Exhibit 99.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of February 2, 2001 (this
"Agreement"), by and between BIZ INTERACTIVE ZONE, INC., a Delaware corporation
(the "Company"), and WAVE SYSTEMS CORP., a Delaware corporation ("Wave").
WHEREAS, the Company and Wave have entered into (i) a certain
Technology Licensing and Authorization Agreement, dated August 18, 2000 and (ii)
a certain Purchase, Development, and Deployment Agreement, dated as of October
2, 2000;
WHEREAS, the Company desires to issue and sell to Wave, and Wave
desires to purchase and acquire from the Company, shares of the Company's Series
B Preferred Stock, par value $0.001 per share (the "Series B Preferred Stock"),
having the rights, restrictions, privileges and preferences set forth in the
Third Amended and Restated Certificate of Incorporation to be filed with the
Secretary of State of Delaware in substantially the form attached hereto as
Exhibit A (the "Certificate of Incorporation"), on the terms and conditions set
forth in this Agreement; and
WHEREAS, Wave desires to issue and sell to the Company, and the Company
desires to purchase and acquire from Wave, the Wave Payment Shares as defined in
Section 1.2 below, on the terms and conditions set forth in this Agreement and
the Payment and Registration Rights Agreement (as defined below).
NOW, THEREFORE, the parties hereby agree as follows:
1. AGREEMENT TO PURCHASE AND SELL SHARES.
1.1 AUTHORIZATION. As of the Closing (as defined below), the Company
will have authorized the issuance, pursuant to the terms and conditions of this
Agreement, of 3,600,000 shares of Series B Preferred Stock.
1.2 AGREEMENT TO PURCHASE AND SELL. The Company agrees to issue and
sell to Wave at the Closing, and Wave agrees to purchase and acquire from the
Company at the Closing, 3,600,000 shares of Series B Preferred Stock in exchange
for 2,000,000 shares of Class A Common Stock, par value $0.01 per share (the
"Wave Payment Shares"), of Wave, to be issued to the Company pursuant to the
terms of the Payment and Registration Rights Agreement, dated as of the date
hereof (the "Payment and Registration Rights Agreement"), between the Company
and Wave, substantially in the form of Exhibit B attached hereto. The Series B
Preferred Stock purchased and sold pursuant to this Agreement will be
hereinafter referred to as the "Purchased Shares."
2. CLOSING. The closing of the purchase and sale of the Purchased
Shares (the "Closing") will take place at the offices of Xxxxxxx Xxxx LLP, at
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as the Company
and Wave shall mutually agree, concurrently with the execution of this Agreement
or at such other time as the Company and Wave shall mutually agree (the "Closing
Date"). At the Closing, the Company will deliver to Wave a certificate
representing the Purchased Shares in exchange
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for delivery to the Company by Wave of a certificate representing the Wave
Payment Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Wave that, except as set forth in the Disclosure
Schedule ("Disclosure Schedule") attached to this Agreement as Exhibit C (which
Disclosure Schedule, when read together with this Section 3, shall be deemed to
be representations and warranties to Wave by the Company under this Section 3),
the statements in the following paragraphs of this Section 3 are all true and
complete as of the date of this Agreement (except to the extent any
representation or warranty speaks as of or is limited to an earlier date in
which case such representation or warranty shall be true and complete as of such
earlier date).
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company has
been duly incorporated and organized, and is validly existing in good standing,
under the laws of Delaware. The Company has the corporate power and authority to
enter into and perform this Agreement; the Payment and Registration Rights
Agreement; that certain Amended and Restated Stockholders' Agreement, dated as
of the date hereof by and among the Company, Wave and the other stockholders of
the Company, substantially in the form of Exhibit D attached hereto (the
"Stockholders' Agreement") and any other agreement ("Other Agreement") to which
the Company is a party, the execution and delivery of which is contemplated
hereby (this Agreement, the Payment and Registration Rights Agreement, the
Stockholders' Agreement and the Other Agreements are collectively referred to as
the "Operative Agreements"). Further, the Company has the corporate power and
authority to own and operate its properties and assets and to carry on its
business as currently conducted and as presently proposed to be conducted.
