SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of June 11, 1999, by and between
V-ONE Corporation, a Delaware corporation, with headquarters located at ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and
Hai ▇▇▇ ▇▇▇▇▇ and Wen ▇▇▇ ▇▇ (each a "Buyer" and collectively, the "Buyers").
W I T N E S S E T H:
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WHEREAS, the Buyers wish to purchase, upon the terms and subject to the
conditions of this Agreement, shares of non-voting, convertible preferred stock
of the Company that will be convertible into shares of Common Stock, $.001 par
value (the "Common Stock"), of the Company; and
WHEREAS, the Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D as promulgated by the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933
Act");
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. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(a) SUBSCRIPTION. The Buyers hereby agree to purchase from the Company
such number of shares (the "Preferred Shares") of Series B Convertible Preferred
Stock, $.001 par value (the "Preferred Stock"), of the Company, having the terms
and conditions as set forth in the form of Certificate of Designations of the
Series B Convertible Preferred Stock attached hereto as ANNEX I (the
"Certificate of Designations"), as is equal to U.S. $3,000,000 divided by 105%
of the closing bid price of a share of the Company's Common Stock on the Nasdaq
National Market on the trading date immediately preceding the date of this
Agreement, rounded to the nearest number of whole shares, for $3,000,000. One
million dollars (U.S. $1,000,000) of the purchase price for the Preferred Shares
shall be payable in United States Dollars on the date hereof. Two million
dollars (U.S. $2,000,000) shall be payable by tendering a promissory note
("Note") in the form of ANNEX II. The shares of Common Stock issuable upon
conversion of the Preferred Shares are referred to herein as the "Conversion
Shares." The Conversion Shares and the Preferred Shares are referred to herein
collectively as the "Shares."
(b) FORM OF PAYMENT. The Buyers shall collectively pay the cash portion of
the aggregate purchase price for the Preferred Shares by delivering good funds
in United States Dollars to the Company and shall tender the Note. The portion
of the aggregate purchase price to be paid by each Buyer is set forth on
SCHEDULE A. Such delivery of funds and Note shall be made against delivery by
the Company of the certificates for the appropriate number of Preferred Shares
registered in the name of the appropriate Buyers. Promptly following payment by
the Buyers of the cash purchase price of the Preferred Shares and delivery of
the Note, the Company shall deliver certificates for the Preferred Shares,
registered in the name of the appropriate Buyers, to the Buyers.
(c) METHOD OF PAYMENT. Payment of the cash portion of the aggregate
purchase price for the Preferred Shares shall be made by wire transfer of funds
to:
Citibank, F.S.B.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
ABA#:▇▇▇▇▇▇▇▇▇
Account #:▇▇▇▇▇▇▇▇
Not later than 4:00 p.m., Washington, D.C. time, on the date prior to the
date hereof, the Buyers shall deposit with the Company the cash portion of the
aggregate purchase price for the Preferred Shares.
2. BUYERS REPRESENTATIONS, WARRANTIES, ETC.
Each Buyer represents and warrants to, and covenants and agrees with, the
Company as follows:
(a) PURCHASE FOR INVESTMENT. Each Buyer is purchasing the Preferred Shares
for his own account for investment only and not with a view toward the public
sale or distribution thereof;
(b) ACCREDITED INVESTOR. Each Buyer is 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)(5) or (6) of Regulation D;
(c) NON-U.S. PERSON. Each Buyer is not a "U.S. person" as that term is
defined in Rule 902(k) of Regulation S under the 1933 Act;
(d) REOFFERS AND RESALES. All subsequent offers and sales of the Shares by
each Buyer shall be made pursuant to a registration statement relating to the
Shares being offered and sold under the 1933 Act or pursuant to an exemption
from registration under the 1933 Act;
(e) COMPANY RELIANCE. Each Buyer understands that the Preferred Shares are
being offered and sold, and the Conversion Shares are being offered, to him 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 each Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Preferred Shares and
to receive an offer of the Conversion Shares;
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(f) INFORMATION PROVIDED. Each Buyer and his 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 Preferred
Shares and the offer of the Conversion Shares that have been requested by the
Buyer; each Buyer and his 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,
each Buyer has had the opportunity to obtain and to review the Company's (1)
Annual Reports on Form 10-K for the fiscal years ended December 31, 1996, 1997
and 1998, (2) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998 and 1999, June 30, 1998 and September 30, 1998, (3) Current Reports on Form
8-K filed May 14, September 25, November 9, November 24, and December 16, 1998
and March 12, and April 2, 1999 and (4) proxy statements for the Company's 1998
and 1999 Annual Meetings of Stockholders, in each case as filed with the SEC
(collectively, the "SEC Reports"); and each Buyer understands that his
investment in the Shares involves a high degree of risk;
(g) ABSENCE OF APPROVALS. Each Buyer 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; and
(h) SUBSCRIPTION AGREEMENT AND NOTE. Each of this Agreement and the Note
has been duly and validly authorized, executed and delivered on behalf of each
Buyer and is a valid and binding agreement of the Buyer enforceable in
accordance with its 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.
