SUBSCRIPTION AGREEMENT
dated as of October 7, 1998
by and between
UNICOMP, INC.
and
ADVANTAGE FUND II LTD.
____________________
SERIES A CONVERTIBLE PREFERRED STOCK
and
COMMON STOCK PURCHASE WARRANTS
SUBSCRIPTION AGREEMENT
SERIES A CONVERTIBLE PREFERRED STOCK
and
COMMON STOCK PURCHASE WARRANTS
UNICOMP, INC.
Page
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1. AGREEMENT TO SUBSCRIBE 1
(a) Subscription 1
(b) Payment 1
2. BUYER REPRESENTATIONS, WARRANTIES, ETC. 2
(a) Purchase for Investment 2
(b) Accredited Investor 2
(c) Reoffers and Resales 2
(d) Company Reliance 2
(e) Information Provided 2
(f) Absence of Approvals 3
(g) Subscription Agreement 3
(h) Residency 3
3. COMPANY REPRESENTATIONS, WARRANTIES, ETC. 3
(a) Organization and Authority 3
(b) Capitalization 3
(c) Concerning the Shares and the Common Stock 4
(d) Subscription Agreement and Other Transaction Documents
4
(e) Non-contravention 5
(f) Approvals 5
(g) Information Provided 5
(h) Absence of Certain Changes 6
(i) Absence of Certain Proceedings 6
(j) Properties 6
(k) Labor Relations 7
(l) SEC Filings 7
(m) Absence of Brokers, Finders, Etc. 7
(n) No Solicitation. 7
(o) Certain Issuances of Securities. 8
(p) Absence of Rights Agreement 8
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS
(a) Transfer Restrictions 8
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(b) Restrictive Legend 8
(c) Registration Rights Agreement 9
(d) Form D 10
(e) Authorization for Trading; Reporting Status 10
(f) Use of Proceeds 10
(g) Blue Sky Laws 10
(h) Certain Expenses 10
(i) Certain Issuances of Securities 11
(j) Restriction on Conversion 11
(k) Best Efforts 12
(l) Legal Opinion 12
5. TRANSFER AGENT AGREEMENT 12
(a) Transfer Agent Agreement 12
(b) Conversion Procedure 12
6. CLOSING DATE. 13
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND ISSUE. 13
8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE. 13
9. MISCELLANEOUS. 14
(a) Governing Law. 14
(b) Counterparts. 14
(c) Headings, etc. 14
(d) Severability 14
(e) Amendments 14
(f) Waivers. 14
(g) Notices. 15
(h) Assignment 15
(i) Survival of Representations and Warranties 15
(j) Entire Agreement 15
(k) Termination 15
(l) Further Assurances 16
(m) Public Statements, Press Releases, Etc. 16
(n) Construction 16
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SCHEDULES
Schedule 3(a) Subsidiaries
Schedule 3(b)-1 Antidilution Adjustments
Schedule 3(h) Liabilities
Schedule 3(j) Security Interests
ANNEXES
Annex I Form of Articles of Amendment
Annex II Form of Common Stock Purchase Warrant
Annex III Form of Escrow Agreement
Annex IV Form of Registration Rights Agreement
Annex V Form of Transfer Agent Agreement
Annex VI Form of Opinion of European Counsel to be Delivered
after Closing Date
Annex VII Form of Notice of Conversion of Series A Convertible
Preferred Stock
Annex VIII Form of Opinion of Counsel to be Delivered on Closing
Date
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SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of October 7, 1998, by and
between UNICOMP, INC., a Colorado corporation (the "Company"), with headquarters
located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and ADVANTAGE
FUND II LTD., a British Virgin Islands corporation (the "Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, shares of non-voting, convertible preferred
stock of the Company which will be convertible into shares of Common Stock, $.01
par value (the "Common Stock"), of the Company and in connection therewith the
Company is to issue to the Buyer warrants to purchase shares of Common Stock as
provided in this Agreement; and
WHEREAS, the Company and the Buyer 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 Buyer hereby agrees to purchase from the
Company the number of shares (the "Preferred Shares") of Series A Convertible
Preferred Stock, $1.00 par value (the "Preferred Stock"), of the Company set
forth on the signature page of this Agreement, having the terms and conditions
as set forth in the form of Articles of Amendment of the Company's Articles of
Incorporation attached hereto as Annex I (the "Articles of Amendment") at the
price per share and for the aggregate purchase price set forth on the signature
page of this Agreement (the "Purchase Price"). In connection with the purchase
of the Preferred Shares by the Buyer, the Company shall issue to the Buyer at
the closing on the Closing Date (as defined herein) Common Stock Purchase
Warrants in the form attached hereto as Annex II (the "Warrants") to purchase a
number of shares of Common Stock equal to the quotient obtained by dividing (i)
the quotient obtained by dividing (x) the Purchase Price by (y) the average
Closing Bid Price (as defined in the Articles of Amendment) of a share of Common
Stock for the five Trading Days (as defined in the Articles of Amendment)
immediately prior to the Closing Date by (ii) ten (subject to adjustment after
issuance of the Warrants as provided in the Warrants). The shares of Preferred
Stock issuable pursuant to Section 5 of the Articles of Amendment as dividends
on the Preferred Shares are referred
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to herein as the "Dividend Shares." The shares of Common Stock issuable upon
exercise of the Warrants are referred to herein as the "Warrant Shares." The
Warrant Shares and the shares of Common Stock issuable upon conversion of the
Preferred Shares and the Dividend Shares are referred to herein collectively as
the "Common Shares." The Common Shares, the Preferred Shares and the Dividend
Shares are referred to herein collectively as the "Shares." The Shares and the
Warrants are referred to herein collectively as the "Securities."