3.2 CAPITALIZATION. The authorized and issued capital stock of the
Company as of the Closing and immediately prior to the Closing will consist of:
30,000,000 shares of Common Stock, par value $0.001 per share (the "Common
Stock") authorized, of which 16,400,000 shares are issued and outstanding and
7,000,000 shares of preferred stock authorized (the "Preferred"). Of the
Preferred, 1,051,128 shares have been designated as Series A Preferred Stock
(the "Series A Preferred Stock"), 187,970 shares of which are issued and
outstanding immediately prior to the Closing, and 3,600,000 shares have been
designated as Series B Preferred Stock, none of which are issued and outstanding
immediately prior to the Closing. All such issued and outstanding shares have
been duly authorized and validly issued, and are fully paid and nonassessable
and have been issued in compliance with all applicable state and federal laws
concerning the issuance of securities. The holders of record of the presently
issued and outstanding Common Stock and Series A Preferred Stock immediately
prior to the Closing are set forth in the Disclosure Schedule. There are no
options, rights, warrants or convertible securities to purchase or acquire from
the Company any of its shares of capital stock, other than the Purchased Shares
to be issued at Closing. Except as expressly provided in the Certificate of
Incorporation of the Company, this Agreement or the other Operative Agreements,
no holder of shares of Common Stock or any other security of the Company or any
other person is entitled to any preemptive right, right of first refusal or
similar right as a result of the issuance of the securities or otherwise, or any
voting trust, agreement or arrangement among any of the holders of voting stock
of the Company affecting the exercise of the voting rights of such stock.
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3.3 SUBSIDIARIES. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, partnership,
trust, joint venture, association or other entity.
3.4 DUE AUTHORIZATION. All corporate action on the part of the
Company's directors and stockholders necessary for: (a) the authorization,
execution, delivery of, and the performance of all obligations of the Company
under this Agreement and the other Operative Agreements; and (b) the
authorization, issuance, and delivery of all of the Purchased Shares being sold
under this Agreement has been taken or will be taken prior to the Closing. This
Agreement and the other Operative Agreements constitute and, when executed and
delivered, will constitute, valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms, except as may be
limited by (i) applicable bankruptcy, insolvency, reorganization or others laws
of general application relating to or affecting the enforcement of creditors'
rights generally and (ii) the effect of rules of law governing the availability
of equitable remedies.
3.5 VALID ISSUANCE OF STOCK. The Purchased Shares, when issued and
paid for as provided in this Agreement and the Payment and Registration Rights
Agreement will be duly authorized and validly issued, fully paid and
nonassessable. The Common Stock issuable upon conversion of the Purchased Shares
has been duly and validly reserved for issuance and, upon issuance in accordance
with the terms of the Certificate of Incorporation will be duly authorized,
validly issued and nonassessable.
3.6 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority is required on the part of the Company
in order to enable the Company to execute, deliver and perform its obligations
under this Agreement and the other Operative Agreements, except for filings
required under applicable state securities laws which filings will be effected
by the Company within the applicable time periods.
3.7 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation pending (or, to the Company's knowledge, currently
threatened) against the Company, its activities, properties or assets or, to the
Company's knowledge, against any officer, director or employee of the Company in
connection with such officer's, director's or employee's relationship with, or
actions taken on behalf of, the Company. The Company has no knowledge or belief
that: there is pending or threatened any claim or litigation against the Company
contesting its right to transact its business as it is currently conducted and
currently proposed to be conducted; or there exists, or there is pending or
planned, any patent, invention, device, application or principle, or any
statute, rule, law, regulation standard or code which would materially adversely
affect the condition, financial or otherwise, or the operations of the Company.
3.8 PROPRIETARY RIGHTS AND CONFIDENTIALITY AGREEMENT. Each employee
of the Company has, prior to the Closing, entered into and executed a
Proprietary Information and Inventions Agreement in the form attached hereto as
Exhibit E. The Company, to its knowledge is not aware that any of its employees,
officers or consultants are or will be in violation of any proprietary rights,
confidentiality or employment agreements entered into by such employee, officer
or consultant and the Company.
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3.9 STATUS OF PROPRIETARY ASSETS.
(a) STATUS. The Company has full title and ownership of, or is
duly licensed under or otherwise authorized to use, to the Company's knowledge
(without having conducted a special investigation or patent search) all patents,
patent applications, trademarks, service marks, trade names, copyrights, domain
names, trade secrets, confidential and proprietary information, designs and
proprietary rights (all of the foregoing collectively hereinafter referred to as
the "Proprietary Assets"), used in its business as now conducted without any
material conflict with or infringement of the rights of others. The Disclosure
Schedule sets forth all of the Company's Proprietary Assets. The Company has not
received any written notice or claim of, nor does it have any knowledge of, any
infringement or misappropriation by the Company of the asserted rights of
others. The Company is not aware of any infringement or misappropriation by
others of its Proprietary Assets. The Company has taken all reasonable steps
necessary or appropriate to establish and maintain its ownership of its
Proprietary Assets. The Company is not aware that any of its employees is
obligated under any contract or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
the use of his or her best efforts to promote the interests of the Company or
that would conflict with the Company's business as currently proposed to be
conducted. The Company does not believe it is or will be necessary to utilize
any inventions, trade secrets or proprietary information of any of its employees
made prior to their employment by the Company, except for inventions, trade
secrets or proprietary information that have been assigned to the Company.
