the Shares or the Additional
Warrants and provided further, however, that such descriptions do not
describe (a) any options that have been issued under the Company's 1996
Incentive Stock Plan or 1998 Incentive Stock Plan, or any amendment to
the terms of such options, since the Company's Annual Report on Form
10-K for the year ended December 31, 1997 or warrants to purchase
Advantage Fund II Ltd.
September 22, 1998
Page 4
20,000 shares of Common Stock issued to two of the Company's directors
in August 1998;
(6) To our knowledge, except with respect to the agreements
set forth on Schedule 3(b) to the Subscription Agreement dated as of
December 3, 1997 between the Company and the Fund ("Subscription
Agreement"), no holder of any of the Company's securities has any
rights, "demand," "piggy-back" or otherwise, to have such securities
registered by reason of the intention to file, filing or effectiveness
of the Registration Statement contemplated by Amendment No. 1 other
than those rights that have been waived prior to the date hereof;
(7) Based on the Fund's representations, warranties and
covenants set forth in the Agreement, the Additional Warrants may be
issued to the Fund pursuant to the Agreement and the Shares may be
issued to the Fund upon exercise of the Additional Warrants without
registration under the Securities Act of 1933, as amended ("1933 Act").
In addition, for purposes of rendering the opinions set forth in this
Paragraph (7), we have assumed that (a) all of the purchasers from the
Company of the Additional Warrants are, and of the Shares will be,
"accredited investors" within the meaning of Rule 501 of Regulation D,
(b) the offering of the Additional Warrants and Shares cannot be
integrated with any other offering of securities by the Company, (c)
neither the Company nor any person acting on its behalf has offered the
Additional Warrants or the Shares by means of any form of general
solicitation or general advertising, (d) the limitations on resale of
the Additional Warrants and the Shares are implemented by the Company
as required by Rule 502(d) of Regulation D, and (e) the Company timely
files a Form D and amendments thereto as required by Rule 503 of
Regulation D;
(8) No authorization, approval or consent of, or filing with,
any court, government body, regulatory agency, self-regulatory
organization or stock exchange, market or automated quotation system or
the stockholders of the Company is required to be obtained or made by
the Company for the issuance and sale of the Additional Warrants as
contemplated by the Agreement, or the issuance of the Shares on
exercise of and as contemplated by the Additional Warrants, except such
as have been obtained or made and other than (a) as may be required by
Nasdaq with respect to the listing of the Shares, (b) such as may be
required under the securities or "blue sky" laws of certain
jurisdictions (as to which we express no opinion) and (c) the Form D to
be filed by the Company with the SEC;
(9) Except as disclosed in the Company's Annual Report on Form
10-K for the year ended December 31, 1997 and the Company's Quarterly
Reports on Form 10-Q for the three months ended March 31, 1998 and June
Advantage Fund II Ltd.
September 22, 1998
Page 5
30, 1998, to our knowledge, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body
pending or threatened against or affecting the Company, wherein an
unfavorable decision, ruling or finding would have a material adverse
effect on the properties, business, condition (financial or other),
results of operations or prospects of the Company or the transactions
contemplated by the Agreement or any of the documents contemplated
thereby or that would adversely affect the validity or enforceability
of, or the authority or ability of the Company to perform its
obligations under, the Agreement, or any of such other documents;
(10) Except for certain registration rights contained in the
agreements set forth in Items 1 through 14 of Schedule 3(b) of the
Subscription Agreement, the execution, delivery and performance by the
Company of the Agreement, Amendment No. 1 and the Additional Warrants,
the offer, sale and issuance of the Additional Warrants and the
issuance of the Shares, and the fulfillment of and the compliance with
the respective terms thereof by the Company will not result in a breach
of any of the terms or provisions of, or constitute a default under,
the Company's certificate of incorporation or bylaws, or any law,
statute, rule or regulation to which the Company is subject or any
indenture, mortgage or material instrument or agreement to which the
Company is a party or by which it or any of its property is bound,
other than other than those rights or provisions that have been waived
prior to the date hereof; provided, however, that we express no view as
to whether the Transaction Agreements, the securities contemplated by
the Subscription Agreement or the warrants originally issued to ▇▇▇▇▇▇▇
Capital Partners, Ltd. would cause a change in the terms of conversion
or exercise of any security of the Company that is convertible into or
exercisable for Common Stock; and
(11) To our knowledge after due inquiry, the Company has
timely filed with the SEC all forms, reports and other documents
required to be filed with the SEC under the 1934 Act since October 24,
1996.