(B) PAYMENT. Payment of the Purchase Price and delivery of the
Securities shall be made in accordance with the terms of the Escrow Agreement in
the form attached hereto as Annex III (the "Escrow Agreement"). The Escrow
Agreement shall be executed and delivered by the Company, the Buyer and the
escrow agent (the "Escrow Agent") named therein prior to or immediately
following the execution and delivery of this Agreement. The Buyer shall pay the
Purchase Price by delivering good funds in United States Dollars to the Escrow
Agent against delivery by the Company of the certificates for the Preferred
Shares and the Warrants registered in the name of the Buyer. Promptly following
payment by the Buyer to the Escrow Agent of the Purchase Price, but in any event
prior to the Closing Date (as defined herein), the Company shall deliver
certificates for the Preferred Shares and the Warrants, registered in the name
of the Buyer or its nominee, to the Escrow Agent. The certificates for the
Preferred Shares shall be delivered by the Company to the Escrow Agent on a
delivery against payment basis at the closing. Not later than 4:00 p.m., New
York City time, on the date which is two Business Days after the Company shall
have accepted this Agreement and returned a signed counterpart of this Agreement
to the Buyer or its legal counsel, the Buyer shall deposit with the Escrow Agent
an amount equal to the Purchase Price. As used in this Agreement, the term
"Business Day" means any day other than a Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by law to
remain closed.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
(A) PURCHASE FOR INVESTMENT. The Buyer is purchasing the
Preferred Shares and acquiring the Warrants, and will acquire the Common Shares
upon conversion of the Preferred Shares or exercise of the Warrants, for its own
account for investment only and not with a view towards the public sale or
distribution thereof;
(B) ACCREDITED INVESTOR. The 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)(3);
(C) REOFFERS AND RESALES. All subsequent offers and sales of the
Securities by
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the Buyer shall be made pursuant to registration of the Securities being offered
and sold under the 1933 Act or pursuant to an exemption from registration;
(D) COMPANY RELIANCE. The Buyer understands that the Preferred Shares
are being offered and sold, the Warrants are being issued, and the Common Shares
are being offered, in each case 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 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 the Warrants and to receive an offer of the Common Shares;
(E) INFORMATION PROVIDED. The Buyer 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
Preferred Shares and the issuance of the Warrants and the offer of the Common
Shares which have been requested by the Buyer; the Buyer and its advisors, if
any, have been afforded the opportunity to ask questions of the Company and have
received satisfactory answers to any such inquiries; without limiting the
generality of the foregoing, the Buyer has had the opportunity to obtain and to
review the Company's (1) Annual Report on Form 10-K for the fiscal year ended
February 28, 1998 (the "1998 10-K"), (2) Quarterly Report on Form 10-Q for the
quarter ended May 31, 1998, and (3) definitive proxy statement for the Company's
1998 Annual Meeting of Shareholders, in each case as filed with the SEC
(collectively, the "SEC Reports"); and the Buyer understands that its investment
in the Shares involves a high degree of risk;
(F) ABSENCE OF APPROVALS. The 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;
(G) SUBSCRIPTION AGREEMENT. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the 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; and
(H) RESIDENCY. The Buyer's address set forth on the signature page of
this Agreement is the Buyer's principal place of business and the Buyer has no
operations in the United States.
3. COMPANY REPRESENTATIONS, WARRANTIES, ETC.
The Company represents and warrants to, and covenants and agrees with,
the Buyer that:
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(A) ORGANIZATION AND AUTHORITY. Each of the Company and its
subsidiaries listed on SCHEDULE 3(A) attached hereto (the "Subsidiaries") is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, and the Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement,
the Articles of Amendment, the Warrants, the Escrow Agreement, the Registration
Rights Agreement, the form of which is attached hereto as Annex IV (the
"Registration Rights Agreement"), the Transfer Agent Agreement, the form of
which is attached hereto as Annex V (the "Transfer Agent Agreement"), and the
other agreements to be executed and delivered by the Company in connection
herewith, and to consummate the transactions contemplated hereby and thereby.
Each of the Company and the Subsidiaries is duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions wherein such
qualification is necessary and where failure so to qualify could have a material
adverse effect on the business, properties, operations, condition (financial or
other), results of operations or prospects of the Company and the Subsidiaries,
taken as a whole. The Company has no equity investment in any person other than
the Subsidiaries.
(B) CAPITALIZATION. The authorized capital stock of the Company
consists of (a) 25,000,000 shares of Common Stock of which 7,890,786 shares were
outstanding on September 30, 1998, all of which are fully paid and
nonassessable; and (b) 5,000,000 shares of Preferred Stock, $1.00 par value,
none of which are outstanding, and 3,600 shares of which will be designated as
Series A Convertible Preferred Stock of which 3,000 shares will be issued
pursuant to this Agreement; and on the Closing Date there will be (x) no
material increase from September 30, 1998 in the number of shares of Common
Stock outstanding and (y) no issuances of preferred stock except as issued
pursuant to this Agreement. As of September 30, 1998, the Company had
outstanding options, warrants and similar rights entitling the holders to
purchase 1,189,671 shares of Common Stock. Other than as set forth in the
preceding sentence, the Company does not have outstanding any material amount of
securities (or obligations to issue any such securities) convertible into,
exchangeable for or otherwise entitling the holders thereof to acquire shares of
Common Stock, except as disclosed in the SEC Reports or on Schedule 3(b)-1. The
Company has duly reserved from its authorized and unissued shares of Common
Stock the full number of shares required for (a) all options, warrants,
convertible securities and other rights to acquire shares of Common Stock which
are outstanding and (b) all shares of Common Stock and options and other rights
to acquire shares of Common Stock which may be issued or granted under the stock
option and similar plans which have been adopted by the Company or any of the
Subsidiaries. Each outstanding class or series of securities for which any
antidilution or similar adjustment arising by reason of the issuance or
conversion of the Preferred Shares and the Dividend Shares or the issuance or
exercise of the Warrants will occur is identified on SCHEDULE 3(B)-1 attached
hereto, together with the amount of such antidilution adjustment. The
outstanding shares of Common Stock and outstanding options, warrants and other
securities convertible into, exchangeable for or otherwise entitling the holder
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thereof to acquire shares of Common Stock have been duly authorized and validly
issued. None of such outstanding shares of Common Stock, options, warrants and
other securities has been issued in violation of the preemptive rights of any
securityholder of the Company. The offers and sales of the outstanding shares of
Common Stock and such options, warrants and other securities were at all
relevant times either registered under the 1933 Act and applicable state
securities laws or exempt from such requirements. Except for (i) 25,000 shares
of Common Stock issuable upon the exercise of warrants held by First Bermuda,
Inc. and (ii) 25,000 shares of Common Stock issuable upon the exercise of
warrants held by The Cruttenden ▇▇▇▇ Bridge Fund, LLC, 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 (as defined in the Registration
Rights Agreement).