(b) LICENSES; OTHER AGREEMENTS. Except as set forth in the
Disclosure Schedule, the Company has not granted, and, to the Company's
knowledge, there is not outstanding, any options, licenses or agreements of any
kind relating to any Proprietary Asset of the Company, nor is the Company bound
by or a party to any option, license or agreement of any kind with respect to
any of its Proprietary Assets. The Company is not obligated to pay any royalties
or other payments to third parties with respect to the marketing, sale,
distribution, manufacture, license or use of any Proprietary Asset or any other
property or rights.
3.10 COMPLIANCE WITH LAW AND DOCUMENTS. The Company is not in
violation or default of any provisions of its Certificate of Incorporation, as
amended, and to the Company's knowledge, except for any violations that
individually and in the aggregate would have no material adverse impact on the
Company's business, the Company is in compliance with all applicable statutes,
laws, regulations and executive orders and with all governmental bodies and
agencies having jurisdiction over the Company's business or properties. The
Company has not received any written notice of any violation of any such
statute, law, regulation or order which has not been remedied prior to the date
hereof. The execution, delivery and performance of this Agreement and the other
Operative Agreements and the consummation of the transactions contemplated
hereby or thereby will not result in any such violation or default, or be in
conflict with or result in a violation or breach of, with or without the passage
of time or the giving of notice or both, the Company's Certificate of
Incorporation, any judgment, order or decree of any court or arbitrator to which
the Company is a party or is subject, any agreement or contract of the Company,
or, to the Company's knowledge, a violation of any statute, law, regulation or
order, or an event which results in the creation of any lien, charge or
encumbrance upon any asset of the Company.
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3.11 RELATED-PARTY TRANSACTIONS. No employee, officer or director of
the Company or member of his or her immediate family is indebted to the Company,
nor is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them. To the Company's knowledge, none of such persons has any
direct or indirect ownership in any firm or corporation with which the Company
is affiliated or with which the Company has a business relationship, or any firm
or corporation that competes with the Company, except that employees, officers
or directors of the Company and members of their immediate families may own
stock in publicly traded companies that may compete with the Company. To the
Company's knowledge, no officer or director or any member of their immediate
families is, directly or indirectly, interested in any material contract with
the Company.
3.12 PERMITS. The Company has obtained all franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which could materially and adversely
affect the business, properties or financial condition of the Company and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. The Company is not
in default in any material respect under any of such franchises, permits,
licenses or other similar authority.
3.13 REGISTRATION RIGHTS AND OTHER SHAREHOLDER RIGHTS. Except as
provided in the Stockholders' Agreement, the Company is not under any obligation
to register under the Securities Act, any of its currently outstanding
securities or any securities issuable upon exercise or conversion of its
currently outstanding securities nor is the Company obligated to register or
qualify any such securities under the securities laws of any state of the United
States. To the best of the Company's knowledge, except as set forth in the
Stockholders' Agreement and Certificate of Incorporation, no voting or similar
agreements exist related to the Company's securities which are presently
outstanding.
3.14 TITLE TO PROPERTY AND ASSETS. The properties and assets the
Company owns are owned by the Company free and clear of all mortgages, deeds of
trust, liens, encumbrances and security interests except for statutory liens for
the payment of current taxes that are not yet delinquent and liens, encumbrances
and security interests which arise in the ordinary course of business and which
do not affect material properties and assets of the Company.
3.15 FINANCIAL STATEMENTS. The Company has furnished Wave its
unaudited balance sheet as at September 30, 2000 (the "Balance Sheet") and
unaudited profit and loss statement, statement of stockholders' equity and
statement of cash flows as at and for the nine month period ended September 30,
2000 (the "Financial Statements"). The Financial Statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated, except that the Financial
Statements may not contain all footnotes required by generally accepted
accounting principles. The Financial Statements fairly present the financial
condition and operating results of the Company as of the dates and for the
periods indicated. Since September 30, 2000, there has been no material adverse
change in the business, condition (financial or otherwise), or results of
operation of the Company, other than changes occurring in the ordinary course of
business (which ordinary changes have not, individually or in the aggregate,
been material). The projections of the Company for the period from January 1,
2000 through December 31, 2001 attached hereto as Exhibit F have been
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prepared in good faith on the basis of reasonable assumptions and the Company
has no reason to believe that they are incorrect or misleading in any material
respect.
