EXHIBIT 3
IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING: SIGNIFICANT
REPRESENTATIONS ARE CALLED FOR HEREIN.
VELOCITY EXPRESS CORPORATION
STOCK PURCHASE AGREEMENT
Velocity Express Corporation
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
THIS AGREEMENT, made effective this 28 day of October 2002, between
Velocity Express Corporation, a Delaware corporation (the "Company"), and TH Xxx
Xxxxxx Ventures, L.P., TH Xxx Xxxxxx Parallel Ventures, L.P., THLi Coinvestment
Partners, LLC and Blue Star I, LLC (collectively referred to herein as
"undersigned" or "THLPV") each with a principal place of business in New York.
1. (a) Subject to the terms and conditions herein, the Company agrees to sell
to the undersigned, and the undersigned agrees to purchase from the
Company, 160,000 shares of the Company's Series H Preferred Convertible
Preferred Stock, par value $0.004 per share (the "Shares" or "Series H
Preferred") for the subscription price of $10.00 per Share. The rights and
preferences of the Shares are set forth in the Certificate of Designation
of Preferences and Rights of Series H Convertible Preferred Stock as set
forth in Appendix A attached hereto. The Company will also issue to the
undersigned in connection with this purchase a warrant to purchase 800,000
shares of the Company's Common Stock (the "Warrant"). A form of the
Warrant is attached hereto as Appendix B. The undersigned acknowledges
that this subscription is contingent upon acceptance in whole or in part
by the Company. The undersigned shall pay the amount of $1,600,000 for
full purchase of the Shares, such payment to be made in the following
manner. Upon execution of this Agreement in order to secure its obligation
to the Company, THLPV will provide to Fleet Capital Corporation for the
benefit of the Company, letters of credit in form and substance and drawn
on a commercial bank acceptable to Fleet Capital Corporation, in its sole
discretion, in the amount of $1,600,000. No later than 120 days from the
date hereof THLPV shall deliver $1,600,000 in cash to the Company in
payment for the Shares and the Company in turn shall pay such amount to
Velocity Express, Inc. ("VEI") a wholly owned subsidiary of the Company,
as a contribution to the capital of VEI. Upon payment of said $1,600,000
and contribution thereof to VEI, the above described letter of credit
shall terminate.
(b) Company and the undersigned agree that, as set forth in Section 6 of
Certificate of Designation of Preferences and Rights of Series H
Convertible Preferred Stock, the Company can repurchase the Series H
Preferred Stock of the undersigned on or before April 30, 2003 by
tendering to undersigned $1,600,000.00. In the event the Company does not
repurchase the Series H Preferred Stock, the undersigned shall be entitled
to receive an additional warrant (the "Call Warrant") to purchase
1,200,000 shares of the Company's Common Stock. A form of the Call Warrant
is attached hereto as Appendix C.
(c) In the event Fleet Capital Corporation makes demand on the
above-described letter of credit prior to the payment to the Company by
the undersigned for the shares,
payment under the letter of credit shall be considered payment to the
Company for the Shares and the Company shall deliver such Shares to the
undersigned.
2. The undersigned acknowledges and represents as follows:
(a) That the undersigned has had an opportunity to carefully review the
Company, has had the opportunity to conduct due diligence on the
Company, has had the opportunity to review its public filings with
the Securities and Exchange Commission and has reviewed the Risk
Factors, attached hereto as Appendix D, relating to the Company (the
"Company Materials"), and all documents delivered therewith or
reasonably requested by the undersigned;
(b) That the undersigned is able to bear the economic risk of the
investment in the Shares;
(c) That the undersigned has knowledge and experience in financial
and business matters, that the undersigned is capable of
evaluating the merits and risks of the prospective investment
in the Shares and that the undersigned is able to bear such
risks.
(d) That the undersigned understands an investment in the Shares
is highly speculative but believes that the investment is
suitable for the undersigned based upon the undersigned
investment objectives and financial needs, and has adequate
means for providing for his, her or its current financial
needs and personal contingencies and has no need for liquidity
of investment with respect to the Shares;
(e) That the undersigned has been given access to full and
complete information regarding the Company (including the
opportunity to meet with Company officers and review such
documents as the undersigned may have requested in writing)
and has utilized such access to the undersigned satisfaction
for the purpose of obtaining information in addition to, or
verifying information included in, the Company Materials;
(f) That the undersigned recognizes that the Shares are an
investment, involve a high degree of risk, including, but not
limited to, the risks described in the Company Materials; and
(g) That the undersigned realizes that (i) the purchase of Shares
is a long-term investment; (ii) the purchasers of the Shares
must bear the economic risk of investment for an indefinite
period of time because the Shares have not been registered
under the Securities Act of 1933, as amended (the "Act") and,
therefore, cannot be sold unless they are subsequently
registered under the Act, or an exemption from such
registration is available; and (iii) the transferability of
the Shares is restricted, and (A) requires conformity with the
restrictions contained in paragraphs 5 and 6 below, and (B)
will be further restricted by a legend placed on the
certificate(s) representing the Shares stating that the Shares
have not been registered under the Act and referring to the
restrictions on
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transferability of the Shares, and by stop transfer orders or
notations on the Company's records referring to the
restrictions on transferability.
