As filed with the Securities and Exchange Commission on July 17, 1998
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
UNIVIEW TECHNOLOGIES CORPORATION
(Exact name of Registrant as specified in its charter)
Texas 3651 75-1975147
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
10911 Petal Street, Dallas, Texas 75238
(214) 503-8880
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Billy J. Robinson
Vice President, Secretary and General Counsel
uniView Technologies Corporation
10911 Petal Street, Dallas, Texas 75238
(214) 503-8880
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public:
From time to time after the registration statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box.[X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.[ ]
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CALCULATION OF REGISTRATION FEE
Title of Each Amount Proposed Proposed
Class of To Be Maximum Maximum Amount of
Securities to Registered(1) Offering Price Aggregate Registration
be Registered Per Unit(2) Offering Price(2) Fee (3)
Common Stock,
$.10 par value 2,980,000 $2.16 $6,436,800 $1,898.86
(1) Includes up to a maximum of 2,380,000 estimated shares of
Common Stock issuable upon conversion of or otherwise with respect to the
Registrant's Series Q and Series 1998-A1 convertible preferred stock; and
up to 600,000 shares of Common Stock issuable upon the exercise of
warrants.
(2) Estimated solely for the purpose of calculating the
registration fee. Pursuant to Rule 457(c), the offering price and
registration fee are calculated upon the basis of the average of the high
and low trading prices of the Common Stock as reported by the Nasdaq
Stock Market on July 13, 1998.
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933, as amended,
or until this Registration Statement shall become effective on such date
as the Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 17, 1998
Up to 600,000 Shares of Common Stock Underlying Warrants,
Which Shares are being Registered for Resale upon Exercise of the
Warrants; and
Up to 2,380,000 Shares of Common Stock Convertible from Preferred Stock,
Which Shares are being Registered for Resale upon Conversion of the
Preferred Stock.
-----------------------------------
ANY INVESTMENT IN THE SECURITIES OFFERED HEREIN INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------------
UNIVIEW TECHNOLOGIES CORPORATION
This Prospectus covers an aggregate total of 2,980,000 (estimated)
shares of Common Stock, par value $.10 per share (the "Shares") of
uniView Technologies Corporation, a Texas corporation (the "Company.")
Up to 600,000 Shares underlying Warrants are being registered for resale
upon the exercise of Warrants; up to a maximum of 1,200,000 (estimated)
shares of Common Stock issuable upon conversion of the Company's Series Q
Convertible Preferred Stock (the "Series Q Preferred Stock") are being
registered for resale upon conversion of the Series Q Preferred Stock;
and up to a maximum of 1,180,000 (estimated) shares of Common Stock
issuable upon conversion of the Company's Series 1998-A1 Convertible
Preferred Stock (the "Series 1998-A1 Preferred Stock") are being
registered for resale upon conversion of the Series 1998-A1 Preferred
Stock. The preferred security holders and the warrant holders are
hereinafter referred to as the "Selling Stockholders." See "Selling
Stockholders" and "Plan of Distribution."
The number of Shares included in this Prospectus as "shares of
Common Stock issuable upon conversion of the Series Q Preferred Stock,"
is based on a variable conversion price which represents seventy-five
percent of the average of the closing bid prices of the Common Stock for
five consecutive trading days immediately prior to conversion. The
Series Q Preferred Stock is convertible at any time, and the actual
conversion price and number of actual Shares issuable upon conversion
cannot be precisely determined until such time as the Series Q Preferred
Stock is actually converted. However, pursuant to the Registration
Rights Agreement between the Company and the preferred security holders,
the Company agreed to include in this Prospectus a multiple of the number
of Shares that would have been issuable as if all of the Series Q
Preferred Stock had been converted on June 5, 1998, the closing date of
the transaction. The number of such Shares set forth in this Prospectus
is therefore merely an estimate of the total number of Shares that could
be issued upon conversion of all of the Series Q Preferred Stock. The
actual number of Shares issuable upon conversion of the Series Q
Preferred Stock is subject to adjustment depending on the actual date of
conversion in the future and could be materially less or more than such
estimated amount, depending on factors which cannot be predicted by the
Company including, among other things, the future market price of the
Common Stock. See "Risk Factors - Possible Volatility of Stock Price."
<PAGE>
The number of Shares included in this Prospectus as "shares of
Common Stock issuable upon conversion of the Series 1998-A1 Preferred
Stock," is based on a variable conversion price which represents the
lesser of (i) $2.43375 (the "Initial Conversion Price") or (ii) 100% of
the average of the four lowest closing bid prices of the Common Stock
during the twenty trading days prior to the date of conversion (the
"Variable Conversion Price.") The Series 1998-A1 Preferred Stock is
convertible at any time, except that, until October 1, 1998, the holders
of the Series 1998-A1 Preferred Stock are not permitted to convert any
Series 1998-A1 Preferred Stock at the Variable Conversion Price. After
such time, the right to convert Series 1998-A1 Preferred Stock vests at
the cumulative rate of twenty-five percent per month until all shares of
Series 1998-A1 Preferred Stock are convertible. The actual conversion
price and number of actual Shares issuable upon conversion cannot be
precisely determined until such time as the Series 1998-A1 Preferred
Stock is actually converted. However, pursuant to the Registration
Rights Agreement between the Company and the preferred security holders,
the Company agreed to include in this Prospectus a multiple of the number
of Shares that would have been issuable as if all of the Series 1998-A1
Preferred Stock had been converted on June 30, 1998, the closing date of
the transaction. The number of such Shares set forth in this Prospectus
is therefore merely an estimate of the total number of Shares that could
be issued upon conversion of all of the Series 1998-A1 Preferred Stock.
The actual number of Shares issuable upon conversion of the Series 1998-
A1 Preferred Stock is subject to adjustment depending on the actual date
of conversion in the future and could be materially less or more than
such estimated amount, depending on factors which cannot be predicted by
the Company including, among other things, the future market price of the
Common Stock. See "Risk Factors - Possible Volatility of Stock Price."
The Company will not receive any of the proceeds from the sale by
the Selling Stockholders of the Shares to which this Prospectus relates.
The Company received proceeds upon the initial placements of Series Q
Preferred Stock and Series 1998-A1 Preferred Stock, and will receive no
further proceeds from future conversions thereof. The Company will only
receive proceeds if and when any of the warrants held by the Selling
Stockholders are exercised.
Price to Proceeds to Company
Public Discounts or other Persons
Per Share (1) (2) (3)
Total Maximum (4) (1) (2) (3)
(1) The Selling Stockholders may from time to time effect the sale of
their Shares at prices and at terms then prevailing or at prices
related to the then current market price. The Common Stock of the
Company is traded on the Nasdaq Stock Market under the symbol "UVEW."
On July 13, 1998, the average of the high and low trading prices of
the Common Stock as reported by the Nasdaq Stock Market was $2.16 per
share.
(2) The Selling Stockholders may pay regular brokers' commissions in
cash at the time(s) of the sale of their Shares.
(3) The Company will not receive any proceeds from the sales of the
Shares to which this Prospectus relates. The Selling Stockholders
will receive proceeds based on the market price of the Shares at the
time(s) of sale.
(4) Without deduction of expenses for the offering (all of which will
be borne by the Company), estimated to be approximately $3,699.
The date of this Prospectus is ______________.
<PAGE>
(Inside front cover page of Prospectus)
AVAILABLE INFORMATION
The Company is an electronic filer and is subject to the
informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). The reports, proxy statements and other
information filed by the Company with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Regional Offices of the Commission at 7 World Trade
Center, Suite 1300, New York, New York 10048 and 500 W. Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material also can be
obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
also maintains a World Wide Web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. As the Common
Stock of the Company is quoted on the Nasdaq Stock Market, reports, proxy
statements and other information concerning the Company may be inspected
at the offices of the National Association of Securities Dealers, Inc. at
1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement
on Form S-3 (together with all amendments thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the shares of Common Stock offered hereby. This
Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. Such
additional information may be obtained from the Commission's principal
office in Washington, D.C. Statements contained in this Prospectus as to
the contents of any contract or other document referred to herein are not
necessarily complete, and in each instance reference is made to the copy
of such contract or other document filed as an exhibit to the
Registration Statement or to documents incorporated therein by reference,
each such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated
herein by reference:
(1) The Company's Current Report on Form 8-K dated as of June 12,
1998 (the "8-K Report.")
(2) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1998, dated May 15, 1998 (the "March 1998 10-Q
Report.")
(3) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended December 31, 1997, dated February 13, 1998 (the
"December 1997 10-Q Report.")