3.16 TAX RETURNS, PAYMENTS AND ELECTIONS. The Company has filed all
tax returns and reports required by law to be filed by the Company. These
returns and reports are true and correct in all material respects. The Company
has paid all taxes and other assessments due, except those contested by it in
good faith which are listed in the Disclosure Schedule. The provision for taxes
of the Company is adequate for taxes due or accrued as of the date thereof. The
Company has not elected pursuant to the Internal Revenue Code of 1986, as
amended (the "Code"), to be treated as an S corporation, nor has it made any
other elections pursuant to the Code (other than elections which relate solely
to methods of accounting, depreciation or amortization) which would have a
material adverse effect on the Company, its financial condition, its business as
presently conducted or currently proposed to be conducted or any of its material
properties or material assets. The Company has never had a tax audit or a tax
deficiency proceeding and the Company has made all withholdings or collections
for all taxes, including, without limitation, federal and state income taxes,
and federal and state unemployment taxes, of its employees. The Company is not
and has not been delinquent in the payment of any tax, assessment or
governmental charge other than with respect to those contested by the Company in
good faith which are listed in the Disclosure Schedule. The Company has never
had any tax deficiency proposed or assessed against it and has not executed any
waiver of any statute of limitations on the assessment or collection of any tax
or governmental charge which had a material adverse effect on the financial
condition of the Company. None of the Company's federal income tax returns nor
any state income or franchise tax returns have ever been audited by governmental
authorities.
3.17 ABSENCE OF MATERIAL LIABILITIES. The Company has no
liabilities, obligations or indebtedness (whether accrued, absolute, contingent,
liquidated or otherwise, whether due or to become due) except: (i) those
liabilities reflected and provided for on the Balance Sheet; (ii) those fully
described and listed on the Disclosure Schedule; and (iii) those incurred by the
Company in the ordinary course of its business since and which do not in the
aggregate exceed $5,000, which, in both cases, individually or in the aggregate,
are not material to the financial condition or operating results of the Company.
3.18 INSURANCE. The Disclosure Schedule sets forth the following
information with respect to each insurance policy (including policies providing
property, casualty, liability and workers' compensation coverage and bond and
surety arrangements) to which the Company has been a party, a named insured or
otherwise the beneficiary of coverage:
(i) the name, address and telephone number of the agent; and
(ii) the name of the insurer, the name of the policyholder and
the name of each covered insured.
Such insurance policies provide adequate coverage for, in the Company's
belief, all normal risks incident to the business of the Company and its
properties and assets.
3.19 CONTRACTS. Except as set forth in this Agreement or any of the
Operative Agreements, and as disclosed in the Disclosure Schedule, the Company
currently
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has no existing written contract, obligation, agreement, plan, arrangement,
commitment or the like of any material nature, including, without limitation,
the following:
(i) employment, bonus, pension, profit sharing, deferred
compensation, stock bonus, retirement, stock option, stock purchase, phantom
stock or similar plans, including agreements evidencing rights to purchase
securities of the Company and agreements among the Company's stockholders and
the Company;
(ii) loan agreements, notes, indentures or instruments relating
to or evidencing indebtedness for borrowed money, or mortgaging, pledging or
granting or creating a lien or security interest or other encumbrance on any of
the Company's property or any agreement or instrument evidencing any guaranty by
the Company of payment or performance by any other person;
(iii) agreements with dealers, sales representatives, brokers
or other distributors, advertisers or sales agencies;
(iv) agreements with any labor union or collective bargaining
organization or other labor agreements;
(v) any contract or series of contracts with the same person
for the furnishing or purchase of machinery, equipment, goods or services,
including, without limitation, agreements with equipment lessors, processors,
subcontractors, consultants and developers;
(vi) any joint venture contract or arrangement or other
agreement involving a sharing of profits or expenses or pursuant to which the
Company has granted rights to manufacture, produce, assemble, license, market or
sell its products to any other person or that affects the Company's exclusive
rights to develop, manufacture, assemble, distribute and sell its products and
services;
(vii) agreements limiting the ability of the Company to compete
in any line of business or in any geographic area or with any person;
(viii) agreements providing for disposition of the business,
assets or shares of capital stock of the Company (other than provided for
herein), agreements of merger or consolidation to which the Company is a party
or letters of intent with respect to any of the foregoing;
(ix) letters of intent or agreements with respect to the
acquisition of the business, assets or shares of any other business;
(x) agreements for the purchase of material fixed assets or for
the purchase of materials, supplies or equipment in excess of normal operating
requirements;
(xi) agreements granting any preemptive right, right of first
refusal or similar right to any person;
(xii) agreements obligating the Company to pay any royalty or
similar charge for use or exploitation of any tangible or intangible property;
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(xiii) covenants not to compete or other restriction on the
Company's ability to conduct its business or engage in any other activity; and
(xiv) other agreements not made in the ordinary course of
business that are material to the Company.