3. The undersigned has been advised that the Shares are not being registered
under the Act or any other securities laws pursuant to exemptions from the
Act and such laws, and that the Company's reliance upon such exemptions is
predicated in part on the undersigned's representations to the Company as
contained herein. The undersigned represents and warrants that the Shares
are being purchased for his, her or its own account and for investment and
without the intention of reselling or redistributing the same, that he,
she or it has made no agreement with others regarding any of such Shares
and that his, her or its financial condition is such that it is not likely
that it will be necessary to dispose of any of such Shares in the
foreseeable future. The undersigned is aware that, in the view of the
Securities and Exchange Commission, a purchase of Shares with an intent to
resell by reason of any foreseeable specific contingency or anticipated
change in market value, or any change in the condition of the Company or
its business, or in connection with a contemplated liquidation or
settlement of any loan obtained for the acquisition of the Shares and for
which the Shares were pledged as security, would represent an intent
inconsistent with the representations set forth above. The undersigned
further represents and agrees that if, contrary to his, her or its
foregoing intentions, he, she or it should later desire to dispose of or
transfer any of such Shares in any manner, he, she or it shall not do so
without first obtaining (a) the opinion of counsel designated by the
Company that such proposed disposition or transfer lawfully may be made
without the registration of such Shares for such purpose pursuant to the
Act, as then in effect, and any other applicable securities laws, or (b)
such registrations (it being expressly understood that except as provided
in the Registration Rights Agreement dated as of the date hereof, the
Company shall not have any obligation to register the Shares for such
purpose).
The undersigned agrees that the Company may place a restrictive
legend on the certificate(s) representing the Shares, containing
substantially the following language:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND WITHOUT REGISTRATION UNDER ANY OTHER SECURITIES LAWS, IN
RELIANCE UPON EXEMPTIONS CONTAINED IN THE ACT AND SUCH LAWS. NO
TRANSFER OF THESE SECURITIES OR ANY INTEREST THEREIN MAY BE MADE IN
THE ABSENCE OF EITHER AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT AND UNDER THE APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE
SECURITIES LAWS. FURTHER, THESE SECURITIES ARE SUBJECT TO
LIMITATIONS ON CONVERTIBILITY AS SET FORTH IN THE STOCK PURCHASE
AGREEMENT APPLICABLE TO THE ISSUANCE OF THESE SECURITIES.
The undersigned agrees and consents that the Company may place a
stop transfer order on the certificate(s) representing the Shares to
assure the undersigned's compliance with this Agreement and the matters
referenced above.
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The undersigned agrees to save and hold harmless, defend and
indemnify the Company and its directors, officers and agents from any
claims, liabilities, damages, losses, expenses or penalties arising out of
any misrepresentation of information furnished by the undersigned to the
Company in this Agreement.
The undersigned understands that the Company at a future date may file a
registration or offering statement (the "Registration Statement") with the
Securities and Exchange Commission to facilitate a public offering of its
securities. The undersigned agrees, for the benefit of the Company, that
should an underwritten public offering be made and should the managing
underwriter of such offering require, the undersigned will not, without
the prior written consent of the Company and such underwriter, during the
Lock Up Period as defined herein: (a) sell, transfer or otherwise dispose
of, or agree to sell, transfer or otherwise dispose of any of the Shares
beneficially held by the undersigned during the Lock Up Period; (b) sell,
transfer or otherwise dispose of, or agree to sell, transfer or otherwise
dispose of any options, rights or warrants to purchase any of the Shares
beneficially held by the undersigned during the Lock Up Period; or (c)
sell or grant, or agree to sell or grant, options, rights or warrants with
respect to any of the Shares. The foregoing does not prohibit gifts to
donees or transfers by will or the laws of descent to heirs or
beneficiaries provided that such donees, heirs and beneficiaries shall be
bound by the restrictions set forth herein. The term "Lock Up Period"
shall mean the lesser of (x) 240 days or (y) the period during which
Company officers and directors are restricted by the managing underwriter
from effecting any sales or transfers of the Company's securities. The
Lock Up Period shall commence on the effective date of the Registration
Statement.
The undersigned has read and executed the Registration Rights Agreement in
the form appended hereto as Appendix E. The undersigned agrees that,
notwithstanding any registration rights granted under the Registration
Rights Agreement, the undersigned will not be entitled to any registration
rights, whether by demand, piggyback or otherwise, until April 30, 2003.
The undersigned represents and warrants that the undersigned is a bona
fide resident of, and is domiciled in, the state or country listed in the
Recital to this Agreement and that the Shares are being purchased solely
for the beneficial interest of the undersigned and not as nominee, for, or
on behalf of, or for the beneficial interest of, or with the intention to
transfer to, any other person, trust or organization, except as
specifically set forth in paragraph 5 of this Agreement.
Accredited Status. The undersigned represents and warrants that the
undersigned constitutes an accredited investor as defined in Rule 501(a)
under the Securities Act of 1933.