These opinions are limited to the matters expressly stated herein and
are rendered solely for your benefit and may not be quoted or relied upon for
any other purpose or by an other person. Except with our prior consent, the
foregoing opinions are not to be used, circulated, quoted, published or
otherwise referred to or disseminated for any other purpose or relied upon by
any person or entity other than the addressee as described in the preceding
sentence. Further, the foregoing opinions are given as of the date hereof and we
assume no obligation to update or supplement these opinions to reflect any facts
Advantage Fund II Ltd.
September 22, 1998
Page 6
or circumstances that may hereafter come to our attention or any changes in laws
that may hereafter occur.
Very truly yours,
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Exhibit D
---------
V-ONE CORPORATION
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ADVANTAGE FUND II LTD.
▇/▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ Antilles
September 22, 1998
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
American Stock Transfer & Trust Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: V-ONE Corporation - Series A Convertible Preferred Stock
--------------------------------------------------------
Dear ▇▇. ▇▇▇▇▇▇:
This letter ("Letter") amends the instruction letter sent to American
Stock Transfer & Trust Company ("AST") on December 8, 1997 ("Original Letter")
regarding the private placement by V-ONE Corporation ("Company") of 4,000 shares
of Series A Convertible Preferred Stock ("Series A Stock") to Advantage Fund II
Ltd. ("Advantage") and AST's duties as Transfer Agent and Registrar for the
Series A Stock.
The Company and Advantage have entered into a Waiver Agreement dated as
of September 22, 1998 ("Agreement"), a copy of which is included herewith as
Item 1, pursuant to which Advantage has, subject to the conditions set forth in
the Agreement, agreed for a period beginning on September 22, 1998 and ending on
November 20, 1998:
1. not to convert the Series A Stock pursuant to Section 10(a) of the
Certificate of Designations of the Series A Stock ("Certificate"),
2. not to require the Company to redeem the Series A Stock pursuant
to Section 7(a)(2) of the Certificate,
3. to allow the Company, at its option, to redeem the Series A Stock
for $1,300 per share, and
4. to waive its right to an adjustment to the "Ceiling Price" and
"Conversion Percentage" (as such terms are defined in the
Certificate).
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
American Stock Transfer & Trust Company
September 22, 1998
Page 2
In consideration of the foregoing, the Company has issued to Advantage:
1. warrants ("First Warrants") to purchase 100,000 shares of the
Company's Common Stock, par value $.001 per share ("Common
Stock"), at an exercise price of $2.125 per share, and
2. warrants ("Second Warrants") to purchase 389,441 shares of Common
Stock at an exercise price of $4.77 per share (collectively the
First Warrants and the Second Warrants are referred to as the "New
Warrants").
In addition, the Agreement provides that, if some or all of the Series
A Stock is converted into shares of Common Stock at any time on or after the
date of the Agreement, no warrants ("Series A Warrants") shall be issued to
Advantage or any subsequent holders of the Series A Stock pursuant to Section
10(a) of the Certificate. The Series A Stock shall be convertible solely into
shares of Common Stock under the formula provided under Section 10(a) of the
Certificate ("Conversion Shares") without any adjustment as a result of the fact
that the Series A Warrants will no longer be issued.
In connection with the execution of the Agreement, the Company and
Advantage, the holder of all of the outstanding shares of Series A Stock, have
agreed that the Original Letter shall be amended as follows:
1. The Company hereby instructs AST to issue the Conversion Shares upon
the conversion of the Series A Stock from time to time upon receipt of a
Conversion Notice (as that term is defined in the Original Letter) as per the
instructions in the Original Letter and according to the formula described in
Section 10(a) of the Certificate, but without any adjustment as a result of the
fact that the Series A Warrants will no longer be issued. AST shall disregard
receipt of a Conversion Notice (as that term is defined in the Original Letter)
that requests Series A Warrants to be issued, shall not issue any Series A
Warrants in connection with the conversion of Series A Stock and shall return
all executed copies of the form of Series A Warrant to the Company.