The Company has complied with all the material provisions of all said
contracts, obligations, agreements, plans, arrangements and commitments set
forth in the Disclosure Schedule and is not in default in any material respect
thereunder. The Company has provided Wave with true and complete copies of each
of the contracts, agreements, plans, arrangements and other documents referred
to on the Disclosure Schedule.
3.20 DISCLOSURE. No representation, warranty or statement by the
Company in this Agreement, or in any exhibit, schedule, statement or certificate
furnished to Wave pursuant to this Agreement, when read as a whole, contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements made herein, in light of the circumstances under which
they were made, not misleading. Without limiting the generality of the
foregoing, except as set forth on the Disclosure Schedule, the Company is not
aware of any transaction with a reasonable likelihood of being completed that
would have a material impact on the business, operations or corporate structure
of the Company. It is the understanding of the parties that the disclosure of
any potential transaction on the Disclosure Schedule shall not, to the extent
that Wave has approval or consent rights pursuant to the Operative Agreements,
the Certificate of Incorporation, applicable law or otherwise, constitute
consent to or approval of any such transaction by Wave.
3.21 [Intentionally Deleted]
3.22 EMPLOYEE BENEFIT PLANS.
(a) The Company has set forth on the Disclosure Schedule (i) all
employee benefit plans, (ii) bonus, option, purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar plans and
(iii) unexpired severance agreements, written or otherwise for the benefit of,
or relating to, any current or former employee of the Company (the "Company
Employee Plan"). The Company has performed in all material respects all
obligations required to be performed by it under each Company Employee Plan and
each Company Employee Plan has been established and maintained in all material
respects in accordance with its terms and with all applicable laws, statutes,
orders, rules and regulations, including but not limited to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or the Code.
(b) The Company is not a party to any oral or written (i) agreement
with any officer, manager or other key employee of the Company, the benefits of
which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company of the nature contemplated by
this Agreement, (ii) agreement with any officer or manager of the Company
providing any term of employment or compensation guarantee or for the payment of
compensation in excess of $150,000 per annum (excluding the grant of stock
options), or (iii) agreement or plan, including any option plan, appreciation
plan, or purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits
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of which will be calculated on the basis of any of the transactions contemplated
by this Agreement.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF WAVE. Wave
hereby represents and warrants to the Company that:
4.1 PURCHASE FOR OWN ACCOUNT. The Purchased Shares to be purchased
by Wave hereunder will be acquired for investment for Wave's own account, not as
a nominee or agent, and not with a view to the public resale or distribution
thereof, and Wave has no present intention of selling, granting any
participation in, or otherwise distributing the same. Wave also represents that
Wave has not been formed for the specific purpose of acquiring Purchased Shares.
By executing this Agreement, Wave further represents that Wave does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer, or grant participation to a person, with respect to any of the
Purchased Shares.
4.2 DISCLOSURE OF INFORMATION. Wave has received or has had full
access to all the information it considers necessary or appropriate to make an
informed investment decision with respect to the Purchased Shares to be
purchased by Wave under this Agreement. Wave further has had an opportunity to
ask questions and receive answers from the Company regarding the terms and
conditions of the offering of the Purchased Shares and to obtain additional
information necessary to verify any information furnished to Wave or to which
Wave had access. The foregoing, however, does not in any way limit or modify the
representations and warranties made by the Company in Section 3.
4.3 INVESTMENT EXPERIENCE. Wave understands that the purchase of the
Purchased Shares involves substantial risk. Wave (a) has experience as an
investor in securities of companies in the development stage and acknowledges
that Wave is able to fend for itself, can bear the economic risk of Wave's
investment in the Purchased Shares and has such knowledge and experience in
financial or business matters that Wave is capable of evaluating the merits and
risks of this investment in the Purchased Shares and protecting its own
interests in connection with this investment, and/or (b) has a pre-existing
personal or business relationship with the Company and certain of its officers,
directors or controlling persons of a nature and duration that enables Wave to
be aware of the character, business acumen and financial circumstances of such
persons.
4.4 ACCREDITED INVESTOR STATUS. Wave is an "accredited investor"
within the meaning of Regulation D promulgated under the Securities Act.