(C) CONCERNING THE SHARES AND THE COMMON STOCK. The Shares have been
duly authorized. The Preferred Shares, when issued and paid for in accordance
with this Agreement, the Dividend Shares, when issued as dividends on the
outstanding shares of Preferred Stock, and the Common Shares, when issued upon
conversion of the Preferred Shares or the Dividend Shares or upon exercise of
the Warrants, as the case may be, 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
Company has duly reserved 1,576,000 shares of Common Stock for conversion of the
shares of Preferred Stock and exercise of the Warrants, and such shares shall
remain so reserved (subject to reduction from time to time for shares of Common
Stock issued upon conversion of shares of Preferred Stock or redemption or other
permitted retirement of shares of Preferred Stock), and the Company shall from
time to time reserve such additional shares of Common Stock as shall be required
to be reserved pursuant to the Articles of Amendment, as long as the Preferred
Stock is convertible, and pursuant to the Warrants, as long as the Warrants are
exercisable. The Common Stock is listed for trading on the Nasdaq National
Market ("Nasdaq") and (1) the Company and the Common Stock meet the criteria for
continued listing and trading on Nasdaq; (2) the Company has not been notified
since January 1, 1996 by Nasdaq of any failure or potential failure to meet the
criteria for continued listing and trading on Nasdaq and (3) no suspension of
trading in the Common Stock is in effect. The Company knows of no reason that
the Common Shares will not be eligible for listing on Nasdaq.
(D) SUBSCRIPTION AGREEMENT AND OTHER TRANSACTION DOCUMENTS. This
Agreement, the Articles of Amendment, the Registration Rights Agreement, the
Warrants, the Escrow Agreement and the Transfer Agent Agreement and the other
agreements and instruments contemplated hereby and thereby have been duly and
validly authorized by the Company, this Agreement has been duly executed and
delivered by the Company and this Agreement is, and the Registration Rights
Agreement, the Warrants, the Escrow Agreement and the Transfer Agent Agreement
and such other agreements, when executed and delivered by the Company, will be,
valid and binding obligations of the Company enforceable in accordance with
their respective terms,
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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.
(E) NON-CONTRAVENTION. The execution and delivery by the Company of
this Agreement and the other documents contemplated by this Agreement and the
consummation by the Company of the issuance of the Preferred Shares and the
Warrants as contemplated by this Agreement, and the other transactions
contemplated by this Agreement, the Articles of Amendment, the Registration
Rights Agreement, the Warrants, the Escrow Agreement and the Transfer Agent
Agreement do not and will not, with or without the giving of notice or the lapse
of time, or both (i) result in any violation of any terms of the Articles of
Incorporation or By-laws of the Company or any Subsidiary, (ii) conflict with or
result in a breach by the Company or any Subsidiary of any of the terms or
provisions of, or constitute a default under, or result in the modification,
amendment, termination or cancellation of, result in the acceleration of any
obligation of the Company or any Subsidiary under, or result in the creation or
imposition of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any Subsidiary pursuant to, any
indenture, mortgage, deed of trust or other agreement or instrument to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or any of their respective properties or assets is bound or affected, (iii)
violate or contravene 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 Subsidiary or any of their respective
properties or assets or (iv) have any material adverse effect on any permit,
certification, registration, approval, consent, license or franchise necessary
for the Company or any Subsidiary to own or lease and operate any of their
respective properties or to conduct any of their respective businesses or the
ability of the Company or any Subsidiary to make use thereof.
(F) APPROVALS. No authorization, approval or consent of, or filing
with, 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 or made by the Company for (1) the execution, delivery
and performance by the Company of this Agreement, the Registration Rights
Agreement, the Warrants, the Escrow Agreement, the Transfer Agent Agreement and
the other agreements and instruments contemplated hereby and thereby, (2) the
execution, filing and performance by the Company of the Articles of Amendment,
(3) the issuance and sale of the Preferred Shares and the Dividend Shares and
the issuance of the Warrants as contemplated by this Agreement and (4) the
issuance of Common Shares on conversion of the Preferred Shares or the Dividend
Shares or upon the exercise of the Warrants or the issuance of Dividend Shares
as dividends on shares of Preferred Stock, other than (v) the filing of the
notification for listing of additional shares with the Nasdaq pursuant to
Section 4(e), (w) the filing of the Articles of Amendment with the Secretary of
State of the State of Colorado, (x) registration of the resale of the Common
Shares under the 1933 Act as contemplated by the Registration Rights Agreement,
(y) as may be required under applicable state securities or "blue sky" laws and
(z) filing of one or more
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Forms D with respect to the Securities as required under Regulation D.
(G) INFORMATION PROVIDED. The information provided by or on behalf of
the Company to the Buyer in connection with the transactions contemplated by
this Agreement, including, without limitation, the information referred to in
Section 2(e) 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 therein, in the light of the circumstances under which they are made,
not misleading, it being understood that, for purposes of this Section 3(g), any
statement contained in such information shall be deemed to be modified or
superseded for purposes of this Section 3(g) to the extent that a statement in
any document included in such information which was prepared or filed with the
SEC on a later date modifies or replaces such statement, whether or not such
later prepared or filed statement so states. The Company has not filed any
reports with the SEC under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), since February 28, 1998 other than the SEC Reports.
(H) ABSENCE OF CERTAIN CHANGES. Since February 28, 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 and the Subsidiaries taken as a whole,
except as disclosed in the SEC Reports. Except as and to the extent disclosed,
reflected or reserved against in the financial statements of the Company and the
notes thereto included in the SEC Reports or disclosed on SCHEDULE 3(H) attached
hereto, neither the Company nor any Subsidiary has any material (individually or
in the aggregate) liabilities, debts or obligations whether accrued, absolute,
contingent or otherwise, and whether due or to become due. Subsequent to
February 28, 1998, neither the Company nor any Subsidiary has incurred any
liabilities, debts or obligations of any nature whatsoever which are
individually or in the aggregate material to the Company and the Subsidiaries
taken as a whole, other than those incurred in the ordinary course of their
respective businesses or disclosed in the SEC Reports.