3. COMPANY REPRESENTATIONS, WARRANTIES, ETC.
The Company represents and warrants to, and covenants and agrees with,
each Buyer that:
(a) ORGANIZATION AND AUTHORITY. 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 (i) own, lease
and operate its properties and to carry on its business as now being conducted,
and (ii) to execute, deliver and perform its obligations under this Agreement,
the Registration Rights Agreement, the form of which is attached hereto as ANNEX
III (the "Registration Rights Agreement"), the Certificate of Designations, and
the other agreements to be executed and delivered by the Company in connection
herewith, and to consummate the transactions contemplated hereby and thereby.
The Company has no subsidiaries.
(b) CAPITALIZATION. The authorized capital stock of the Company currently
consists of (a) 33,333,333 shares of Common Stock of which 16,773,075 shares
were outstanding on May 13, 1999, all of which are fully paid and nonassessable;
and (b) 13,333,333 shares of Preferred Stock, $.001 par value, some of which
shares are or will be designated as Series B Convertible Preferred Stock and
issued pursuant to this Agreement.
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(c) CONCERNING THE SHARES. The Shares have been duly authorized and the
Preferred Shares, when issued and paid for in accordance with this Agreement,
and the Conversion Shares, when issued upon conversion of the Preferred Shares,
will be duly and validly issued, fully paid and non-assessable and will not
subject the holder thereof to personal liability by reason of being such holder.
There are no preemptive or similar rights of any stockholder of the Company or
any other person to acquire any of the Shares. The Preferred Shares are not
being offered or sold by any form of general solicitation or general
advertising.
(d) SUBSCRIPTION AGREEMENT; REGISTRATION RIGHTS AGREEMENT. This Agreement
and the Registration Rights Agreement have been duly and validly authorized by
the Company, this Agreement has been duly executed and delivered on behalf of
the Company and this Agreement and the Registration Rights Agreement are 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 and limits upon rights to indemnity.
(e) NON-CONTRAVENTION. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the issuance of the Preferred
Shares as contemplated by this Agreement and the other transactions contemplated
by this Agreement, the Registration Rights Agreement and the terms of the
Preferred Stock 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 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 that would have a material adverse effect on the Company.
(f) APPROVALS. 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 the Registration Rights Agreement (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 and sale of the
Preferred Shares as contemplated by this Agreement and (3) the issuance of
Conversion Shares on conversion of the Preferred Shares (other than the filing
of an additional listing application with the Nasdaq National Market).
(g) INFORMATION PROVIDED. The information provided by or on behalf of the
Company to the Buyers in connection with the transactions contemplated by the
Agreement, including, without limitation, the information referred to in Section
2(f) of this Agreement, does not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
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therein, in the light of the circumstances under which they are made, not
misleading.
(h) ABSENCE OF CERTAIN CHANGES. Since December 31, 1998, 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.
(i) ABSENCE OF CERTAIN PROCEEDINGS. Except as described in the SEC
Reports, there is no action, suit or proceeding, before or by any court, public
board or body or governmental agency pending or, to the knowledge of the
Company, threatened against the Company and, to the knowledge of the Company,
there is no inquiry or investigation before or by any court, public board or
body or governmental agency pending or threatened against the Company, in any
such case wherein an unfavorable decision, ruling or finding would have a
material adverse effect on the business, properties, operations, condition
(financial or other), results of operations or prospects of the Company or the
transactions contemplated by this Agreement or any of the documents contemplated
hereby or that could adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under, this
Agreement or any of such other documents.
(j) SEC FILINGS. 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 ("1934
Act").