4.5 RESTRICTED SECURITIES. Wave understands that the Purchased
Shares are characterized as "restricted securities" under the Securities Act
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under the Securities Act and applicable
regulations thereunder such securities may be resold without registration under
the Securities Act only in certain limited circumstances. In this connection,
Wave represents that Wave is familiar with Rule 144 of the U.S. Securities and
Exchange Commission (the "SEC"), as presently in effect, and understands the
resale limitations imposed thereby and by the Securities Act. Wave understands
that the Company is under no obligation to register any of the securities sold
hereunder except as provided in the Stockholders' Agreement. Wave understands
that no
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public market now exists for any of the Purchased Shares and that it is
uncertain whether a public market will ever exist for the Purchased Shares.
4.6 LEGENDS. It is understood that the certificates evidencing the
Purchased Shares will bear the legends set forth below:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE APPLICABLE FEDERAL AND STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH ANY APPLICABLE
SECURITIES LAWS.
The legend set forth above shall be removed by the Company from any
certificate evidencing Purchased Shares upon delivery to the Company of an
opinion by counsel, reasonably satisfactory to the Company, that a registration
under applicable securities laws is at that time in effect with respect to the
legended security or that such security can be freely transferred in a public
sale without such a registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from registration
pursuant to which the Company issued the Purchased Shares.
5. CONDITIONS TO WAVE'S OBLIGATIONS AT CLOSING. The obligations of Wave
under Sections 1 and 2 of this Agreement are subject to the fulfillment or
waiver, on or before the Closing, of each of the following conditions, the
waiver of which shall not be effective against Wave without notice by Wave to
the Company of such waiver, which notice may be given by written, oral or
telephone communication to the Company or its counsel:
5.1 REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations
and warranties of the Company contained in this Agreement and the other
Operative Agreements shall be true and complete in all material respects except
those representations and warranties that are qualified by materiality which
shall be true and correct in all respects on and as of the Closing Date (except
to the extent any such representation or warranty speaks as of or is limited to
an earlier date in which case such representation or warranty shall be true and
complete as of such earlier date) with the same effect as though such
representations and warranties had been made on and as of the Closing Date.
5.2 PERFORMANCE. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
shall have
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obtained all approvals, consents and qualifications necessary to complete the
purchase and sale described herein.
5.3 COMPLIANCE CERTIFICATE. The Company shall have delivered to Wave
at the Closing a certificate signed on its behalf by its President, Chief
Executive Officer or Chief Financial Officer certifying that the conditions
specified in Sections 5.1 and 5.2 above have been fulfilled and stating that
there shall have been no material adverse change in the business, affairs,
operations, properties, assets or condition of the Company not previously
disclosed to Wave in writing.
5.4 SECURITIES EXEMPTIONS. The offer and sale of the Purchased
Shares to the Wave pursuant to this Agreement shall be exempt from the
registration requirements of the Securities Act and the registration and/or
qualification requirements of all applicable state securities laws.
5.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Wave, and Wave shall have received all such counterpart originals
and certified or other copies of such documents as it may reasonably request.
Such documents shall include (but not be limited to) the following:
(a) CERTIFIED CHARTER DOCUMENTS. A copy of the Certificate of
Incorporation of the Company (as amended through the date of the Closing),
certified by the Secretary of the Company as a true and correct copy thereof as
of the Closing.
(b) CORPORATE ACTIONS. A copy of the resolutions of the Board of
Directors and the stockholders of the Company providing for the approval of this
Agreement and the other Operative Agreements, the issuance of the Purchased
Shares and the other matters contemplated hereby, certified by the Secretary of
the Company to be true, complete and correct.
(c) OPERATIVE AGREEMENTS. The Company shall have executed and
delivered the Stockholders' Agreement and the Payment and Registration Rights
Agreement and the Initial Stockholders (as defined in the Stockholders'
Agreement) shall have executed and delivered the Stockholders' Agreement.
5.6 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. The Company
and each of its employees shall have entered into and executed the Company's
Proprietary Information and Inventions Agreement in the form attached hereto as
Exhibit E.
5.7 CERTIFICATE. The Company shall have delivered to Wave a
certificate representing the Purchased Shares to be purchased by Wave which
shall be issued in Wave's name.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company to Wave under this Agreement are subject to the fulfillment or
waiver on or before the Closing of each of the following conditions by Wave the
waiver of which shall not be effective against the Company without notice by the
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Company to Wave of such waiver, which notice may be given by written, oral or
telephone communication to Wave or its counsel:
6.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Wave contained in this Agreement and the other Operative
Agreements shall be true and complete in all material respects except those
representations and warranties set forth in Section 4 hereof and those
representations and warranties that are qualified by materiality which shall be
true and correct in all respects on and as of the Closing Date (except to the
extent any such representation or warranty speaks as of or is limited to an
earlier date in which case such representation or warranty shall be true and
complete as of such earlier date) with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing Date.