(4) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1997, dated November 12, 1997 (the
"September 1997 10-Q Report.")
(5) The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1997, dated August 6, 1997 (the "1997 10-K Report.")
<PAGE>
Any documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of this offering shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from
the date of filing of such documents.
Any statement contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
To the extent that any proxy statement is incorporated by reference
herein, such incorporation shall not include any information contained in
such proxy statement which is not, pursuant to the Commission's rules,
deemed to be "filed" with the Commission or subject to the liabilities of
Section 18 of the Exchange Act.
The Company will provide without charge to each person, including
any beneficial owner, to whom this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all information
that has been incorporated herein by reference (other than exhibits to
such documents unless such exhibits are specifically incorporated by
reference into such documents). Any such request should be directed to
the Company's principal executive offices: uniView Technologies
Corporation, 10911 Petal Street, Dallas, Texas 75238, Attention:
Investor Relations; telephone number (214) 503-8880.
The Offering
Common Stock Offered by the Up to 600,000 Shares
Company Upon Exercise of
Warrants
Common Stock Offered by the Up to 2,380,000 Shares
Company Upon Conversion of (estimated)
Preferred Stock
Common Stock Outstanding After 13,012,607 (estimated)
the Offering (1)
Use of Proceeds from Exercise Working capital and general
of Warrants corporate purposes
Nasdaq Stock Market Symbol UVEW
Risk Factors For a description of certain
risks inherent in an
investment in the Common
Stock, see "RISK FACTORS"
(1) Assumes the exercise of outstanding warrants to purchase 300,000
Shares at $2.50 per share, 200,000 Shares at $2.80 per share, and 100,000
Shares at $3.00 per share; and the conversion of Preferred Stock into
2,380,000 estimated Shares, which represents an agreed multiple of the
number of Shares that would have been issuable as if all of the Preferred
Stock had been converted on the respective closing dates of the
transactions.
<PAGE>
RISK FACTORS
The following factors should be considered, together with the other
information in this Prospectus, in evaluating an investment in the
Company.
FORWARD LOOKING STATEMENTS
When used in this Prospectus, the words "plans," "expects,"
"anticipates," "estimates," "believes" and similar expressions are
intended to identify forward-looking statements. Such statements, which
may include statements contained in the following "Risk Factors" section,
are subject to risks and uncertainties, discussed in greater detail in
this section below and elsewhere in this Prospectus that could cause
actual results to differ materially from those projected or discussed.
These forward-looking statements speak only as of the date of this
Prospectus. The Company expressly disclaims any obligation or
undertaking to release publicly any updates or change in the Company's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement may be based.
RISKS RELATED TO COMPANY OPERATIONS
Limited Cash Flow; Additional Financing Required
In recent years, the Company has not achieved a positive cash flow
from operations. Accordingly, the Company continues to rely on available
credit arrangements and continued sales of its common and preferred stock
to supplement its ongoing financial needs. The Company has recently
revised its business model and has moved away from manufacturing and
marketing consumer electronics products into developing, customizing, and
licensing to third parties its state-of-the-art Internet-television
convergence technologies. It has become evident that to fully realize,
or to achieve earlier than otherwise possible, the expected financial
returns on its current business model, it will be necessary for the
Company to join with one or more major financial business partners which
have the means to fund the Company's operations and expansion during this
introductory phase. Until the Company becomes self-supporting or links
with a substantial financial business partner, additional equity or debt
financing will be required. Management continually evaluates
opportunities with various investors to raise additional capital, without
which, the Company's operations, growth and profitability would be
restricted. Management has in the past been able to raise necessary
financing to fund ongoing operations, however, there can be no assurance
that such resources will continue to be available to the Company or that
they will be available upon terms favorable to the Company. A lack of
sufficient financial resources to fund operations until the Company's
business plan begins to produce the expected returns could have a
material adverse effect on the Company's business, operating results and
financial condition.
Limited Operating History; Absence of Profitable Operations in Recent
Periods
The Company has reported a net loss in each of its last five fiscal
years from a combination of various operating segments. In 1992, the
Company purchased a computer chip company, Southwest Memory, Inc.
("SWM"). In 1993, it purchased Curtis Mathes Corporation ("CMC") and in
1994 it sold SWM. Also in 1994 the Company acquired the rights to, and
later received a patent on, the RealViewTM technology, which can be
<PAGE>
incorporated into a ten-foot square projection television used in
commercial advertising applications. In 1996 the Company began
development of the uniViewTM technologies for the convergence of the
Internet and television mediums, and another subsidiary, uniView
Xpressway Corporation, initiated the uniView XpresswayTM and currently
offers its services as an Internet Service Provider and Online Service.
In June 1998 the Company acquired three other computer-related consulting
companies, Network America, Inc., CompuNet Support Systems, Inc., and
Corporate Network Solutions, L.C. While each of these recently acquired
companies has been generally self-supporting in the past, the character
of the Company has changed over the recent past and there is a limited
operating history for the Company in its present form under its current
business model. There can be no assurance that the Company's current
business model or the current combination of operating segments will be
profitable in the future.
Possible Volatility of Stock Price
The stock market has recently experienced significant price and
volume fluctuations that could continue in the future. These
fluctuations could adversely affect the market price of the Common Stock
without regard to the Company's operating performance. The market price
for shares of the Company's Common Stock has varied significantly and may
be volatile depending on news announcements and changes in general market
conditions. The Company believes that factors such as quarterly
variations in the Company's financial results or the financial results of
competitors, general industry conditions, including competitive
developments, and general economic conditions could also cause uncertain
price fluctuations in the Common Stock. In addition, the shares being
registered under this Prospectus will become eligible for sale in the
public market after the Registration Statement becomes effective. The
shares are expected to have no underwriters and will therefore not be
subject to underwriter price stabilization transactions. No prediction
can be made as to the effect, if any, that sales of such securities, or
the availability of such securities for sale, will have on the market
prices prevailing from time to time for the Common Stock. However, even
the possibility that a substantial number of the Company's securities
may, in the near future, be sold in the public market may adversely
affect prevailing market prices for the Common Stock and could impair the
Company's ability to raise additional capital through the sale of its
equity securities. Such impaired ability, or inability, of the Company
to raise necessary financing for its ongoing operations could have a
material adverse effect on the Company's business, operating results and
financial condition. See "Risk Factors -- Limited Cash Flow; Additional
Financing Required."
Risks Related to Under-Priced Stocks
The Common Stock is currently listed on the Nasdaq SmallCap Market
("Nasdaq"). In order to continue to be listed on Nasdaq, the Company
must maintain $2,000,000 in net tangible assets (total assets less total
liabilities and goodwill) or market capitalization of $35,000,000 or
$500,000 in net income for two of the last three years, a $1,000,000
market value for the public float, two market-makers, and a minimum bid
price of $1.00 per share. The Company currently complies with all of the
above listing criteria. In the future, if the Company fails to meet the
minimum maintenance criteria it may result in the delisting of the
Company's securities from Nasdaq, and trading, if any, of the Company's
securities would thereafter be conducted in the non-Nasdaq over-the-
<PAGE>
counter market. If the Company's securities are delisted, an investor
could find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, the Company's securities. In
addition, if the Common Stock were to become delisted from trading on
Nasdaq and the trading price of the Common Stock were to remain below
$5.00 per share, trading in the Common Stock would also be subject to the
requirements of certain other rules promulgated under the Securities
Exchange Act of 1934, as amended. Such rules require additional
disclosure by broker-dealers in connection with any trades involving a
stock defined as a "penny stock," i.e., any non-Nasdaq equity security
that has a market price of less than $5.00 per share, subject to certain
exceptions. Such rules further require the delivery of a disclosure
schedule explaining the penny stock market and the risks associated
therewith prior to entering into any penny stock transaction, and impose
various sales practice requirements on broker-dealers who sell penny
stocks to persons other than established customers and accredited
investors (generally institutions.) For these types of transactions, the
broker-dealer must make a special suitability determination for the
purchaser and must receive the purchaser's written consent to the
transaction prior to the sale. The additional burdens imposed upon
broker-dealers by such requirements could discourage broker-dealers from
effecting transactions in the Common Stock, which could severely limit
the market liquidity of the Common Stock and the ability of purchasers in
this offering to sell the Common Stock in the secondary market.