4. The undersigned has been advised by the Company that the rules of the
Nasdaq Stock Market provide that shareholder approval is required if the
Company issues, at a price which is less than market value, Common Stock
or securities convertible into Common Stock which exceeds twenty percent
of the Company's outstanding Common Stock or twenty percent of the
Company's voting power outstanding before such issuance. The undersigned
acknowledges and agrees that until the occurrence of the later of (1)
April 30, 2003, or (2) shareholder approval of the issuance of the Series
H Preferred has been obtained, the Series H cannot be converted into
common stock pursuant to paragraph 5A (i) of the Certificate of
Designation for the Series H Preferred Stock, and will not have
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any of the voting rights set forth in paragraph 4A of the Certificate of
Designation for the Series H Preferred Stock.
5. NASD Affiliation. The undersigned is affiliated or associated, directly or
indirectly, with a National Association of Securities Dealers, Inc.
("NASD") member firm or person.
Yes _________ No _________
If yes, list the affiliated member firm or person:__________________
____________________________________________________________________
____________________________________________________________________
Your relationship to such member firm or person:___________
__________________________________________________________________________
__________________________________________________________________________
6. Entities. The undersigned agrees and certifies that:
A. The undersigned was not organized for the specific purpose of
acquiring securities of the Company; and
B. This Agreement has been duly authorized by all necessary action on
the part of the undersigned, has been duly executed by an authorized
officer or representative of the undersigned, and is a legal, valid
and binding obligation of the undersigned enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or other similar laws relating
to the enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity.
7. Miscellaneous.
A. Manner in which title is to be held: (check one)
___________ Individual Ownership
___________ Joint Tenants with Right of Survivorship*
___________ Partnership*
___________ Tenants in Common*
___________ Corporation
___________ Trust
___________ Other ______________________________
__________________________________________________(describe)
B. The undersigned agrees that the undersigned understands the meaning
and legal consequences of the agreements, representations and
warranties contained herein,
----------
* Multiple signatures required
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agrees that such agreements, representations and warranties shall
survive and remain in full force and effect after the execution
hereof and payment for the Shares, and further agrees to indemnify
and hold harmless the Company, each current and future officer,
director, employee, agent and shareholder from and against any and
all loss, damage or liability due to, or arising out of, a breach of
any agreement, representation or warranty of the undersigned
contained herein.
C. This Agreement shall be construed and interpreted in accordance with
Minnesota law without regard to conflict of law provisions.
D. The undersigned agrees to furnish to the Company, upon request, such
additional information as may be deemed necessary to determine the
undersigned's suitability as an investor.
8. The provisions of Section 4 hereof shall not be amended without approval
of the stockholders of the Company.
9. The Company acknowledges and represents, (a) that it has the authority to
enter into the agreement and issue the Warrants, (b) that all necessary
consents and corporate action have been taken to authorize and perform the
agreement and the Warrants, (c) that such documents are enforceable
against the Company, and (d) that all its public filings are true and
correct in all material respects.
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SIGNATURE PAGE
Accepted as of October 28, 2002
/s/ Xxxxxx X. Xxxxxx
------------------------------
Velocity Express Corporation
By: Xxxxxx Xxxxxx
Its: Chief Executive Officer
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SIGNATURE PAGE
Accepted as of October 28, 2002
/s/ Xxxx Xxxxx
------------------------------
Name: Xxxx Xxxxx
Title: Principal
TH Xxx Xxxxxx Parallel Ventures, L.P.
(f/k/a TH Xxx.Xxxxxx Internet Parallel Partners, L.P.)
By: TH Xxx Xxxxxx Fund Advisors, L.P., its General Partner
By: TH Xxx Xxxxxx Fund Advisors, LLC., its General Partner
/s/ Xxxx Xxxxx
------------------------------
Name: Xxxx Xxxxx
Title: Principal
THLi Coinvestment Partners, LLC
/s/ Xxxx Xxxxx
------------------------------
Name: Xxxx Xxxxx
Title: Principal
Blue Star I, LLC
By: /s/ Xxxxxx X. Xxx
------------------------------
Name: Xxxxxx H, Xxx
Title: Sole Member
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CERTIFICATE OF SIGNATORY
(To be completed if Shares are being subscribed by an entity.)
I, ______________, am the _______________, ______________, (the "Entity").
I certify that I am empowered and duly authorized by the Entity to execute
and carry out the terms of the Stock Purchase Agreement and to purchase and hold
the Shares, and certify further that the Stock Purchase Agreement has been duly
and validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this ______ day of ______ , 2002.
__________________________________
(Signature)
__________________________________
(Title)
__________________________________
(Please Print Name)
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ACCEPTANCE BY THE COMPANY
Velocity Express Corporation hereby accepts the foregoing subscription to
the extent of 160,000 Shares.
Velocity Express Corporation
By _______________________________
Xxxxxx X. Xxxxxxxxxx
General Counsel and Secretary
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APPENDIX A
CERTIFICATE OF DESIGNATION
A-1
APPENDIX D
RISK FACTORS
D-1
APPENDIX E
REGISTRATION RIGHTS AGREEMENT