6.2 PERFORMANCE. Wave shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement and the other
Operative Agreements that are required to be performed or complied with by it on
or before the Closing and shall have obtained all approvals, consents and
qualifications necessary to complete the purchase and sale described herein.
6.3 COMPLIANCE CERTIFICATE. Wave shall have delivered to the Company
at the Closing a certificate signed on its behalf by its President, Chief
Executive Officer or Chief Financial Officer certifying that the conditions
specified in Sections 6.1 and 6.2 above have been fulfilled and stating that
there shall have been no material adverse change in the business, affairs,
prospects, operations, properties, assets or condition of Wave not previously
disclosed to the Company in writing.
6.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Company, and the Company shall have received all such
counterpart originals and certified or other copies of such documents as it may
reasonably request, including, without limitation, a copy of the resolutions of
the Board of Directors of Wave providing for the approval of this Agreement and
the other Operative Agreements, the acquisition of the Purchased Shares, the
issuance of the Wave Payment Shares and the other matters contemplated hereby
and thereby, certified by the Secretary of Wave to be true, complete and
correct.
6.5 WAVE PAYMENT SHARES. Wave shall have delivered to the Company a
certificate representing the Wave Payment Shares which shall be issued in the
Company's name.
6.6 SECURITIES EXEMPTIONS. The offer and sale of the Purchased
Shares to the Wave pursuant to this Agreement shall be exempt from the
registration requirements of the Securities Act and the registration and/or
qualification requirements of all applicable state securities laws.
6.7 OPERATIVE AGREEMENTS. Wave shall have executed and delivered the
Stockholders' Agreement and the Payment and Registration Rights Agreement.
6.8 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated at the Closing and all
documents incident
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thereto shall be reasonably satisfactory in form and substance to the Company
and to the Company's legal counsel, and the Company shall have received all such
counterpart originals and certified or other copies of such documents as it may
reasonably request.
7. GENERAL PROVISIONS.
7.1 SURVIVAL OF WARRANTIES. The representations, warranties,
covenants and agreements made herein shall survive any investigation made by
Wave and the Closing of the transactions contemplated hereby.
7.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties.
7.3 GOVERNING LAW. THE VALIDITY, CONSTRUCTION AND PERFORMANCE OF
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF DELAWARE, APPLICABLE TO CONTRACTS EXECUTED IN AND
PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REFERENCE TO ANY CHOICE OF LAW
PRINCIPLES OF SUCH STATE. WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF
THIS AGREEMENT, ANY OF THE OTHER OPERATIVE AGREEMENTS OR ANY TRANSACTION, THE
PARTIES EXPRESSLY WAIVE ANY RIGHT THEY MAY HAVE TO A JURY TRIAL AND AGREE THAT
ANY SUCH LEGAL PROCEEDING SHALL BE TRIED BY A JUDGE WITHOUT A JURY.
7.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, including facsimile copies, each of which shall be an original,
but all of which together shall constitute one instrument.
7.5 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
7.6 NOTICES, ETC. Except as expressly provided herein, notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed or sent by telecopier, as
follows:
(a) If to Wave:
Wave Systems Corp.
000 Xxxxxxxx Xxxxxx
Xxxxx X-000
Xxx, XX 00000
Attn: Xxxxxx Xxxxxx
Chief Financial Officer
Facsimile No.: (000) 000-0000
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With a copy to:
Xxxxxxx Xxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
(b) If to the Company,
Biz Interactive Zone, Inc.
0000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Chief Executive Officer
Facsimile No.: (000) 000-0000
With a copy to:
Xxxx Xxxx Xxxx & Freidenrich LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
or to such other address or attention of such other person as any party
shall advise the other party in writing. All notices and other communications
given to a party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of receipt.
7.7 EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which each party may be entitled.
7.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the Operative
Agreements delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof and supersede all prior agreements, oral or written, and all
other communications between the parties relating to the subject matter hereof.
Any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Wave.