Potential Dilution of Shareholders' Ownership Interests
As of July 13, 1998, there were 10,032,607 common shares of the
Company issued and outstanding. Assuming the issuance of 1,403,591
common shares in exchange for the total number of currently exercisable
warrants and vested employee stock options outstanding as of that date
(without regard to whether such shares are being registered hereunder),
and the issuance of common shares in conversion to Common Stock of all
convertible preferred stock outstanding as of that date (the balance of
all preferred stock convertible into approximately 1,741,077 common
shares, based upon the conversion prices in effect as of July 13, 1998),
there would be approximately 13,177,275 common shares outstanding. In
such event, an existing shareholder would experience dilution of their
ownership interest in the Company to the extent such shareholder held
none of the securities being exercised or converted. For example, an
existing 10% shareholder before such issuances would become a 7.61%
shareholder after such issuances, assuming such shareholder held none of
the warrants or preferred stock being exercised or converted, and other
existing shareholders would experience a similar dilution of their
ownership interest in the Company.
Further assuming the exercise of all outstanding currently
exercisable warrants and vested employee stock options and the issuance
of common shares in conversion to Common Stock of all convertible
preferred stock outstanding as of July 13, 1998, the pro forma net
tangible book value of the Company would increase by the amount of the
proceeds paid to the Company for the Common Stock issued in exchange for
the currently exercisable warrants and vested stock options
(approximately $10,715,270 or $.81 per share increase.) "Pro forma net
tangible book value" represents the amount of total tangible assets, less
total liabilities, divided by the number of shares of Common Stock
outstanding after considering the issuance of Common Stock for
outstanding currently exercisable warrants and vested stock options and
the conversion of Preferred Stock into Common Stock. The increase
<PAGE>
results from giving effect to the receipt by the Company of the net
proceeds from the exercise of the warrants and stock options.
The likelihood that the warrants and vested stock options will be
exercised increases as the market price of the stock rises above the
exercise price of the warrants and stock options. See "DESCRIPTION OF
SECURITIES: Warrants and Employee Stock Options."
Preferred Stock's Preference over Common Stock
The Company's Preferred Stock has preferences over the Common Stock
in payment of dividends and in distributions to shareholders upon
dissolution of the Company. During ongoing operation of the Company,
these preferences mean very little; payment of dividends to Preferred
Shareholders has no adverse effect upon Common Shareholders because the
Company has not in the past, and does not expect in the foreseeable
future, to declare any dividends on its Common Stock. However, in the
event it became necessary to dissolve the Company, to the extent of any
assets remaining after payment of all creditors of the Company, Preferred
Shareholders would receive the face amount and all accrued dividends on
their Preferred Stock before any distributions could be made to Common
Shareholders. In the event of a dissolution of the Company at the July
13, 1998 levels of Common and Preferred Stock, because of the Preferred
Stock preferences, a Common Shareholder could receive a distribution
which is approximately $.37 per share less than it would otherwise
receive if there were no shares of Preferred Stock outstanding. See
"DESCRIPTION OF SECURITIES: Preferred Stock."
Dependence on Key Personnel
The Company's success depends to a significant extent on the
performance and continued service of its senior management and certain
key employees. Competition for highly skilled employees with technical,
management, marketing, sales, product development and other specialized
training is intense, and there can be no assurance that the Company will
be successful in attracting and retaining such personnel. Specifically,
the Company may experience increased costs in order to attract and retain
skilled employees. In addition, there can be no assurance that employees
will not leave the Company or compete against the Company. The Company's
failure to attract additional qualified employees or to retain the
services of key personnel could materially adversely affect the Company's
business, operating results and financial condition.
Prior Claims on Future Earnings
One of the Company's subsidiaries, Curtis Mathes Corporation
("CMC"), is currently operating under a six-year plan of reorganization,
which became effective on October 1, 1992 (the "Plan"). Until
termination of the Plan, 1/2% of gross sales of CMC, if any, must be paid
monthly to a "Liquidating Trustee," which has been designated by the
Bankruptcy Court to administer such payments on behalf of unsecured
creditors in the order of priority. CMC was the operating entity which
historically sold commodity consumer electronics products (televisions,
VCR's, camcorders, and related products) to consumers. In early 1996,
CMC sold its entire remaining inventory to a third party and negotiated a
satisfaction of its primary debt obligation with Deutsche Financial
Services Corporation ("DFS"). CMC has had no sales since that time.
However, in the event CMC does generate any future revenue, its
profitability will be affected to the extent of the required payments.
<PAGE>
Warranty Claims
Beyond the claim of the Trustee on any potential future earnings of
CMC, and as required by the Plan, CMC remains obligated to service past
outstanding product warranties. Cash balances were set aside as required
by the Plan, to cover a portion of these estimated past product warranty
costs. CMC has additionally in the past accrued a portion of the total
product sales price to cover estimated product warranty costs. Although
management believes that the amount accrued is adequate to meet claim
requirements based upon historical data, there can be no assurance that
the accruals will always cover warranty claims filed during any
particular period. If warranty claims during any particular period
exceed projections, the Company must cover such claims out of its current
cash, thereby reducing the profitability of the Company during such
periods. Many of the warranties on products sold in the past are
expiring, and due to lower product sales by CMC in the past few years,
remaining warranty obligations are slowly diminishing; however, until
expiration of these past outstanding product warranties, the Company's
profitability will be affected to the extent the current required
warranty expenditures exceed the cash reserves designated for that
purpose.
Off-Balance Sheet Risks
An "off-balance sheet risk" is one in which the ultimate obligation
of the Company may exceed the amount reported in the liability section of
the financial statements and which may be triggered by the default of a
third party on an obligation upon which the Company is contingently
liable. CMC is a party to financial instruments with such off-balance
sheet risks to meet the financing requirements of former CMC dealers. In
the normal course of business, CMC has transferred receivables from
qualified dealers to Deutsche Financial Services Corporation ("DFS")
under a repurchase agreement. The agreement requires CMC, in the event
of default by the dealer, to repurchase property that is collateral
(inventory consisting of consumer electronics products) for the financing
provided to the dealer. CMC is contingently liable to DFS for the
portion of the receivable that is defaulted through nonpayment or non-
recovery of the collateral. This amount is partially offset by recovery
of unsold products from such dealers, which can then be resold. As
dealer defaults occur in the future and the Company honors its repurchase
obligations, the profitability of the Company could be reduced
accordingly.
RISKS RELATED TO COMPANY TECHNOLOGIES
Changes in Technology and Industry Standards
The marketplace in which the Company operates is undergoing rapid
changes, including evolving industry standards, frequent new technologies
and product introductions and changes in consumer requirements and
preferences. The introduction of new technologies, products and product
features can render the Company's existing and announced technologies and
product features obsolete or unmarketable. The development cycle for
products utilizing new technologies may be significantly longer than the
Company's current development cycle for products on existing and proposed
technologies and may require the Company to invest resources in products
and technologies that may not become profitable. There can be no
assurance that the expected demand for the Company's technologies and
services will materialize, or that the mix of the Company's future
<PAGE>
technologies or product features will keep pace with technological
changes. There can also be no assurance that the Company will be
successful in developing and marketing future technologies or product
features that will satisfy evolving consumer preferences.
The Company further expects that it may be required to modify its
Internet access technologies in the future to accommodate advanced online
distribution technologies such as cable, satellite, broadcast and
enhanced telephone distribution, and to offer advanced services such as
voice and full-motion video. Currently, the uniView Xpressway services
are accessed primarily through standard telephone systems via modems. As
the online and interactive digital services of the uniView Xpressway
service, including Internet access, entertainment and information
services, become accessible by digital subscriber lines, coaxial and
fiber optic cable, the Company may have to develop new technologies or
modify its existing technologies to keep pace with these developments.
Competitors of the Company may have better access to those technologies
and could gain advantage by implementing new access technologies more
quickly and at lower cost than the Company.
Pursuit of these technological advances will require substantial
expenditures, and there can be no assurance that the Company will succeed
in adapting its technologies as rapidly or as successfully as its
competitors. Failure to adapt its technologies or to develop and
introduce new technologies and product enhancements in a timely fashion
could have a material adverse effect on the Company's business, operating
results and financial condition.
Dependence on Introduction of New Product Features
The Company's future success will depend to a great extent upon the
timely introduction and market acceptance of new product features of the
uniView Internet-television convergence product and online content of the
uniView Xpressway service and other new technologies. A significant
delay in the introduction of, or the presence of a defect in, one or more
new product features or new technologies could have a material adverse
effect on the ultimate success of such products. In such event, the
Company's business, operating results and financial condition,
particularly in view of the seasonality of the Company's business, could
also be materially and adversely affected. (See "Risk Factors -
Seasonality"). Further, because of the revenue typically associated with
initial shipments of a product containing new features, delaying
introduction of such a product until near the end of a fiscal quarter may
materially adversely affect the operating results for that quarter. The
process of developing Internet-television convergence products containing
software-related components such as those contained in uniView products
and those used in connection with the uniView Xpressway Internet service
is extremely complex and is expected to become more complex and expensive
in the future as new platforms and technologies are introduced or
incorporated. These new technologies also require and depend upon
externally manufactured hardware components, such as file servers,
routers, modems, and other similar devices commonly used in the computer
industry, but not yet used on a wide scale for Internet-television
convergence products.