(k) NOTICE FILINGS. The Company is not the subject of any order, judgment
or decree temporarily, preliminarily or permanently enjoining the Company for
failure to comply with Rule 503 of Regulation D.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
(a) TRANSFER RESTRICTIONS. Each Buyer acknowledges that (1) the Preferred
Shares have not been and are not being registered under the provisions of the
1933 Act and, except as provided in the Registration Rights Agreement, the
Conversion Shares have not been and are not being registered under the 1933 Act,
and may not be transferred unless (A) subsequently registered thereunder or (B)
the Buyer 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
Shares to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any resale of 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 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 (3) neither the
Company nor any other person is under any obligation to register the Shares
(other than registration of the resale of the Conversion Shares pursuant to the
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Registration Rights Agreement) under the 1933 Act or to comply with the terms
and conditions of any exemption thereunder (other than pursuant to Section 4(d)
hereof and pursuant to the Registration Rights Agreement).
(b) RESTRICTIVE LEGENDS. (1) Each Buyer acknowledges and agrees that the
certificates for the Preferred Shares shall bear restrictive legends in
substantially the following form (and a stop-transfer order may be placed
against transfer of the Preferred Shares):
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 conversion 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 acceptable to the Company that such registration is not required.
(2) Each Buyer further acknowledges and agrees that the
certificates for the Conversion Shares issued upon conversion of the Preferred
Shares may bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates for the
Conversion 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 securities have been acquired for investment only and
may not be resold, transferred or assigned in the absence of registration
of the resale thereof or an opinion of counsel acceptable to the Company
that such registration is not required.
(c) VOTING OF PREFERRED SHARES. Each Buyer agrees to vote all of his
shares of Series B Convertible Preferred Stock in favor of any future increase
in the authorized shares of the Company's preferred stock and/or common stock.
(d) REGISTRATION RIGHTS AGREEMENT. The parties hereto agree to enter into
the Registration Rights Agreement on or before the date hereof.
(e) FORM D. The Company agrees to file a Form D with respect to the Shares
as required under Regulation D. Each Buyer agrees to cooperate with the Company
in connection with such filing and, upon request of the Company, to provide all
information relating to that Buyer reasonably required for such filing.
(f) AUTHORIZATION FOR TRADING; REPORTING STATUS. Promptly following the
date hereof, the Company shall file a notification for listing of additional
shares with the Nasdaq.
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5. ISSUANCE OF CERTIFICATES FOR PREFERRED SHARES; CONVERSION PROCEDURE.
(a) ISSUANCE OF CERTIFICATES. On the date hereof, following the delivery
by the Buyers of the aggregate purchase price for the Preferred Shares in
accordance with Section 1 hereof, the Company will issue certificates for the
Preferred Shares to the Buyers.
(b) CONVERSION PROCEDURE. In connection with the exercise of conversion
rights relating to the Preferred Shares, each Buyer or any subsequent holders of
the Preferred Shares shall complete, sign and furnish to the Company a Notice of
Conversion in the form attached hereto as ANNEX IV, which shall be deemed to
satisfy all requirements of the Certificate of Designations with respect to any
exercise of conversion rights by the Buyer or any such holders.
6. MISCELLANEOUS.
(a) This Agreement and the Note issued pursuant hereto shall be governed
by and construed and enforced under the internal laws of the State of New York
without giving effect to principles of conflict of laws. Each party hereto
hereby consents to jurisdiction of the federal and state courts located in the
State of Maryland in connection with any claim, lawsuit, civil action or other
proceeding arising out of or in connection with this Agreement and the Note and
the transactions contemplated hereby and thereby (collectively, "Claim"). Each
party hereto hereby waives and agrees not to assert by way of motion, as a
defense or otherwise in any Claim that he or it is not subject to the
jurisdiction of the above courts, that such Claim is brought in an inconvenient
forum, or that the venue of such Claim is improper.
(b) This Agreement may not be assigned by any Buyer without the prior
written consent of the Company. This Agreement shall be binding on each party's
successors and permitted assigns.
(c) This Agreement may be executed in counterparts by the parties hereto
on separate counterparts, all of which together shall constitute one and the
same instrument. A facsimile transmission of this Agreement bearing a signature
on behalf of a party hereto shall be legal and binding on such party.
(d) The headings, captions and footers of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(e) If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
(f) This Agreement may be amended only by an instrument in writing signed
by the party to be charged with enforcement.
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(g) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
or any course of dealings between the parties, shall not operate as a waiver
thereof or an amendment hereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or
exercise of any other right or power.