You shall continue to issue shares of Common Stock on exercise of
Series A Warrants issued prior to the date of the Agreement.
2. The Company hereby instructs AST to issue shares of Common Stock on
exercise of the New Warrants.
3. The New Warrants and the underlying Common Stock (collectively
"Securities") are being offered in reliance on Rule 506 of Regulation D.
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
American Stock Transfer & Trust Company
September 22, 1998
Page 3
Therefore all subsequent offers and sales of the Securities by Advantage must be
made pursuant to registration under the Securities Act of 1933, as amended
("1933 Act"), or an exemption from such registration.
4. Pursuant to Amendment No. 1 dated as of September 22, 1998 to the
Registration Rights Agreement dated as of December 3, 1997 by and between the
Company and Advantage, the Company has agreed to register under the 1933 Act the
shares of Common Stock issuable on exercise of the New Warrants. Until such
registration statement is effective, the shares of Common Stock issued on
exercise of the New Warrants are subject to stop transfer instructions and must
bear the restrictive legend included herewith as Item 2. In all other respects,
the issuance and transfer of the shares of Common Stock issuable upon exercise
of the New Warrants shall be treated as Common Shares (as that term is defined
in the Original Letter) for purposes of the Original Letter.
5. The Company and Advantage have the authority to amend the Original
Letter pursuant to Section 4(b) of the Original Letter. Except as expressly
amended hereby, the Original Letter shall remain in full force and effect.
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
American Stock Transfer & Trust Company
September 22, 1998
Page 4
Very truly yours,
V-ONE CORPORATION
By:__________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
ADVANTAGE FUND II LTD.
By:__________________________
Name: ▇.▇. ▇▇▇▇▇
Title: President
Receipt Acknowledged:
AMERICAN STOCK TRANSFER & TRUST
COMPANY
By:__________________________
Name:
Title:
ITEM 1
------
WAIVER AGREEMENT
This Waiver Agreement ("Agreement") dated as of the 22nd day of
September, 1998, by and between V-ONE Corporation, a Delaware corporation
("Company"), and Advantage Fund II Ltd., a British Virgin Islands corporation
("Fund").
WITNESSETH
WHEREAS, pursuant to that certain Certificate of Designations dated
December 8, 1997 ("Certificate"), the Company authorized 4,000 shares of Series
A Convertible Preferred Stock, par value $.001 per share ("Preferred Stock"),
the rights, preferences and privileges of which are set forth in the
Certificate; and
WHEREAS, pursuant to that certain Subscription Agreement dated as of
December 3, 1997 by and between the Company and the Fund ("Subscription
Agreement"), the Company issued and sold to the Fund 4,000 shares of Preferred
Stock ("Advantage Shares"); and
WHEREAS, the Fund currently holds 2,462 Advantage Shares; and
WHEREAS, pursuant to the Certificate, the Fund has the right to convert
the Advantage Shares into a certain number of shares of Common Stock, $.001 par
value per share, of the Company ("Common Stock") or in certain circumstances to
require the Company to redeem the Advantage Shares; and
WHEREAS, the Company desires to induce the Fund to agree not to
exercise certain of its rights under the Certificate;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. For the period beginning on the date of this Agreement and ending on
November 20, 1998 ("Term") as long as the Company is in compliance with its
obligations to the Fund under the Certificate, the Subscription Agreement, the
Registration Rights Agreement dated as of December 3, 1997, as amended by
Amendment No. 1 (as hereinafter defined) between the Company and the Fund (as
amended, the "Registration Rights Agreement"), and any other agreements between
the Company and the Fund, as the Certificate and such agreements are amended by
this Agreement:
(a) the Fund hereby waives its right to convert the Advantage
Shares into shares of Common Stock and warrants to purchase Common
Stock pursuant to Section 10(a) of the Certificate; and
(b) the Fund hereby waives its right to require the Company to
redeem the Advantage Shares pursuant to Section 7(a)(2) of the
Certificate.
2. The parties agree that the Company shall have the right, at its
option, to redeem the Advantage Shares at a price of $1,300 per share at any
time during the Term without regard to any contrary provisions in the
Certificate. If the Advantage Shares are redeemed, all accrued dividends on the
Advantage Shares shall be waived by the Fund (without any additional payment by
the Company).