(I) ABSENCE OF CERTAIN PROCEEDINGS. Except as disclosed in the SEC
Reports, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board or body or governmental agency (collectively, an
"Action") pending or, to the knowledge of the Company or any Subsidiary,
threatened against the Company or any Subsidiary, in any such case wherein an
unfavorable decision, ruling or finding would have a material adverse effect on
the business, properties, condition (financial or other), results of operations
or prospects of the Company and the Subsidiaries, taken as a whole, or the
transactions contemplated by this Agreement or any of the documents contemplated
hereby or which would 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; neither the Company or any Subsidiary
nor any director or officer thereof is or has been the subject of any Action
involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty; the Company does not have pending
before the SEC any request for confidential treatment of information and to the
best of the
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Company's knowledge no such request will be made by the Company prior to the
time the Registration Statement relating to the Common Shares which is
contemplated by the Registration Rights Agreement is first ordered effective by
the SEC; and, other than as disclosed in writing to the Buyer, there has not
been, and to the best of the Company's knowledge there is not pending or
contemplated, any investigation by the SEC involving the Company or any current
or former director or officer of the Company.
(J) PROPERTIES. Except as set forth on SCHEDULE 3(J) attached
hereto, the Company and the Subsidiaries have good title to all property real
and personal (tangible and intangible) and other assets owned by them, free and
clear of all security interests, charges, mortgages, liens or other
encumbrances, except such as are described in the SEC Reports or such as do not
materially interfere with the use of such property made, or proposed to be made,
by the Company or any Subsidiary. The leases, licenses or other contracts or
instruments under which the Company and the Subsidiaries lease, hold or are
entitled to use any property, real or personal, are valid, subsisting and
enforceable with only such exceptions as do not materially interfere with the
use of such property made, or proposed to be made, by the Company or any
Subsidiary. Neither the Company nor any Subsidiary has received notice of any
material violation of any applicable law, ordinance, regulation, order or
requirement relating to its owned or leased properties. The Company does not
have any knowledge of, and the Company has not given or received any notice of,
any pending conflicts with or infringement of the rights of others with respect
to any Company Proprietary Rights (as defined herein) or with respect to any
license of Company Proprietary Rights. No action, suit, arbitration, or legal,
administrative or other proceeding or investigation is pending, or, to the best
knowledge of the Company, threatened, which involves any Company Proprietary
Rights. Neither the Company nor any Subsidiary is subject to any judgment,
order, writ, injunction or decree of any court or any federal, state, local,
foreign or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or any arbitrator, or has entered into or
is a party to any contract which restricts or impairs the use of any such
Company Proprietary Rights in a manner which would have a material adverse
effect on the use by the Company or any Subsidiary of any of the Company
Proprietary Rights. To the best knowledge of the Company, no Company Proprietary
Rights and no services or products sold by the Company or any Subsidiary,
conflict with or infringe upon any proprietary rights available to any third
party. Neither the Company nor any Subsidiary has received written notice of any
pending conflict with or infringement upon such third-party proprietary rights.
Neither the Company nor any Subsidiary has entered into any consent,
indemnification, forbearance to ▇▇▇ or settlement agreement with respect to
Company Proprietary Rights other than in the ordinary course of business. No
claims have been asserted by any person with respect to the validity of the
Company's or any Subsidiary's ownership or right to use the Company Proprietary
Rights and, to the best knowledge of the Company, there is no reasonable basis
for any such claim to be successful. To the best knowledge of the Company, the
Company Proprietary Rights are valid and enforceable. No registration relating
to the Company Proprietary Rights has lapsed, expired or been abandoned or
canceled or is the subject of cancellation or other adversarial proceedings, and
all applications therefor are pending and
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are in good standing, except for such lapses, expirations, abandonments,
cancellations, adversarial proceedings or failures to be in good standing which
would not, singly or in the aggregate, have a material adverse effect on the
business, properties, operations, condition (financial or otherwise), results of
operations or prospects of the Company and the Subsidiaries taken as a whole.
The Company and the Subsidiaries have complied, in all material respects, with
their respective contractual obligations relating to the protection of the
Company Proprietary Rights used pursuant to licenses. To the best knowledge of
the Company, no person is infringing on or violating the Company Proprietary
Rights. As used herein, the term "Company Proprietary Rights" means all patents,
patent applications, inventions, trademarks, trade names, applications for
registration of trademarks, service marks, service ▇▇▇▇ applications,
copyrights, know-how, manufacturing processes, formulae, trade secrets, licenses
and rights in any thereof and any other intangible property and assets which are
material to the businesses of the Company and the Subsidiaries as now conducted,
as proposed to be conducted or as described in this Agreement.
(K) LABOR RELATIONS. No material labor problem exists or, to
the knowledge of the Company or any Subsidiary, is imminent with respect to any
of the employees of the Company or any Subsidiary.
(L) SEC FILINGS. The Company has timely filed all required
forms, reports and other documents required to be filed with the SEC under the
1934 Act. 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 1934 Act.
(M) ABSENCE OF BROKERS, FINDERS, ETC. No broker, finder or
similar person is entitled to any commission, fee or other compensation by
reason of the transactions contemplated by this Agreement other than ▇▇▇▇▇▇
Capital Group, Ltd., and the Company shall pay, and indemnify and hold harmless
the Buyer from, any claim made against the Buyer by such entity or any other
person for any such commission, fee or other compensation.
(N) NO SOLICITATION. No form of general solicitation or
general advertising was used by the Company or, to the best of its knowledge,
any other person acting on behalf of the Company, in respect of or in connection
with the offer and sale of the Securities. Neither the Company nor, to its
knowledge, any person acting on behalf of the Company has, either directly or
indirectly, sold or offered for sale to any person any of the Preferred Shares
or the Warrants or, within the six months prior to the date hereof, any other
similar security of the Company except as contemplated by this Agreement; and
neither the Company nor any person authorized to act on its behalf will sell or
offer for sale any shares of Preferred Stock or shares of Common Stock or
Warrants, or solicit any offers to buy any shares of Preferred Stock or shares
of Common Stock or Warrants, so as thereby to cause the issuance or sale of any
of the Shares or the issuance of the Warrants to be in violation of Section 5 of
the 1933 Act.