In the past, the Company has experienced delays in the introduction
of certain new products and product features. The Company anticipates
that there may be similar delays in developing and introducing such
products and product features in the future and there can be no assurance
<PAGE>
that they will be introduced on schedule in the future or at all.
Further, the market for these new products and product features is
evolving and, in comparison with the overall market for consumer
electronics and Internet access products, is considered relatively small,
making it difficult to predict with any assurance the future growth rate
and size of the market. There can be no assurance that new technologies
or new product features introduced by the Company will achieve market
acceptance or generate significant revenues.
Risk of Product Failures
Internet-television convergence products containing software-related
components as complex as those developed by the Company may contain
undetected errors when first introduced. If any undetected errors occur,
delays or lost revenues during the period required to correct these
errors could be expected. The Company has in the past experienced delays
and significant technical support expenses in connection with developing
technologies and product features. There can be no assurance that,
despite testing by the Company, errors will not be found in new
technologies or product features or releases after commencement of
commercial shipments. This type of problem could result in a delay in,
or loss of market acceptance, which could have a material adverse effect
on the Company's business, operating results and financial condition.
Dependence on Licensees and Distribution Channels
The Company expects to be dependent upon licensees and other outside
sources in the future for the manufacturing of all finished products
incorporating the Company's technologies. The Company expects future
licensees to sell licensed products through consumer electronics stores,
computer stores, mail order companies, direct mail, and through the
Internet. Sales to a limited number of distributors and retailers could
be expected to constitute a substantial portion of net revenues of such
licensees, and consequently, any royalties and subscription fees payable
to the Company related to the uniView technologies. Minimum purchase
obligations of any principal distributor or retailer of a licensee are
not expected to be significant and the Company would expect any licensees
to sell on a purchase order basis without a long-term agreement to a
majority of these entities. The loss of, or significant reduction in
sales attributable to, any licensees or these distribution channels could
materially adversely affect the Company's business, operating results and
financial condition. In addition, manufacturing, distribution and
retailing businesses in the consumer electronics industry have from time
to time experienced significant fluctuations in their businesses and
there have been a number of business failures among these entities. The
insolvency or business failure of any significant licensee or of any
significant distributor or retailer of licensed products in the future
could have a material adverse effect on the Company's business, operating
results and financial condition.
Dependence on the Internet
The Company expects to derive a significant portion of its future
income from its Internet-related technologies and Internet advertising
revenues. The Company's future success will depend to a great extent
upon the continued growth in the use of the Internet by consumers and the
increased use of the Internet for commercial purposes, including use as
an advertising medium. If the expected rate of growth in the use of the
Internet does not occur, or if it occurs at a slower pace than expected,
<PAGE>
the Company's business, operating results and financial condition could
be materially adversely affected.
Risk of Capacity Constraints; System or Security Failures
The Company expects at some point in the future to generate a high
volume of use of its licensed products and the uniView Xpressway service.
The performance of each of these technologies is critical to the
Company's reputation, its ability to attract subscribers to the uniView
Xpressway service, and to market acceptance of its technologies. Any
system capacity constraint or failure that causes interruption of or
increases in response time of the uniView Xpressway service would reduce
the attractiveness of the licensed products and services to existing and
potential subscribers and content providers. Additionally, the Company's
network operations are dependent in part upon its ability to protect its
operating systems against physical damage from fire, floods, earthquakes,
power loss, telecommunications failures, break-ins and similar events.
The Company currently does not have redundant, multiple site capacity in
the event of any such occurrence. Despite the implementation of network
security measures by the Company, its servers are also vulnerable to
computer viruses, break-ins and similar disruptions from unauthorized
tampering with the related systems. Any significant, prolonged or
chronic system capacity constraint or interruption of services or other
malfunction of the Company's operating systems could have a material
adverse effect on the Company's business, operating results and financial
condition.
Relationships with Providers
As the marketplace in which the Company operates changes and as
competition intensifies, it may become more difficult or more expensive
to secure and maintain relationships with electronic commerce,
advertising, marketing, technology and content providers. Failure to
maintain relationships, establish new relationships or the loss of a
number of relationships, or significantly increased costs in doing so,
could have a material adverse effect on the Company's business, financial
condition and operating results.
RISKS RELATED TO THE INDUSTRY
Highly Competitive Industry
The industry in which the Company and its licensees operate is
intensely and increasingly competitive and includes a large number of
technology development companies, Internet service providers and
manufacturers of consumer electronics products. A number of companies
have announced development of, or have introduced Internet-television
convergence devices and technologies similar to the Company's uniView
technologies. Such competitors include, among others: (i) suppliers of
low-cost Internet access technologies, such as "network computer" devices
promoted by Oracle and others, (ii) "set top" boxes developed by WebTV
Networks, Scientific Atlanta and others, the Apple Pippin, the NewCom Web
Pal, and other devices that are under development by companies such as
Navio, as well as (iii) video game devices that provide Internet access
such as the Sega Saturn, the Sony Playstation and the Nintendo 64. In
addition, manufacturers of television sets have announced plans to
introduce Internet access and Web browsing capabilities into their
products or through set-top boxes, using technologies supplied by others.
Personal computer manufacturers, such as Gateway 2000, are introducing
<PAGE>
products that offer full-fledged television viewing, combined with
Internet access. Operators of cable television systems also plan to offer
Internet access in conjunction with cable service. The Company also
competes with various national and local Internet service providers, such
as the Microsoft Network, AT&T Corp., MCI Communications Corporation,
Netcom and others, and commercial on-line services such as America
Online, Inc., ICTV and @Home Network, Road Runner Group (owned by Time
Warner Inc.).
Competition occurs principally in the areas of style, quality,
functionality, service, design, product features and price of the
licensed product. There can be no assurance that the Company's
competitors will not develop Internet access products and services that
are superior to, and priced competitively with, those of the Company,
thereby achieving greater market acceptance than the Company's offerings.
Many of the Company's current competitors and potential future
competitors may have greater financial, technical, marketing and/or
personnel resources than the Company. This competitive environment
could: (i) limit the number of licensees that are willing to license the
Company's technologies, (ii) require price reductions and increased
spending on product development, marketing, network capacity, and content
procurement, (iii) limit the Company's opportunities to enter into and/or
renew agreements with content providers and distribution partners, (iv)
limit its ability to develop new products, product features and services,
(v) limit its ability to increase its uniView Xpressway subscriber base,
and (vi) result in attrition in the uniView Xpressway subscriber base.
Any of the foregoing events could have a material adverse effect on the
Company's business, financial condition and operating results.
In addition, certain of the Company's current and prospective
competitors may be acquired by, receive investments from or enter into
other commercial relationships with larger, well-established and well-
funded companies. There can be no assurance that the Company will have
the resources required to continue to respond effectively to these
competitive pressures.
Seasonality of the Industry
Sales of licensed products and services are expected to decrease
during the first and second quarters of each calendar year as a result of
the seasonal effect of the consumer buying season, resulting in decreased
royalties, subscription fees and advertising revenues payable to the
Company during such periods. Revenues generated by online subscription
fees to the uniView Xpressway service are expected to be more uniform
than sales revenues of the licensed products, but consumer-buying cycles
are still expected to affect these revenues. Although it is too early to
predict with any certainty, advertising revenues generated by the uniView
Xpressway service may also prove to be related to consumer buying cycles
and the budgeting cycles of its potential advertisers. The Company's
operations must be supplemented during periods of lower seasonal revenues
through its reserves or through other operations or licensing activities
of the Company. Although the Company typically plans ahead for seasonal
variations in revenues, there can be no assurance that past budgetary
expectations will be adequate to cover such periods in the future.
<PAGE>
Variable Economy
The Company plans to license its technologies to third parties in
return for licensing fees, product royalties, and Internet access
subscription fees. All of such fees payable to the Company, except the
initial licensing fees, would be directly related to the number of units
of licensed products sold or otherwise placed with consumers. The
consumer electronics industry is influenced significantly by general
economic conditions, including consumer behavior and consumer confidence,
the level of personal discretionary spending, interest rates and credit
availability. Variations in the general economy affecting expendable
consumer dollars impacts a consumer's willingness to expend monies for
the products which incorporate the Company's technologies, which would
translate into fluctuations in sales volumes for licensees and in
royalties and subscription fees payable to the Company. There can be no
assurance that a prolonged economic downturn would not have a material
adverse effect upon the profitability of the Company in the future.