3. For the period beginning on December 8, 1997 and ending on November
20, 1998, the Fund hereby waives its right to an adjustment to the "Ceiling
Price" and the "Conversion Percentage" (as such terms are defined in the
Certificate) and waives its right to the "Periodic Amount" pursuant to Section
2(c) of the Registration Rights Agreement. The term "Periodic Amount" is defined
in such Section 2(c).
4. The Fund agrees that none of the transactions contemplated by this
Agreement shall give rise to an "Optional Redemption Event" under the
Certificate (as such term is defined in the Certificate).
5. On the date hereof, the Fund shall receive (a) warrants ("New
Warrants") to purchase 100,000 shares of Common Stock at an exercise price of
$2.125 per share, the term of which New Warrants shall expire on September 21,
2003, and (b) warrants ("Conversion Warrants") to purchase 389,441 shares of
Common Stock at an exercise price of $4.77 per share, the term of which
Conversion Warrants shall expire on September 21, 2003. The New Warrants and the
Conversion Warrants (collectively, "Additional Warrants") shall be in the form
attached hereto as Exhibit A.
6. The Fund agrees not to sell, transfer or otherwise dispose of
(collectively "transfer") any of the Advantage Shares unless, prior to any such
proposed transfer, (i) the Company is furnished with written notice of the name
and address of such transferee, (ii) at or before the time the Company receives
the written notice contemplated by clause (i) of this sentence, the transferee
agrees in writing for the benefit of the Company to be bound by all of the
provisions contained in this Agreement (including without limitation Exhibit D
hereto) following such transfer, (iii) such transfer shall have been made in
accordance with the applicable requirements of the Subscription Agreement, the
Certificate, the Securities Act of 1933, as amended ("1933 Act"), and applicable
state securities laws, and (iv) the further transfer of such the Advantage
Shares by the transferee (and any subsequent transferees) is restricted pursuant
to the provisions of this Agreement.
7. The Fund agrees that, whether or not the Advantage Shares are
redeemed during the Term or otherwise, if some or all of the Advantage Shares
are, on or after the date hereof, converted into shares of Common Stock pursuant
to Section 10 of the Certificate or otherwise, no "Warrants" (as such term is
defined in the Certificate) shall be issued to the Fund or any subsequent holder
of the Advantage Shares upon such conversion. The Fund and the Company agree to
deliver a letter to the Company's transfer agent and registrar (American Stock
Transfer & Trust Company), in the form attached hereto as Exhibit D, to this
2
effect and instructing such transfer agent and registrar to issue shares of
Common Stock upon exercise of the Additional Warrants.
8. On the date hereof and as conditions to the effectiveness hereof,
the Company and the Fund shall enter into Amendment No. 1 in the form attached
hereto as Exhibit B ("Amendment No. 1") to the Registration Rights Agreement and
the Company shall deliver to the Fund an opinion of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
substantially in the form attached hereto as Exhibit C.
9. The Fund represents and warrants to the Company that:
(a) The Advantage Shares are owned by the Fund free and clear of
any and all liens and/or encumbrances;
(b) Each of this Agreement and Amendment No. 1 has been duly and
validly authorized by the Fund, this Agreement has been, and Amendment
No. 1 will be, duly executed and delivered on behalf of the Fund and
this Agreement is, and Amendment No. 1, when executed and delivered by
the Fund, will be, valid and binding obligations of the Fund
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement
of creditors' rights generally;
(c) The Fund is acquiring the Additional Warrants and will purchase
the shares of Common Stock issuable on exercise of the Additional
Warrants (collectively, the "Shares") for its own account for
investment only and not with a view to, or for sale in connection with,
the distribution thereof;
(d) On the date hereof the Fund is, and on each date the Additional
Warrants are exercised the Fund will be, an "accredited investor" as
that term is defined in Rule 501 of the General Rules and Regulations
under the 1933 Act by reason of Rule 501(a)(3);
(e) All subsequent offers and sales of the Additional Warrants and
the Shares by the Fund shall be made pursuant to registration of such
securities being offered and sold under the 1933 Act or pursuant to an
exemption from registration;
(f) The Fund has no present intention of distributing or selling
the Additional Warrants or the Shares;
(g) The Fund understands that the Additional Warrants are being
offered and sold, and the Shares are being offered, to it in reliance
on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is
relying upon the truth and accuracy of, and the Fund's compliance with,
the representations, warranties, agreements, acknowledgments and
understandings of the Fund set forth herein in order to determine the
3
availability of such exemptions and the eligibility of the Fund to
acquire the Additional Warrants and to receive an offer of the Shares;
(h) The Fund and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Additional
Warrants and the offer of the Shares that have been requested by the
Fund; the Fund and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete
and satisfactory answers to any such inquiries; without limiting the
generality of the foregoing, the Fund has had the opportunity to obtain
and to review the Company's (1) Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, (2) Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1998 and June 30, 1998 and (3) proxy
statement for the Company's 1998 Annual Meeting of Stockholders
(collectively, "SEC Reports"), in each case as filed with the
Securities and Exchange Commission ("SEC"); and the Fund understands
that its investment in the Shares involves a high degree of risk;
(i) The Fund has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of an investment in the Additional Warrants and the Shares, and is able
to bear the economic risk of this investment for an indefinite period
of time; and
(j) The Fund understands that no United States federal or state
agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Shares.