-13-
(O) CERTAIN ISSUANCES OF SECURITIES. The Company has not
issued any shares of Common Stock or shares of any series of preferred stock or
other securities convertible into, exchangeable for or otherwise entitling the
holder to acquire shares of Common Stock which are subject to Rule 4460(i) of
Nasdaq (or any successor, replacement or similar provision thereof or of any
other market on which the Common Stock is listed for trading) and which would be
integrated with the sale of the Preferred Shares to the Buyer or the issuance of
Common Shares upon conversion thereof or upon exercise of the Warrants or the
Dividend Shares in payment of dividends thereon for purposes of such Rule
4460(i) (or any successor, replacement or similar provision thereof or of any
other market on which the Common Stock is listed for trading).
(P) ABSENCE OF RIGHTS AGREEMENT. The Company has not adopted a
shareholder rights plan or similar arrangement relating to accumulations of
beneficial ownership of Common Stock or a change in control of the Company.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
(A) TRANSFER RESTRICTIONS. The Company and the Buyer
acknowledge and agree that (1) the Preferred Shares and the Warrants have not
been and are not being registered under the provisions of the 1933 Act and,
except as provided in the Registration Rights Agreement with respect to the
resale of the Common Shares, the Common Shares have not been and are not being
registered for resale under the 1933 Act, and the Securities may not be
transferred unless (A)(i) subsequently registered for resale thereunder or (ii)
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
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration and (B) in the case of the Preferred Shares and
the Warrants, such transfer is made to a Permitted Transferee (as defined
herein); (2) any resale of the Securities 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
Securities under circumstances in which the seller, or the person through whom
the sale 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 Securities
(other than pursuant to the 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). As used in this Agreement, "Permitted Transferee" means (i) any
person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with the Buyer; for
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with respect
to any person, shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of the Buyer,
whether through the ownership of voting securities or by contract or otherwise,
(ii) any person who has the same investment manager
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as the Buyer, (iii) a bank or other institutional lender of the Buyer to which
the Preferred Shares or the Warrants are pledged as collateral, or (iv) any
other person approved by the Company, which approval shall not be unreasonably
withheld.
(B) RESTRICTIVE LEGEND. (1) The Buyer acknowledges and agrees
that the Preferred Shares shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of the
Preferred Shares):
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be sold, transferred or assigned in
the absence of an effective registration statement for the securities
under the Securities Act of 1933, as amended, or an opinion of counsel
that registration is not required under said Act.
The number of shares constituting the portion of the Maximum Share
Amount, as defined in the Articles of Amendment to the Company's
Articles of Incorporation (the "Articles of Amendment"), allocated to
the shares represented by this certificate for purposes of conversion
thereof is 1,576,000.
Section 10(b)(3)(a) of the Articles of Amendment permits a holder of
the securities represented by this certificate to convert such
securities in accordance with the Articles of Amendment without being
required to surrender this certificate to the Company unless all of the
securities represented hereby are so converted. Consequently, following
conversion of any of the securities represented by this certificate,
the number of shares represented by this certificate may be less than
the number of shares stated hereon. Upon request of any proposed
transferee of this certificate, the Company will provide confirmation
of the number of shares evidenced by this certificate.
(2) The Buyer further acknowledges and agrees that the
Warrants shall bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the Warrants):
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be resold, transferred or assigned
in the absence of an effective registration statement for the
securities under the Securities Act of 1933, as amended, or an opinion
of counsel reasonably acceptable to the Company that registration is
not required under said Act.
(3) The Buyer further acknowledges and agrees that until such
time as the Common Shares have been registered for resale under the 1933 Act as
contemplated by the Registration Rights Agreement, the certificates for the
Common Shares may bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the
-15-
certificates for the Common Shares):
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be resold, transferred or assigned
in the absence of an effective registration statement for the
securities under the Securities Act of 1933, as amended, or an opinion
of counsel reasonably acceptable to the Company that registration is
not required under said Act.
(4) Once the Registration Statement required to be filed by
the Company pursuant to Section 2 of the Registration Rights Agreement has been
declared effective, thereafter (1) upon request of the Buyer the Company will
substitute certificates without restrictive legend for certificates for any
Common Shares issued prior to the date such Registration Statement is declared
effective by the SEC which bear such restrictive legend and remove any
stop-transfer restriction relating thereto promptly, but in no event later than
three trading days after surrender of such certificates by the Buyer and (2) the
Company shall not place any restrictive legend on certificates for Common Shares
issued on conversion of or as dividends on the Preferred Shares or upon exercise
of the Warrants or impose any stop-transfer restriction thereon.
(C) REGISTRATION RIGHTS AGREEMENT. The parties hereto agree to
enter into the Registration Rights Agreement in the form attached hereto as
Annex IV on or before the Closing Date.
(D) FORM D. The Company agrees to file a Form D with respect
to the Securities as required under Regulation D and to provide a copy thereof
to the Buyer promptly after such filing. The Buyer agrees to cooperate with the
Company in connection with such filing and, upon request of the Company, to
provide all information relating to the Buyer reasonably required for such
filing.
(E) AUTHORIZATION FOR TRADING; REPORTING STATUS. Within two
Business Days after the Closing Date, the Company shall file a notification for
listing of additional shares with the Nasdaq relating to the Common Shares and
shall provide evidence of such filing to the Buyer. So long as the Buyer
beneficially owns any of the Preferred Shares, the Dividend Shares, the Warrants
or the Common Shares, the Company shall file all reports required to be filed
with the SEC pursuant to Section 13 or 15(d) of the 1934 Act and the Company
shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would
permit such termination.