Government Regulation; Legal Uncertainties; International Business Risks
The Federal Communications Commission ("FCC") provides mandatory
guidelines for the electronic emissions of licensed consumer products
containing the Company's technologies. The Internet itself and commercial
Internet services are further impacted by several federal and state
government agencies, legislative bodies and courts, including the FCC,
the Federal Trade Commission and the Internal Revenue Service. In most
other countries in which the Company expects to conduct operations in the
future, the Company is not currently subject to direct regulation other
than pursuant to laws applicable to consumer electronics products and to
businesses generally. A number of legislative and regulatory proposals
from various international bodies and foreign and domestic governments in
the areas of telecommunication regulation, access charges, encryption
standards, content regulation, consumer protection, intellectual
property, privacy, electronic commerce, and taxation, among others, are
currently under consideration (including Directive 95/46/EC of the
European Parliament and of the European Council on the protection of
individuals with regard to the processing of personal data and on the
free movement of such data, to become effective in the individual member
states by October 24, 1998). The Company is unable at this time to
predict which, if any, of such proposals may be adopted and, if adopted,
whether such proposals would be favorable or unfavorable to the industry.
There are certain other significant risks inherent in doing business
on an international level, such as laws governing content that differ
greatly from those in the United States, unexpected changes in regulatory
requirements, political risks, export restrictions, export controls
relating to encryption technology such as that utilized by the uniView
technologies, tariffs and other trade barriers, fluctuations in currency
exchange rates, issues regarding intellectual property and potentially
adverse tax consequences, any or all of which could impact the Company's
future planned international operations. Adverse changes in the legal or
regulatory environment relating to the consumer electronics or Internet
industry in the United States, Europe, Japan or elsewhere, or potentially
unfavorable future application of various existing domestic and foreign
laws governing content, export restrictions, privacy, consumer
protection, export controls on encryption technology, tariffs and other
trade barriers, intellectual property and taxes could have a material
adverse effect on the Company's business, financial condition and
operating results.
<PAGE>
Limited Protection of Intellectual Property and Proprietary Rights; Risk
of Litigation
The Company regards its Internet-television convergence technologies
containing software-related components as proprietary and relies
primarily on a combination of trademark, copyright and trade secret laws,
employee and third-party nondisclosure agreements, and other methods to
protect these proprietary rights. As the number of Internet-television
convergence products in the industry increases and the functionality of
these products overlap, infringement claims may also increase. There can
be no assurance that third parties will not assert infringement claims
against the Company in the future with respect to current or future
technologies or product features. As is common in the industry, from
time to time the Company receives notices from third parties claiming
infringement of intellectual property rights of such parties. The
Company investigates these claims and responds, as it deems appropriate.
Policing unauthorized use of the Company's products is also difficult and
can be expected to be a recurring problem. Further, the Company and
Company's licensees enter into transactions in countries where
intellectual property laws are not well developed or are poorly enforced.
Legal protections of the Company's rights may be ineffective in such
countries, and software-related products developed in such countries may
not be protectable in jurisdictions where protection is ordinarily
available. Any claim or litigation, with or without merit, could be
costly and could result in a diversion of management's attention, which
could have a material adverse effect on the Company's business, operating
results and financial condition. Adverse determinations in such claims
or litigation could also have a material adverse effect on the Company's
business, operating results and financial condition.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sales of
the Shares by Selling Stockholders. The likelihood of the Company
receiving any proceeds from the exercise of the warrants increases as the
market price of the Company's stock increases above the exercise price of
the warrants. If the market price of the stock does not increase to the
required levels, the Company will most likely not receive any proceeds
from this offering. Assuming the exercise of warrants to purchase
300,000 Shares at $2.50 per share (expiring in mid-2001), 200,000 Shares
at $2.80 per share (expiring in mid-2003), and 100,000 Shares at $3.00
per share (expiring in mid-2001), the net proceeds to the Company from
the sale of Shares issuable upon exercise of the warrants would be
approximately $1,610,000. Any proceeds received by the Company upon
exercise of the warrants will be used for general corporate purposes,
including, but not limited to, operating and working capital
requirements. Various uses of the proceeds may include additional
advertising, promotion, and further development of the uniView
technologies.
SELLING STOCKHOLDERS
This Prospectus relates to a maximum of 2,380,000 estimated Shares
issuable upon the conversion of Preferred Stock and 100,000 Shares
issuable upon the exercise of warrants, which were issued pursuant to
Securities Purchase or Subscription Agreements (the "Securities
Subscription Agreements") between the Company and certain Selling
Stockholders designated below. This Prospectus also relates to 300,000
Shares issuable upon the exercise of warrants, which were issued to J.P.
<PAGE>
Carey, Inc., ("J.P. Carey"), pursuant to an agreement dated August 8,
1997, (the "J.P. Carey Agreement"), as partial consideration for capital
raised by J.P. Carey for the Company. This Prospectus also relates to
200,000 Shares issuable upon the exercise of warrants, which were issued
to Pacific Continental Securities Corp., ("Pacific Continental"),
pursuant to an agreement dated June 3, 1998, (the "Pacific Continental
Agreement"), as partial consideration for capital raised by Pacific
Continental for the Company. See "Plan of Distribution."
The "Number of Shares Underlying Warrants," and the "Maximum Number
of Shares Convertible from Preferred Stock" set out in the table below
represent the total number of Shares beneficially owned by the Selling
Stockholders before the offering. All of such Shares are being offered
for the account of the Selling Stockholders and after the offering the
Selling Stockholders will each own no Common Stock of the Company.
Number of Maximum Number of
Shares Shares
Relationship to Underlying Convertible from
Selling Stockholder the Company Warrants Preferred Stock
SECURITIES ACQUIRED PURSUANT TO A SECURITIES SUBSCRIPTION AGREEMENT:
Thomson Kernaghan
& Co. Ltd. Private Investor N/A 1,200,000
Brown Simpson Strategic
Growth Fund, Ltd. Private Investor 65,000 767,000
Brown Simpson Strategic
Growth Fund, L.P. Private Investor 35,000 413,000
------- ---------
SUBTOTAL 100,000 2,380,000
WARRANTS ACQUIRED PURSUANT TO THE J.P. CAREY AGREEMENT:
J.P. Carey, Inc.(1) Finder 300,000 N/A
------- -------
SUBTOTAL 300,000 N/A
WARRANTS ACQUIRED PURSUANT TO THE PACIFIC CONTINENTAL AGREEMENT:
Pacific Continental
Securities Corp.(2) Finder 200,000 N/A
------- -------
SUBTOTAL 200,000 N/A
TOTAL 600,000 2,380,000
========= =========
GRAND TOTAL 2,980,000
=========
(1) These warrants were issued by the Company to J.P. Carey, Inc.
pursuant to the J.P. Carey Agreement.
(2) These warrants were issued by the Company to Pacific Continental
Securities Corp. pursuant to the Pacific Continental Agreement.
<PAGE>
PLAN OF DISTRIBUTION
Securities Being Registered
The following securities are covered by this Prospectus:
1. The resale by J.P. Carey, Inc. of up to 300,000 Shares that may
be acquired upon the exercise of warrants issued pursuant to the J.P.
Carey Agreement.
2. The resale by Pacific Continental Securities Corp. of up to
200,000 Shares that may be acquired upon the exercise of warrants issued
pursuant to the Pacific Continental Agreement.
3. The resale by the respective holders thereof of a maximum of
2,380,000 estimated Shares that may be acquired upon the conversion of
Preferred Stock issued pursuant to a Securities Subscription Agreement
with Thomson Kernaghan & Co. Ltd., Brown Simpson Strategic Growth Fund,
Ltd. and Brown Simpson Strategic Growth Fund, L.P.
4. The resale by the respective holders thereof of 100,000 Shares
that may be acquired upon the exercise of warrants issued pursuant to a
Securities Subscription Agreement with Brown Simpson Strategic Growth
Fund, Ltd. and Brown Simpson Strategic Growth Fund, L.P.
Plan of Distribution
The Shares being registered hereunder may be sold from time to time
by any of the Selling Stockholders, or by pledgees, donees, transferees
or other successors in interest, or by additional selling stockholders.