7.9 SEPARABILITY OF THIS AGREEMENT. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
8. LITRONIC TRANSACTION
(a) Anything to the contrary set forth in this Agreement, the other
Operative Agreements, the Certificate of Incorporation of the Company or
otherwise notwithstanding, if, at any time commencing on the Closing Date and
ending on the first anniversary of the Closing Date, the Company, whether
directly or through one or more of its subsidiaries or stockholders, enters
into, commits to enter into or is otherwise involved in a Litronic Transaction,
then, upon the closing of such transaction and after giving effect thereto:
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(i) except as required by clause (ii) below, Wave shall receive
in respect of its shares in the Company consideration that is identical, on a
share for share basis, to the consideration received by all other stockholders
of the Company in respect of their shares in the Company; and
(ii) immediately after the consummation of the Litronic
Transaction, Wave shall hold, in the aggregate (including the shares received in
connection with clause (i) above), 13.78% of the Fully-Diluted Shares of the
combined or surviving entity (the "Combined Entity"), and shall immediately be
issued additional shares by the Combined Entity without additional consideration
so that, after giving effect to issuance of such additional shares, Wave holds
such percentage of the Fully-Diluted Shares.
As used herein, (A) "Fully-Diluted Shares" means the total outstanding shares of
common stock of the Combined Entity, determined on a fully-diluted basis
assuming (without duplication) the exercise or conversion of all options,
warrants (excluding that certain warrant to purchase 400,000 shares of the
Company's common stock issued to Litronic on July 31, 2000) and all other
securities convertible into or otherwise issuable for common stock that are
outstanding immediately upon the consummation of the Litronic Transaction or
that are contemplated to be issued thereafter in connection with the Litronic
Transaction or the employment, retention, non-compete or bonus arrangements
related thereto, (B) "Litronic" means Litronic Inc., a Delaware corporation, (C)
"Litronic Transaction" means any acquisition, disposition, share transfer, swap
or exchange, merger or consolidation, reorganization or recapitalization,
investment or similar transaction or series of transactions directly or
indirectly involving the Company or one of its subsidiaries or stockholders, on
the one hand, and Litronic or one of its subsidiaries or stockholders, on the
other hand, and, as a result of such transaction or transactions, all or
substantially all of the assets, securities or business of one party or one or
more of its subsidiaries is acquired by the other party or one or more of its
subsidiaries.
(b) the Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, execution of any agreement,
consummation of any transaction or any other voluntary action avoid or seek to
avoid the observance or performance of any of the terms of this Section 8, but
will at all times in good faith assist in the carrying out of all such terms and
the taking of all such action as may be necessary or appropriate in order to
protect the rights of Wave under this Section 8 against dilution or impairment.
As part of any Litronic Transaction, provision shall be made so that Wave shall
be entitled to receive the benefits of this Section 8 at the closing of such
Litronic Transaction. The Company shall not consummate any Litronic Transaction,
unless prior to the consummation thereof, the successor entity (if other than
the Company) resulting from such Litronic Transaction assumes by written
instrument (in form and substance reasonably satisfactory to Wave) the
obligation immediately to deliver the equity securities or other property or
assets in accordance with this Section 8.
(c) Wave hereby agrees and acknowledges that a Litronic Transaction
is not a Sale Event (as such term is defined in the Certificate of
Incorporation).
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9. INDEMNIFICATION.
The Company shall indemnify, defend and hold harmless Wave and its
officers, directors, employees, agents and representatives (collectively,
together with Wave, the "Indemnified Persons") from and against (i) any Loss in
connection with any Claim asserted by any third party resulting from or caused
by any transaction, event or condition arising from or relating to the
execution, delivery and performance by Wave or the Company of this Agreement or
any of the other Operative Agreements or the performance by the Company of any
of the transactions contemplated hereby or thereby (including, without
limitation, any Litronic Transaction) other than Claims asserted by third
parties in connection with (a) Wave's failure to perform its obligations under
this Agreement or any other Operative Agreement or (b) Wave's gross negligence
or fraud and (ii) the enforcement by Wave of any of its rights or remedies
hereunder, under any of the other Operative Agreements or under the Certificate
of Incorporation of the Company. As used herein, (a) "Claim" means any pending
or threatening claim, demand, cause of action, suit, litigation, investigation
or proceeding, whether or not Wave or the other applicable Indemnified Person is
a party thereto and (b) "Loss" means any loss, claim, damage, liability or
expense of any nature whatsoever (including, without limitation, reasonable
counsel fees and disbursements).
(SIGNATURES APPEAR ON NEXT PAGE)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
BIZ INTERACTIVE ZONE, INC.: WAVE SYSTEMS CORP.:
By: By:
----------------------------- ---------------------------------
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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LIST OF EXHIBITS
Exhibit A - Amended and Restated Certificate of Incorporation
Exhibit B - Payment and Registration Rights Agreement
Exhibit C - Disclosure Schedule
Exhibit D - Amended and Restated Stockholders' Agreement
Exhibit E - Proprietary Information and Inventions Agreement
Exhibit F - Projections
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