(F) USE OF PROCEEDS. Neither the Company nor any Subsidiary
owns or has any present intention of acquiring any "margin stock" as defined in
Regulation G (12 CFR Part 207) of the Board of Governors of the Federal Reserve
System ("margin stock"). The proceeds of sale of the Preferred Shares will be
used for general working capital purposes and in the operation of the Company's
business. None of such proceeds will be used, directly or indirectly (1) to make
any loan
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to or investment in any other person (other than financing the Company's
subsidiaries in the ordinary course of business) or (2) for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any margin stock or
for the purpose of maintaining, reducing or retiring any indebtedness which was
originally incurred to purchase or carry any stock that is currently a margin
stock or for any other purpose which might constitute the transactions
contemplated by this Agreement a "purpose credit" within the meaning of such
Regulation G. Neither the Company nor any agent acting on its behalf has taken
or will take any action which might cause this Agreement or the transactions
contemplated hereby to violate Regulation G, Regulation T or any other
regulation of the Board of Governors of the Federal Reserve System or to violate
the 1934 Act, in each case as in effect now or as the same may hereafter be in
effect.
(G) BLUE SKY LAWS. On or before the Closing Date, the Company
shall take such action as shall be necessary to qualify, or to obtain an
exemption for, the Preferred Shares for sale to the Buyer and the Warrants for
issuance to the Buyer pursuant to this Agreement and the Common Shares for
issuance to the Buyer on conversion of the Preferred Shares under such of the
securities or "blue sky" laws of jurisdictions as shall be applicable to the
sale of the Preferred Shares and the issuance of the Warrants pursuant to this
Agreement and the issuance to the Buyer of Common Shares on conversion of the
Preferred Shares and exercise of the Warrants. The Company shall furnish copies
of all filings, applications, orders and grants or confirmations of exemptions
relating to such securities or "blue sky" laws on or prior to the Closing Date.
(H) CERTAIN EXPENSES. Whether or not the closing occurs, the
Company shall pay or reimburse the Buyer for all reasonable expenses (including,
without limitation, legal fees and expenses of counsel to the Buyer) not in
excess of $25,000 incurred by the Buyer in connection with this Agreement and
the transactions contemplated hereby. In addition, the Company shall pay on
demand all expenses incurred by the Buyer, including reasonable attorneys' fees
and expenses, as a consequence of, or in connection with (1) the negotiation,
preparation or execution of any amendment, modification or waiver of this
Agreement, the Articles of Amendment, the Registration Rights Agreement, the
Warrants, the Transfer Agent Agreement and the other agreements and instruments
contemplated hereby and thereby requested by the Company, (2) any default or
breach of any of the Company's obligations set forth in any of such agreements
or instruments and (3) the enforcement or restructuring of any right of,
including the collection of any payments due, the Buyer under any of such
agreements or instruments, including any action or proceeding relating to such
enforcement or any order, injunction or other process seeking to restrain the
Company from paying any amount due the Buyer, in which the Buyer prevails.
(I) CERTAIN ISSUANCES OF SECURITIES. (1) Unless the Company
obtains the Stockholder Approval (as defined in the Articles of Amendment) or a
waiver thereof from the Nasdaq, the Company will not issue any shares of Common
Stock or shares of any other series of preferred stock or other securities
convertible into, exchangeable for, or otherwise entitling the holder to
acquire, shares of Common Stock which would be subject to the requirements of
Rule
-17-
4460(i) of Nasdaq (or any successor, replacement, or similar provision thereof
or of any other market on which the Common Stock is listed for trading) and
which would be integrated with the sale of the Preferred Shares and issuance of
the Warrants to the Buyer or the issuance of Common Shares upon conversion of
the Preferred Shares or Dividend Shares or exercise of the Warrants for purposes
of Rule 4460(i) of Nasdaq (or any successor, replacement or similar provision
thereof or of any other market on which the Common Stock is listed for trading).
(2) During the period from the date of this Agreement to the
date on which the Registration Statement (as defined in the Registration Rights
Agreement) shall have been effective with the SEC for 180 consecutive days, the
Company shall not, without the prior written consent of the Buyer, offer, sell,
contract to sell or issue (or engage any person to assist the Company in taking
any such action) (A) any security (whether debt or equity) with conversion or
exchange terms similar in nature to the conversion rights of the Preferred Stock
or (B) any equity securities or securities convertible into, exchangeable for or
otherwise entitling the holder to acquire, any Common Stock at a price below the
market price of the Common Stock on the date of such issuance or the date of
conversion, exchange or other exercise thereof (collectively, "Discounted
Securities"); provided, however, that nothing in this Section 4(i)(2) shall
prohibit the Company from issuing securities (w) pursuant to compensation plans
for employees, directors, officers, advisers or consultants of the Company and
in accordance with the terms of such plans as in effect as of the date of this
Agreement, (x) upon exercise of conversion, exchange, purchase or similar rights
issued, granted or given by the Company and outstanding as of the date of this
Agreement and disclosed in the SEC Reports or this Agreement, (y) pursuant to a
public offering underwritten on a firm commitment basis registered under the
1933 Act or (z) as part of a transaction involving a strategic alliance,
collaboration, joint venture, partnership or other similar arrangement of the
Company with another corporation, partnership or other business entity which is
engaged in a business similar to or related to the business of the Company, so
long as in the case of this clause (z) the Board of Directors by resolution duly
adopted (and a copy of which shall be furnished to the Buyer promptly after
adoption) determines that such issuance is fair to the holders of each class and
series of capital stock of the Company, including the Preferred Shares, the
Dividend Shares, if any, and the Warrants.
(J) RESTRICTION ON CONVERSION. So long as the Corporation
shall be in compliance in all material respects with its obligations to the
holders of the shares of Series A Convertible Preferred Stock and trading of
shares of Common Stock on Nasdaq shall not be suspended for any reason on any
Trading Day during the calendar month for which this Section 4(j) is applicable,
during any calendar month through and including September, 1999, the Buyer
together with its Permitted Transferees shall not, without the written consent
of the Corporation, exercise their conversion rights pursuant to the Articles of
Amendment by delivering Conversion Notices (as defined in Section 5(b)) which
would require the issuance of a number of shares of Common Stock in excess of
the Conversion Restriction Amount (as defined herein). As used in this
Agreement, "Conversion Restriction Amount" means, for any calendar month, 20% of
the aggregate number of shares of Common Stock traded on Nasdaq during such
calendar month as reported by Bloomberg,
-18-
L.P. (such amount to be subject to equitable adjustments from time to time on
terms reasonably acceptable to the Buyer for stock splits, stock dividends,
combinations, capital reorganizations and similar events relating to the Common
Stock).