The Shares may be disposed of from time to time in one or more
transactions through any one or more of the following: (i) to purchasers
directly, (ii) in ordinary brokerage transactions and transactions in
which the broker solicits purchasers, (iii) through underwriters or
dealers who may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Stockholders or
such successors in interest and/or from the purchasers of the Shares for
whom they may act as agent, (iv) the pledge of the Shares as security for
any loan or obligation, including pledges to brokers or dealers who may,
from time to time, themselves effect distributions of the Shares or
interests therein, (v) purchases by a broker or dealer as principal and
resale by such broker or dealer for its own account pursuant to this
Prospectus, (vi) a block trade in which the broker or dealer so engaged
will attempt to sell the Shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction and (vii)
an exchange distribution in accordance with the rules of such exchange,
including the NASDAQ SmallCap Market, prices and at terms then prevailing
or at prices related to the then current market price, at negotiated
prices and terms or otherwise. In effecting sales, brokers or dealers
may arrange for other brokers or dealers to participate. The Selling
Stockholders or such successors in interest, and any underwriters,
brokers, dealers or agents that participate in the distribution of the
Shares, may be deemed to be "underwriters" within the meaning of the
Securities, Act, and any profit on the sale of the Shares by them and any
discounts, commissions or concessions received by any such underwriters,
brokers, dealers or agents may be deemed to be underwriting commissions
or discounts under the Securities Act. In addition, any Shares held by
the Selling Stockholders or such successors in interest that qualify for
sale pursuant to Rule 144 under the Securities Act may be sold under Rule
<PAGE>
144 rather than pursuant to the Registration Statement of which this
Prospectus is a part.
The Company will pay all of the expenses incident to the offering
and sale of the Shares to the public other than underwriting discounts or
commissions, brokers' fees and the fees and expenses of any counsel to
the Selling Stockholders related thereto.
In the event of a material change in the plan of distribution
disclosed in this Prospectus, the Selling Stockholders will not be able
to effect transactions in the Shares pursuant to this Prospectus until
such time as a post-effective amendment to the Registration Statement is
filed with, and declared effective by, the Commission.
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized by its articles of incorporation, as
amended, to issue up to 80 million shares of Common Stock, $.10 par
value, of which 10,032,607 shares were issued and outstanding as of July
13, 1998. The Board of Directors of the Company, on April 24, 1998,
implemented a ten to one reverse split of the Common Stock. Holders of
Common Stock are entitled to one vote per share on all matters submitted
to a vote of the shareholders and do not have cumulative voting rights in
the election of directors. Accordingly, the holders of a majority of the
outstanding Common Stock can, if they so choose, elect all directors.
The vote of the holders of a majority of the shares entitled to vote,
present in person or represented by proxy, shall decide any question
brought before a meeting of the Company's shareholders at which a quorum
is present. A quorum consists of a majority of the issued and
outstanding shares of the Common Stock entitled to vote. The articles of
incorporation of the Company specify that a majority vote of shareholders
shall be determinative regardless of provisions requiring more than a
majority vote under the Texas Business Corporation Act.
All of the shares issuable upon conversion of Preferred Stock will
be fully paid and nonassessable. Holders of the Common Stock have no
preemptive or other subscription rights, and shares of Common Stock have
no redemption, sinking fund, or conversion privileges. Holders of Common
Stock are entitled to receive dividends when, as and if declared by the
board of directors of the Company, out of funds legally available
therefor. In the event of liquidation or dissolution of the Company,
holders of Common Stock are entitled to share ratably in all assets
available for distribution to such shareholders.
Preferred Stock
The Company is authorized to issue up to 1,000,000 shares of
Preferred Stock, $1.00 par value, in one or more series, which, if
issued, would have certain preferences over the Common Stock. The
articles of incorporation of the Company vest the board of directors with
authority to establish and designate series of Preferred Stock and to fix
and determine the relative rights and preferences of any series so
established. As of July 13, 1998, outstanding Preferred Stock consisted
of (a) $140,000 face value of Series A Preferred Stock with an annual
dividend rate of 6%, and no right to convert into Common Stock; (b)
$75,000 face value of Series H Preferred Stock with an annual dividend
rate of 5% and the right to convert such Preferred Stock into 5,000
<PAGE>
shares of Common Stock at a minimum conversion price of $15.00 per share;
(c) $1,500,000 face value of Series Q Preferred Stock with a 3% annual
dividend rate and the right to convert such Preferred Stock, as of July
13, 1998, into approximately 914,300 shares of Common Stock at a variable
conversion price based upon the stock price of the Company's common stock
for a period immediately preceding the date of conversion; (the number of
shares issuable upon conversion of Series Q Preferred Stock fluctuates
with the stock price of the Company's common stock, as reported by the
Nasdaq Stock Market; as the stock price increases, the number of shares
issuable on conversion decreases; as the stock price decreases, the
number of shares issuable on conversion increases; conversions of Series
Q Preferred Stock are limited by the holdings of their owners; each owner
may not hold more than 4.9% of the Company's outstanding common stock at
any one time); and (d) $2,000,000 face value of Series 1998-A1 Preferred
Stock with a 5% annual dividend rate and the right to convert such
Preferred Stock, as of July 13, 1998, into approximately 821,777 shares
of Common Stock at the "Initial Conversion Price" of $2.43375; (after
October 1, 1998, the number of shares issuable upon conversion of Series
1998-A1 Preferred Stock, at the option of the holders thereof, fluctuates
with the stock price of the Company's common stock, as reported by the
Nasdaq Stock Market; as the stock price increases, the number of shares
issuable on conversion decreases; as the stock price decreases, the
number of shares issuable on conversion increases; the right to convert
Series 1998-A1 Preferred Stock at the fluctuating rate vests at the
cumulative rate of twenty-five percent per month until all shares of
Series 1998-A1 Preferred Stock are convertible; conversions are further
limited by the holdings of their owners, as each owner may not hold more
than 4.999% of the Company's outstanding common stock at any one time).
Such Preferred Stock has no voting rights. It has preference over
the Common Stock as to dividends, and no dividends can be declared or
paid on the Common Stock unless full dividends on all Preferred Stock
then outstanding for all past dividend periods and for the current period
had been declared and paid. Dividends on all Preferred Stock, regardless
of series, are cumulative. No dividend may be declared on shares of any
series of Preferred Stock for any dividend period unless all dividends
accumulated for all prior dividend periods have been declared on all
Preferred Stock then outstanding and a dividend for the same period is
declared at the same time upon all Preferred Stock outstanding in like
proportions to the dividend rate then declared. In the event of
dissolution, liquidation or winding up of the Company, whether voluntary
or involuntary, the holders of each series of the then outstanding
Preferred Stock would be entitled to receive the stated value fixed for
such purpose in the resolution of the board of directors establishing the
respective series of Preferred Stock plus a sum equal to the amount of
all accumulated and unpaid dividends thereon. After such payment to the
holders of Preferred Stock, the remaining assets and funds of the Company
could be distributed pro rata among the holders of the Common Stock. The
whole or any part of outstanding Series A, Series H, Series Q, and Series
1998-A1 Preferred Stock may be called for redemption and redeemed under
certain circumstances, exercisable by the board of directors upon notice
to the holders of such shares as are to be redeemed.
Warrants and Employee Stock Options
As of July 13, 1998, the Company had outstanding currently
exercisable warrants held by various investors and vested employee stock
options held by directors and various employees which were exercisable
for a total of 1,403,591 shares of Common Stock. Directors and certain
<PAGE>
key employees hold a total of 215,000 additional stock options, which
vest at various times over the next two years. Exercise prices of all
warrants and stock options range from a high of $45.00 per share, to a
low of $1.10 per share and expiration dates range from July 1998 through
June 2003.
Debentures
As of July 13, 1998, none of the Company's debentures carried any
right to convert into Common Stock.
The transfer agent and registrar for Common Stock is American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York 10005.
RECENT DEVELOPMENTS
Except as may be reflected in this Prospectus, there have been no
material changes in the Company's affairs since the filing of the
Company's March 1998 10-Q Report and its 8-K Report, which reports have
been incorporated herein by reference.
LEGAL MATTERS
Certain legal matters in connection with the validity of the
securities offered hereby have been passed upon for the Company by Billy
J. Robinson. Mr. Robinson is an attorney who acts as counsel to the
Company. Mr. Robinson is also a director and owns 17,889 shares of
Common Stock and holds vested options to purchase another 12,500 shares
of Common Stock.