(h) Any notices required or permitted to be given under the terms of this
Agreement shall be sent by mail or delivered personally (which shall include
telephone line facsimile transmission with answer back confirmation) or by
courier and shall be effective five days after being placed in the mail, if
mailed, or upon receipt, if delivered personally or by courier, in the case of
the Company addressed to the Company at its address shown in the introductory
paragraph of this Agreement, Attention: Chief Executive Officer (telephone line
facsimile transmission number (▇▇▇) ▇▇▇-▇▇▇▇) or, in the case of a Buyer, at his
address or telephone line facsimile transmission number shown on the signature
page of this Agreement, or such other address or telephone line facsimile
transmission number as a party shall have provided by notice to the other
parties in accordance with this provision. Each Buyer hereby designates as his
address for any notice required or permitted to be given to the Buyer pursuant
to the Certificate of Designations the address shown under his name on the
signature page of this Agreement, until such Buyer shall designate another
address for such purpose.
(i) The respective representations, warranties, covenants and agreements
of each Buyer and the Company contained in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement shall survive the
delivery of payment for the Preferred Shares and shall remain in full force and
effect regardless of any investigation made by or on behalf of them or any
person controlling or advising any of them.
(j) This Agreement and its Annexes and Schedules set forth the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersede all prior agreements and understandings, whether written or oral, with
respect thereto.
(k) The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the date
first above written.
V-ONE CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman, President and Chief
Executive Officer
/s/ Hai ▇▇▇ ▇▇▇▇▇
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Name: Hai ▇▇▇ ▇▇▇▇▇
Address: ▇▇, ▇▇.▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇
Facsimile No.:886-22783 6255
/s/ Wen ▇▇▇ ▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇ (Wen ▇▇▇ ▇▇)
Address: ▇▇, ▇▇.▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇
Facsimile No.:886-22783 6255
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SCHEDULE A
NAME AMOUNT OF AGGREGATE PURCHASE PRICE
1. Hai ▇▇▇ ▇▇▇▇▇ $1,500,000
2. Wen ▇▇▇ ▇▇ $1,500,000
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ANNEX IV
TO
SUBSCRIPTION
AGREEMENT
NOTICE OF CONVERSION
OF CONVERTIBLE PREFERRED STOCK
SERIES B CONVERTIBLE PREFERRED STOCK
OF V-ONE CORPORATION
TO: V-ONE Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman of the Board, President and
Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(1) Pursuant to the terms of the Series B Convertible Preferred Stock (the
"Preferred Stock") of V-ONE Corporation, a Delaware corporation (the "Company"),
the undersigned hereby elects to convert ________ shares of the Preferred Stock
into shares of Common Stock, $.001 par value (the "Common Stock"), of the
Company or such other securities into which the Preferred Stock is currently
convertible. Capitalized terms used in this Notice and not otherwise defined
herein have the respective meanings provided in the Certificate of Designations
for the Preferred Stock (the "Certificate of Designations").
(2) Please issue a certificate or certificates for shares of Common Stock
or other securities into which such number of shares of Preferred Stock is
convertible in the name(s) specified immediately below or, if additional space
is necessary, on an attachment hereto:
--------------------- ---------------------
Name Name
--------------------- ---------------------
Address Address
--------------------- ---------------------
SS or Tax ID Number SS or Tax ID Number
(3) The Conversion Date is _________. The Conversion Price is $__________.
(4) If the shares of Common Stock have not been registered under the
Securities Act of 1933, as amended (the "Act"), the undersigned represents and
warrants that (i) the shares of Common Stock not so registered are being
acquired for the account of the undersigned for investment, and not with a view
to, or for resale in connection with, the public distribution thereof other than
pursuant to registration under the Act, and that the undersigned has no present
intention of distributing or reselling the shares of Common Stock not so
registered other than pursuant to registration under the Act and (ii) the
undersigned is an "accredited investor" as defined in Regulation D under the
Act. The undersigned further agrees that (A) the shares of Common Stock not so
registered shall not be sold or transferred unless either (i) they first shall
have been registered under the Act and applicable state securities laws or (ii)
the Company first shall have been furnished with an opinion of legal counsel
acceptable to the Company to the effect that such sale or transfer is exempt
from the registration requirements of the Act and (B) the Company may place a
legend on the certificate(s) for the shares of Common Stock not so registered to
that effect and place a stop-transfer restriction in its records relating to the
shares of Common Stock not so registered, all in accordance with the
Subscription Agreement, dated as of June 14, 1999, and the Certificate of
Designations.
Date ________________ ____________________________________________
Signature of Holder (Must be signed exactly
as name appears on the Preferred Stock
Certificate.)
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