(K) BEST EFFORTS. Each of the parties shall use its best
efforts timely to satisfy each of the conditions to the other party's
obligations to sell and purchase the Preferred Shares set forth in Section 7 or
8, as the case may be, of this Agreement on or before the Closing Date.
(L) LEGAL OPINION. On or before the tenth Business Day after
the Closing Date, the Company shall deliver to the Buyer an opinion of its
European counsel, in form, scope and substance reasonably satisfactory to the
Buyer, to the effect set forth in Annex VI attached hereto.
5. TRANSFER AGENT AGREEMENT; CONVERSION PROCEDURE.
(A) TRANSFER AGENT AGREEMENT. Prior to the Closing Date, the
Company will (1) execute and deliver the Transfer Agent Agreement in the form
attached hereto as Annex V and thereby irrevocably instruct, Corporate Stock
Transfer, Inc., as Transfer Agent and Registrar (the "Transfer Agent"), to issue
certificates for the Common Shares from time to time upon conversion of the
Preferred Shares and the Dividend Shares and exercise of the Warrants in such
amounts as specified from time to time to the Transfer Agent in the Notices of
Conversion surrendered in connection with such conversions and referred to in
Section 5(b) of this Agreement and the Form of Subscription in the form attached
to the Warrants and (2) appoint the Transfer Agent the conversion agent for the
Preferred Stock and the exercise agent for the Warrants. The certificates for
the Common Shares may bear the restrictive legend specified in Section 4(b) of
this Agreement prior to registration of the resale of the Common Shares under
the 1933 Act. The certificates for the Common Shares shall be registered in the
name of the Buyer or its designee and in such denominations to be specified by
the Buyer in connection with each conversion of Preferred Shares or Dividend
Shares or exercise of the Warrants. The Company warrants that no instruction
other than (x) such instructions referred to in this Section 5, (y) stop
transfer instructions to give effect to Section 4(a) prior to registration of
the resale of the Common Shares under the 1933 Act and (z) the instructions
required by Section 3(n) of the Registration Rights Agreement will be given by
the Company to the Transfer Agent and that the Common Shares shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement. Nothing in this Section 5(a) shall limit in any way
the Buyer's obligations and agreement to comply with the registration
requirements of the 1933 Act upon resale of the Common Shares. If the Buyer
provides the Company with an opinion of counsel, reasonably satisfactory in
form, scope and substance to the Company and its legal counsel, that
registration of a resale by the Buyer of any of the Securities is not required
under the 1933 Act, the Company shall permit the transfer of such Securities
and, in the case of the Common Shares, in accordance with clause (1)(B) of
Section 4(a) of this Agreement, promptly instruct the Company's transfer agent
to issue upon transfer one or more share certificates in such name and in such
denominations as specified by the Buyer within three trading days after
-19-
receipt of such opinion. Nothing in this Section 5(a) shall limit the
obligations of the Company under Section 3(n) of the Registration Rights
Agreement.
(B) CONVERSION PROCEDURE. In connection with the exercise of
conversion rights relating to the Preferred Shares and the Dividend Shares, the
Buyer or any subsequent holder of the Preferred Shares shall complete, sign and
furnish to the Transfer Agent a Notice of Conversion of Series A Convertible
Preferred Stock in the form attached hereto as ANNEX VII, which shall be deemed
to satisfy all requirements of the Articles of Amendment.
6. CLOSING DATE.
Subject to the satisfaction or waiver of the conditions set
forth in Sections 7 and 8, the date and time of the issuance and sale of the
Preferred Shares and the issuance of the Warrants (the "Closing Date") shall be
12:00 noon, New York City time, on or before the date which is three Business
Days after the date the Buyer has deposited the Purchase Price with the Escrow
Agent in accordance with Section 1(b), or such other mutually agreed to time.
The closing shall occur on the Closing Date at the Law Offices of ▇▇▇▇▇ ▇ ▇▇▇▇▇,
Penthouse Suite, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND ISSUE.
The Buyer understands that the Company's obligation to sell
the Preferred Shares and issue the Warrants to the Buyer pursuant to this
Agreement is conditioned upon the satisfaction of the following conditions
precedent on or before the Closing Date (any or all of which may be waived by
the Company in its sole discretion):
(a) The receipt and acceptance by the Company of this
Agreement as evidenced by execution of this Agreement by the Company and
delivery of an executed counterpart of this Agreement to the Buyer or its legal
counsel;
(b) Delivery by the Buyer to the Escrow Agent of good funds as
payment in full of an amount equal to the Purchase Price for the Preferred
Shares in accordance with Section 1(b) hereof; and
(c) The accuracy on the Closing Date of the representations
and warranties of the Buyer contained in this Agreement as if made on the
Closing Date and the performance by the Buyer on or before the Closing Date of
all covenants and agreements of the Buyer required to be performed
on or before the Closing Date.
8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
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The Company understands that the Buyer's obligation to
purchase the Preferred Shares and acquire the Warrants on the Closing Date is
conditioned upon the satisfaction of the following conditions precedent on or
before the Closing Date (any or all of which may be waived by the Buyer in its
sole discretion):
(a) The Company and the Escrow Agent shall have executed and
delivered the Escrow Agreement in the form attached hereto as ANNEX III.
(b) Delivery by the Company to the Escrow Agent of the
certificates for the Preferred Shares and the Warrants in accordance with this
Agreement and the Escrow Agreement;
(c) The accuracy on the Closing Date of the representations
and warranties of the Company contained in this Agreement as if made on the
Closing Date and the performance by the Company on or before the Closing Date of
all covenants and agreements of the Company required to be performed on or
before the Closing Date and receipt by the Buyer of a certificate, dated the
Closing Date, of the Chief Executive Officer of the Company confirming such
matters and such other matters as the Buyer may reasonably request;
(d) The receipt by the Buyer of confirmation of the filing
with the Secretary of State of the State of Colorado of the Articles of
Amendment;
(e) The receipt by the Buyer of a certificate, dated the
Closing Date, of the Secretary of the Company certifying (1) the Articles of
Incorporation and By-Laws of the Company as in effect on the Closing Date, (2)
all resolutions of the Board of Directors (and committees thereof) of the
Company relating to this Agreement and the transactions contemplated hereby and
(3) such other matters as reasonably requested by the Buyer;
(f) The Transfer Agent shall have executed and delivered the
Transfer Agent Agreement in the form attached hereto as ANNEX V; and
(g) Receipt by the Buyer on the Closing Date of an opinion of
▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel for the Company, dated the Closing Date, in form,
scope and substance reasonably satisfactory to the Buyer, to the effect set
forth in ANNEX VIII attached hereto.