EXPERTS
The financial statements and the related financial statement
schedules incorporated in this prospectus by reference from the Company's
Annual Report on Form 10-K as of June 30, 1997 and 1996, and for each of
the years in the three-year period ended June 30, 1997 have been audited
by King Griffin & Adamson P.C., independent certified public accountants,
as stated in their report which is incorporated herein by reference, and
has been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the Company's Articles of
Incorporation or Bylaws, or otherwise, the registrant has been advised
that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of
such issue.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Securities and Exchange Commission registration fee $1,899
Transfer agent's fees 150
Costs of printing 150
Legal fees and expenses 500
Accounting fees and expenses 250
Blue sky fees and expenses 250
Miscellaneous expenses 500
Total estimated fees $3,699
All amounts estimated except for Securities and Exchange Commission
registration fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 2.02(16) and 2.02-1 of the Texas Business Corporation Act
empowers a corporation to indemnify its directors and officers or former
directors or officers and to purchase insurance with respect to liability
arising out of their capacity or status as directors and officers.
Article XIII of the Company's Articles of Incorporation, as amended,
provides that a director of the Company shall not be personally liable to
the Company or its shareholders for monetary damages for any act or
omission in his capacity as a director, except to the extent otherwise
expressly provided by a statute of the State of Texas. Article IX of the
Company's Bylaws provides for indemnification of officers and directors.
The Company has entered into Indemnity Agreements with all of its
officers, directors, and designated agents indemnifying them in
connection with services performed for the Company to the fullest extent
allowed by law.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
<PAGE>
ITEM 16. EXHIBITS
The following is a list of all exhibits filed as a part of this
Registration Statement on Form S-3, including those incorporated herein
by reference.
Exhibit
Number Description of Exhibit
4.1 Articles of Incorporation of the Company, as amended, defining the
rights of security holders (filed as Exhibit "4.1" to the Company's
Registration Statement on Form S-3 originally filed with the
Commission on May 13, 1998 and incorporated herein by reference.)
4.2 Bylaws of the Company, as amended, defining the rights of security
holders (filed as Exhibit "3(ii)" to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended December 31, 1997 and
incorporated herein by reference.)
4.3 Series A Preferred Stock terms and conditions (filed as Exhibit
"4.3" to the Company's annual report on Form 10-K for the fiscal
year ended June 30, 1994 and incorporated herein by reference.)
4.4 Series H Preferred Stock terms and conditions (filed as Exhibit
"4.4" to the Company's Registration Statement on Form S-3 filed with
the Commission on June 20, 1996 and incorporated herein by
reference.)
4.5 Series 1998-A1 Preferred Stock terms and conditions.
4.6 Series Q Preferred Stock terms and conditions (filed as Exhibit
"4.6" to the Company's Current Report on Form 8-K dated June 12,
1998 and incorporated herein by reference.)
4.7 Form of warrant issued in connection with Series 1998-A1
Preferred Stock.
4.8 Form of warrant issued in connection with the J.P. Carey Agreement.
4.9 Form of warrant issued in connection with the Pacific Continental
Agreement.
5 Opinion of Billy J. Robinson.
23.1 Consent of King Griffin & Adamson P.C.
23.2 Consent of Billy J. Robinson (included in his opinion filed as
Exhibit 5.)
24 Powers of Attorney (included on the Signature Page of the
Registration Statement.)
99.1 Agreement between the Company and Pacific Continental Securities
Corp. dated as of June 3, 1998 (the "Pacific Continental
Agreement.")
<PAGE>
99.2 Agreement between the Company and J.P. Carey, Inc. dated as of
August 8, 1997 (the "J.P. Carey Agreement")(filed as Exhibit "99.2"
to the Company's Registration Statement on Form S-3 originally filed
with the Commission on August 18, 1997 and incorporated herein by
reference.)
99.3 Form of Securities Subscription Agreement for Series Q
Preferred Stock.
99.4 Form of Registration Rights Agreement for holders of Series Q
Preferred Stock.
99.5 Form of Stock Purchase Agreement for Series 1998-A1 Preferred
Stock.
99.6 Form of Registration Rights Agreement for holders of Series
1998-A1 Preferred Stock.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in
the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by
the registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act that is incorporated by reference in the Registration
<PAGE>
Statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes that: (1) For
purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Dallas, State of Texas, on July
17, 1998.
UNIVIEW TECHNOLOGIES CORPORATION
By: /s/ PAT CUSTER
Patrick A. Custer
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Patrick A. Custer and F.
Shelton Richardson, Jr., each of whom may act without joinder of the
other, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign, execute and file with the
Commission and any state securities regulatory board or commission any
documents relating to the proposed issuance and registration of the
securities offered pursuant to this Registration Statement on Form S-3
under the Securities Act of 1933, including any amendment or amendments
relating thereto, which amendments may make such changes in the
Registration Statement as such attorney may deem appropriate, with all
exhibits and any and all documents required to be filed with respect
thereto with any regulatory authority, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done
in and about the premises in order to effectuate the same as fully to all
intents and purposes as he might or could do if personally present,
hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done.
<PAGE>
Pursuant to the requirements of the Securities Act, this
Registration Statement on Form S-3 has been signed by the following
persons in the capacities and on the dates indicated.
Principal Executive Officer
/s/ PAT CUSTER Chairman of the Board, July 17, 1998
Patrick A. Custer President, Chief
Executive Officer
and Director
Principal Financial and Accounting Officer
/s/ F. SHELTON RICHARDSON, JR. Vice President, July 17, 1998
F. Shelton Richardson, Jr. Chief Financial
Officer
Additional Directors
/s/ BILLY J. ROBINSON Vice President, Secretary, July 17, 1998
Billy J. Robinson General Counsel and Director
/s/ EDWARD M. WARREN Director July 17, 1998
Edward M. Warren
/s/ BERNARD S. APPEL Director July 17, 1998
Bernard S. Appel
EXHIBIT INDEX
Sequential
Page
Exhibit Number Description of Exhibit Number
4.1 Articles of Incorporation of the Company, as amended, defining the
rights of security holders (filed as Exhibit "4.1" to the Company's
Registration Statement on Form S-3 originally filed with the
Commission on May 13, 1998 and incorporated herein by reference.)
N/A
4.2 Bylaws of the Company, as amended, defining the rights of security
holders (filed as Exhibit "3(ii)" to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended December 31, 1997 and
incorporated herein by reference.) N/A
4.3 Series A Preferred Stock terms and conditions (filed as Exhibit
"4.3" to the Company's annual report on Form 10-K for the fiscal
year ended June 30, 1994 and incorporated herein by reference.)
N/A
4.4 Series H Preferred Stock terms and conditions (filed as Exhibit
"4.4" to the Company's Registration Statement on Form S-3 filed with
the Commission on June 20, 1996 and incorporated herein by
reference.) N/A
4.5* Series 1998-A1 Preferred Stock terms and conditions. 31
4.6 Series Q Preferred Stock terms and conditions (filed as Exhibit
"4.6" to the Company's Current Report on Form 8-K dated June 12,
1998 and incorporated herein by reference.) N/A
4.7* Form of warrant issued in connection with Series 1998-A1
Preferred Stock. 48
<PAGE>
4.8* Form of warrant issued in connection with the J.P. Carey Agreement.
55
4.9* Form of warrant issued in connection with the Pacific Continental
Agreement. 61
5* Opinion of Billy J. Robinson. 67
23.1* Consent of King Griffin & Adamson P.C. 68
23.2* Consent of Billy J. Robinson (included in his opinion filed as
Exhibit 5.) N/A
24* Powers of Attorney (included on the Signature Page of the
Registration Statement.) N/A
99.1* Agreement between the Company and Pacific Continental
Securities Corp. dated as of June 3, 1998 (the "Pacific Continental
Agreement.") 69
99.2 Agreement between the Company and J.P. Carey, Inc. dated as of
August 8, 1997 (the "J.P. Carey Agreement")(filed as Exhibit "99.2"
to the Company's Registration Statement on Form S-3 originally filed
with the Commission on August 18, 1997 and incorporated herein by
reference.) N/A
99.3* Form of Securities Subscription Agreement for Series Q
Preferred Stock. 75
99.4* Form of Registration Rights Agreement for holders of Series Q
Preferred Stock. 84
99.5* Form of Stock Purchase Agreement for Series 1998-A1 Preferred
Stock. 93
99.6* Form of Registration Rights Agreement for holders of Series
1998-A1 Preferred Stock. 121
_________________
* Filed herewith.
<PAGE>
<PAGE>
EXHIBIT "A"
CERTIFICATE OF DESIGNATION OF
5% CONVERTIBLE PREFERRED STOCK, SERIES 1998-A1
OF UNIVIEW TECHNOLOGIES CORPORATION
Pursuant to Article 2.13 of the
Texas Business Corporation Act
Section 1. Designation, Amount, Par Value, Stated Value and
Rank. The series of preferred stock shall be designated as Convertible
Preferred Stock, Series 1998-A1 (the "Series 1998-A1 Preferred Stock"),
and the number of shares so designated shall be 80 (which shall not be
subject to increase without the consent of the holders of the Series 1998-
A1 Preferred Stock ("Holder")). Each share of Series 1998-A1 Preferred
Stock shall have a par value of $1.00 per share and a stated value of
$25,000 per share (the "Stated Value").