10. The Company represents and warrants to the Fund that:
(a) This Agreement, Amendment No. 1 and the Additional Warrants
have been duly and validly authorized by the Company, this Agreement
has been, and Amendment No. 1 and the Additional Warrants will be, duly
executed and delivered on behalf of the Company and this Agreement is,
and Amendment No. 1 and the Additional Warrants, when executed and
delivered by the Company, will be, valid and binding obligations of the
Company enforceable in accordance with their respective terms, subject
as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement
of creditors' rights generally;
(b) The shares of Common Stock, when issued on exercise of the
Additional Warrants, will be duly and validly issued, fully paid and
nonassessable;
(c) The execution and delivery of this Agreement by the Company and
the consummation by the Company of the issuance of the Additional
Warrants as contemplated by this Agreement and the other transactions
contemplated by this Agreement and Amendment No. 1 do not and will not
conflict with or result in a breach by the Company of any of the terms
4
or provisions of, or constitute a default under, the certificate of
incorporation or the by-laws of the Company, or any indenture,
mortgage, deed of trust or other material agreement or instrument to
which the Company is a party or by which it or any of its properties or
assets are bound that would have a material adverse effect on the
Company or any applicable law, rule or regulation or any applicable
decree, judgment or order of any court, United States federal or state
regulatory body, administrative agency or other governmental body
having jurisdiction over the Company or any of its properties or assets
which would have a material adverse effect on the Company;
(d) No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or
stock exchange or market or the stockholders of the Company is required
to be obtained by the Company for (1) the execution, delivery and
performance by the Company of this Agreement and Amendment No. 1
(except such authorization of the SEC as is required with respect to
accelerating the effectiveness of any registration statement filed
pursuant thereto), (2) the issuance of the Additional Warrants as
contemplated by this Agreement, (3) the issuance of the Shares and (4)
the filing of an additional listing application with Nasdaq with
respect to the Shares;
(e) The SEC Reports do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading other than (i) the existence of
this Agreement and the transactions contemplated thereby, (ii) the fact
that an Inconvertibility Notice was required to be sent to the Fund
pursuant to Section 7(a)(2) of the Certificate (and the consequences of
such requirement), and (iii) the Company's financial condition and
results of operations subsequent to June 30, 1998. The Company has not
filed any reports with the SEC under the Securities Exchange Act of
1934, as amended (the "1934 Act"), since August 6, 1998;
(f) Since December 31, 1997, there has been no material adverse
change and no material adverse development in the business, properties,
operations, condition (financial or other), results of operations or
prospects of the Company, except as disclosed in the SEC Reports; and
(g) The Company has timely filed all required forms, reports and
other documents with the SEC. All of such forms, reports and other
documents complied, when filed, in all material respects, with all
applicable requirements of the 1933 Act and the Securities Exchange Act
of 1934, as amended.
11. The Company agrees to file an additional listing application with
respect to the Shares with the Nasdaq National Market within 7 days of the date
of this Agreement.