9. MISCELLANEOUS.
(A) GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Colorado.
(B) COUNTERPARTS. This Agreement may be executed in
counterparts and by the parties hereto on separate counterparts, all of which
together shall constitute one and the same
-21-
instrument. A facsimile transmission of this Agreement bearing a signature on
behalf of a party hereto shall be legal and binding on such party. Although this
Agreement is dated as of the date first set forth above, the actual date of
execution and delivery of this Agreement by each party is the date set forth
below such party's signature on the signature page hereof. Any reference in this
Agreement or in any of the documents executed and delivered by the parties
hereto in connection herewith to (1) the date of execution and delivery of this
Agreement by the Buyer shall be deemed a reference to the date set forth below
the Buyer's signature on the signature page hereof, (2) the date of execution
and delivery of this Agreement by the Company shall be deemed a reference to the
date set forth below the Company's signature on the signature page hereof and
(3) the date of execution and delivery of this Agreement or the date of
execution and delivery of this Agreement by the Buyer and the Company shall be
deemed a reference to the later of the dates set forth below the signatures of
the parties on the signature page hereof.
(C) HEADINGS, ETC. 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.
(D) SEVERABILITY. 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.
(E) AMENDMENTS. No amendment, modification, waiver, discharge
or termination of any provision of this Agreement nor consent to any departure
by the Buyer or the Company therefrom shall in any event be effective unless the
same shall be in writing and signed by the party to be charged with enforcement,
and then shall be effective only in the specific instance and for the purpose
for which given. No course of dealing between the parties hereto shall operate
as an amendment of this Agreement.
(F) WAIVERS. 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.
(G) NOTICES. Any notices required or permitted to be given
under the terms of this Agreement shall be delivered personally (which shall
include telephone line facsimile transmission with answer back confirmation) or
by courier and shall be effective 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 the Buyer, at its
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address or telephone line facsimile transmission number shown on the signature
page of this Agreement, with a copy to Genesee International, Inc., ▇▇▇▇▇ ▇.▇.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (telephone line
facsimile transmission number (▇▇▇) ▇▇▇-▇▇▇▇) or such other address or telephone
line facsimile transmission number as a party shall have provided by notice to
the other party in accordance with this provision. The Buyer hereby designates
as its address for any notice required or permitted to be given to the Buyer
pursuant to the Articles of Amendment the address shown on the signature page of
this Agreement, with a copy to: Advantage Fund II Ltd., c/o Genesee
International, Inc., 10500 ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ (facsimile number (▇▇▇) ▇▇▇-▇▇▇▇), until the Buyer shall designate
another address for such purpose.
(H) ASSIGNMENT. Prior to the Closing Date, the Buyer may not
assign its rights and obligations under this Agreement. Any transfer of the
Preferred Shares or the Warrants by the Buyer after the Closing Date shall be
made in accordance with Section 4(a). After the Closing Date, the Buyer shall
have the right to assign its rights and obligations under this Agreement in
connection with any transfer of the Buyer's rights under the Registration Rights
Agreement by compliance with the provisions of Section 9 of the Registration
Rights Agreement.
(I) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations, warranties, covenants and agreements of the 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 and
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) ENTIRE AGREEMENT. This Agreement and its Schedule and
Annexes set forth the entire agreement between 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) TERMINATION. The Buyer shall have the right to terminate
this Agreement by giving notice to the Company at any time at or prior to the
Closing Date if:
(1) the Company shall have failed, refused, or been unable at
or prior to the date of such termination of this Agreement to perform
any of its obligations hereunder;
(2) any other condition of the Buyer's obligations hereunder
is not fulfilled; or
(3) the closing shall not have occurred on a Closing Date on
or before October 13, 1998, other than solely by reason of a breach of
this Agreement by the Buyer.
Any such termination shall be effective upon the giving of notice thereof by the
Buyer. Upon such termination, the Buyer shall have no further obligation to the
Company hereunder and the Company
-23-
shall remain liable for any breach of this Agreement or the other documents
contemplated hereby which occurred on or prior to the date of such termination.
(L) FURTHER ASSURANCES. Each party to this Agreement will
perform any and all acts and execute any and all documents as may be necessary
and proper under the circumstances in order to accomplish the intents and
purposes of this Agreement and to carry out its provisions.
(M) PUBLIC STATEMENTS, PRESS RELEASES, ETC. The Company and
the Buyer shall have the right to approve before issuance any press releases or
any other public statements with respect to the transactions contemplated
hereby; provided, however, that the Company shall be entitled, without the prior
approval of the Buyer, to make any press release or other public disclosure with
respect to such transactions as is required by applicable law or Nasdaq
regulation (although the Buyer shall be consulted by the Company in connection
with any such press release or other public disclosure prior to its release and
shall be provided with a copy thereof).
(N) CONSTRUCTION. 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, this Agreement has been duly executed by
the Buyer and the Company by their respective officers or other representatives
thereunto duly authorized on the respective dates set forth below.
NUMBER OF SHARES: 3,000
PRICE PER SHARE: $1,000.00
AGGREGATE PURCHASE PRICE: $3,000,000.00
ADVANTAGE FUND II LTD.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
-----------------
Name: Inter Caribbean Services Limited
Title: Secretary
Date: October 7, 1998
---------------
Address: ▇/▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ Antilles
Facsimile No.: 011-599-9732-2008
UNICOMP, INC.
By: /s/ ▇. ▇. ▇▇▇▇▇
---------------
Name: S. A ▇▇▇▇▇
Title: President
Date: October 7, 1998
---------------
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