12. The Fund acknowledges that (a) the Additional Warrants and, except
as provided in Amendment No. 1, the Shares have not been and are not being
registered under the provisions of the 1933 Act and may not be transferred
unless (i) subsequently registered thereunder or (ii) the Fund shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
5
scope and substance to the Company, to the effect that the Additional Warrants
or the Shares to be sold or transferred may be sold or transferred pursuant to
an exemption from such registration; (b) any resale of the Additional Warrants
or the Shares made in reliance on Rule 144 promulgated under the 1933 Act may be
made only in accordance with the terms of said Rule and further, if said Rule is
not applicable, any such resale of the Additional Warrants or the Shares under
circumstances in which the seller, or the person through whom the resale is
made, may be deemed to be an underwriter, as that term is used in the 1933 Act,
may require compliance with some other exemption under the 1933 Act or the rules
and regulations of the SEC thereunder; and (c) neither the Company nor any other
person is under any obligation to register the Shares (other than pursuant to
Amendment No. 1) or the Additional Warrants under the 1933 Act or to comply with
the terms and conditions of any exemption thereunder (other than pursuant to
Amendment No. 1).
13. The Fund acknowledges and agrees that the Additional Warrants
shall bear restrictive legends in substantially the following form (and a
stop-transfer order may be placed against transfer of the Additional Warrants):
These securities have not been registered under the
Securities Act of 1933, as amended (the "Act"), or
any state securities laws. The sale to the holder of
these securities and of the shares of common stock
issuable upon exercise of these securities are not
covered by a registration statement under the Act or
registration under state securities laws. These
securities have been acquired, and such shares of
common stock must be acquired, for investment only
and may not be sold, transferred or assigned in the
absence of registration of the resale thereof or an
opinion of counsel reasonably acceptable to the
Company that such registration is not required.
14. The Fund acknowledges and agrees that, until such time as the
Shares have been registered for resale under the 1933 Act as contemplated by
Amendment No. 1, the certificates for the Shares issued on exercise of the
Additional Warrants shall bear restrictive legends in substantially the
following form (and a stop-transfer order may be placed against transfer of the
Shares):
The securities represented by this certificate have
not been registered under the Securities Act of
1933, as amended (the "Act"), or any state
securities laws. The sale to the holder of these
securities is not covered by a registration
statement under the Act or registration under state
securities laws. These securities have been acquired
for investment only and may not be sold, transferred
or assigned in the absence of registration of the
resale thereof or an opinion of counsel reasonably
acceptable to the Company that such registration is
not required.
6
15. On the date hereof, the Company shall pay the Fund $10,000 with
respect to the Fund's costs and expenses (including attorneys' fees and
expenses) incurred and to be incurred by the Fund in connection with this
Agreement, Amendment No. 1 and the transactions contemplated hereby and thereby.
16. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed in the State of New York. The parties irrevocably consent to the
jurisdiction of the United States federal courts and the state courts located in
the State of Maryland in any suit or proceeding based on or arising under this
Agreement or relating to the Additional Warrants or the Shares, and irrevocably
agree that all claims in respect of such suit or proceeding may be determined in
such courts. The parties irrevocably waive the defense of an inconvenient forum
to the maintenance of such suit or proceeding. The parties further agree that
service of process upon either party, mailed by first class mail, shall be
deemed in every respect effective service of process on such party in any such
suit or proceeding. Nothing herein shall affect either party's right to serve
process in any other manner permitted by law. The parties agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
17. Failure by any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
18. Except as expressly provided herein, all of the terms and
provisions of the Certificate shall continue in full force and effect and
nothing contained herein shall be deemed to constitute a waiver by the Fund of
any of its rights under the Certificate, the Subscription Agreement, the
Registration Rights Agreement or any other agreement among the Company and the
Fund.
19. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
V-ONE CORPORATION
By: _________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President
and Chief Financial Officer
ADVANTAGE FUND II LTD.
By: _________________________________
▇. ▇. ▇▇▇▇▇, President
8
Item 2
------
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"), or any state securities
laws. The sale to the holder of these securities is not covered by a
registration statement under the Act or registration under state securities
laws. These securities have been acquired for investment only and may not be
sold, transferred or assigned in the absence of registration of the resale
thereof or an opinion of counsel reasonably acceptable to the Company that such
registration is not required.