The Series 1998-A1 Preferred Stock shall rank senior to the Junior
Securities (as defined below) and pari passu with all other series of
preferred stock of the Company issued and outstanding as to dividends,
distributions and upon liquidation, dissolution or winding up.
Section 2. Dividends. (a) Holders of Series 1998-A1
Preferred Stock shall be entitled to receive, when and as declared by the
Board of Directors, out of funds legally available therefor, and the
Company shall pay, cumulative dividends at the rate per share (as a
percentage of the Stated Value per share) equal to 5% per annum, payable
quarterly, commencing on September 30, 1998, in cash or shares of Common
Stock (as defined in Section 7) at (subject to the terms and conditions
set forth herein) the option of the Company. Dividends on the Series 1998-
A1 Preferred Stock shall be calculated on the basis of a 360-day year,
shall accrue daily commencing on the Original Issue Date (as defined in
Section 7), and shall be deemed to accrue from such date and be
cumulative whether or not earned or declared and whether or not there are
profits, surplus or other funds of the Company legally available for the
payment of dividends. Accrued and unpaid dividends of the Series 1998-A1
Preferred Stock shall be paid on the date on which such Series 1998-A1
Preferred Stock is converted. The party that holds the Series 1998-A1
Preferred Stock on an applicable record date for any dividend payment
will be entitled to receive such dividend payment and any other accrued
and unpaid dividends which accrued prior to such dividend payment date,
without regard to any sale or disposition of such Series 1998-A1
Preferred Stock subsequent to the applicable record date but prior to the
applicable dividend payment date. Except as otherwise provided herein, if
at any time the Company pays less than the total amount of dividends then
accrued on account of the Series 1998-A1 Preferred Stock, such payment
shall be distributed ratably among the Holders of the Series 1998-A1
Preferred Stock based upon the number of shares held by each Holder.
Payment of dividends on the Series 1998-A1 Preferred Stock is further
subject to the provisions of Section 5(c)(i). The Company shall provide
the Holders quarterly notice of its intention to pay dividends in cash or
shares of Common Stock. Such notice shall be delivered to all Holders not
less than 5 Trading Days prior to March 31, June 30, September 30 and
December 31 of each year for so long as shares of Series 1998-A1
Preferred Stock are outstanding. If dividends are paid in shares of
Common Stock, the number of shares of Common Stock payable as such
dividend to each Holder shall be equal to the cash amount of such
dividend payable to such Holder on such dividend payment date divided by
<PAGE>
the average closing bid price of the Common Stock on the NASDAQ or such
other registered national exchange on which the Company's Common Stock
primarily trades for the five Trading Days prior to such dividend payment
date.
(b) Notwithstanding anything to the contrary contained herein, the
Company may not issue shares of Common Stock in payment of dividends (and
must deliver cash in respect thereof) on the Series 1998-A1 Preferred
Stock if:
(i) the number of shares of Common Stock at the time
authorized, unissued and unreserved for all purposes, or held as
treasury stock, is insufficient to pay such dividends in shares of
Common Stock;
(ii) the shares of Common Stock to be issued in respect of such
dividends are not registered for resale pursuant to an effective
registration statement that names the recipient of such dividend as
a selling shareholder thereunder and may not be sold without volume
restrictions pursuant to Rule 144 promulgated under the Securities
Act of 1933, as amended (the "Securities Act"), as determined by the
general counsel to the Company pursuant to a written opinion letter,
addressed to the Company's transfer agent in the form and substance
acceptable to the Holder;
(iii) the shares of Common Stock to be issued in respect of
such dividends are not listed on the NASDAQ or any other registered
national exchange on which the Common Stock is then listed for
trading, if such listing is required by such exchange;
(iv) the issuance of such shares would result in the recipient
thereof beneficially owning, in accordance with the provisions of
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") as such provisions may be amended or
superseded, or any successor statute or rule promulgated by the
Commission, more than 4.999% of the issued and outstanding shares of
Common Stock; or
(v) the Company has failed to timely satisfy its obligations
pursuant to any Conversion Notice (as defined in Section 5(a)(ii)).
(c) So long as any Series 1998-A1 Preferred Stock shall remain
outstanding, except pursuant to existing agreements of the Company,
neither the Company nor any subsidiary thereof shall redeem, purchase or
otherwise acquire directly or indirectly any Junior Securities (as
defined in Section 7), nor shall the Company directly or indirectly pay
or declare any dividend or make any distribution (other than a dividend
or distribution described in Section 5) upon, nor shall any distribution
be made in respect of, any Junior Securities, nor shall any monies be set
aside for or applied to the purchase or redemption (through a sinking
fund or otherwise) of any Junior Securities.
Section 3. Voting Rights. Except as otherwise provided herein
and as otherwise required by law, the Series 1998-A1 Preferred Stock
shall have no voting rights. However, so long as any shares of Series
1998-A1 Preferred Stock are outstanding, the Company shall not and shall
cause its subsidiaries not to, without the affirmative vote of the
holders of all of the shares of the Series 1998-A1 Preferred Stock then
outstanding, (a) alter or change adversely the powers, preferences or
<PAGE>
rights given to the Series 1998-A1 Preferred Stock, (b) alter or amend
this Certificate of Designation, (c) authorize or create any class of
stock ranking as to dividends or distribution of assets upon a
Liquidation (as defined in Section 4) or otherwise senior to the Series
1998-A1 Preferred Stock, except for any series of Series 1998-A1
Preferred Stock issued and sold in accordance with the Purchase
Agreement, (d) amend its Articles of Incorporation, bylaws or other
charter documents so as to affect adversely any rights of any holders,
(e) increase the authorized number of shares of Series 1998-A1 Preferred
Stock, and (f) enter into any agreement with respect to the foregoing.
Section 4. Liquidation. Upon any liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary (a
"Liquidation"), the Holders shall be entitled to receive out of the
assets of the Company, whether such assets are capital or surplus, for
each share of Series 1998-A1 Preferred Stock an amount equal to the
Stated Value plus all accrued but unpaid dividends per share, whether
declared or not, before any distribution or payment shall be made to the
holders of any Junior Securities, and if the assets of the Company shall
be insufficient to pay in full such amounts, then the entire assets to be
distributed to the holders of Series 1998-A1 Preferred Stock shall be
distributed among the holders of Series 1998-A1 Preferred Stock and the
holders of all securities ranking pari passu to the Series 1998-A1
Preferred Stock ratably in accordance with the respective amounts that
would be payable on such shares if all amounts payable thereon were paid
in full. A sale, conveyance or disposition of all or substantially all of
the assets of the Company or the effectuation by the Company of a
transaction or series of related transactions in which more than 50% of
the voting power of the Company is disposed of, or a consolidation or
merger of the Company with or into any other company or companies shall
not be treated as a Liquidation, but instead shall be subject to the
provisions of Section 5. The Company shall mail written notice of any
such Liquidation, not less than 45 days prior to the payment date stated
therein, to each record holder of Series 1998-A1 Preferred Stock.
Section 5. Conversion. (a) (i) Each share of Series 1998-A1
Preferred Stock (in minimum amounts of $50,000 or such lesser
amounts as the holders of a majority in interest of Series 1998-A1
Preferred Stock then outstanding shall agree) shall be convertible
into shares of Common Stock (subject to reduction pursuant to
Section 5(a)(iii) and Section 5(a)(v) at the Conversion Ratio (as
defined in Section 7) at the option of the Holder in whole or in
part at any time after the Original Issue Date except that, for the
first three months immediately following the Original Issue Date,
the Holder of the Series 1998-A1 Preferred Stock shall not convert
the Series 1998-A1 Preferred Stock at the Variable Conversion Price
(as defined below). After such three-month period the right to
convert Series 1998-A1 Preferred Stock at the Variable Conversion
Price shall vest at the cumulative rate of 25% per month until all
shares of Series 1998-A1 Preferred Stock are convertible at the
Variable Conversion Price. The Holders shall effect conversions by
surrendering the certificate or certificates representing the shares
of Series 1998-A1 Preferred Stock to be converted to the Company,
together with the form of conversion notice attached hereto as
Exhibit A (the "Holder Conversion Notice"). Each Holder Conversion
Notice shall specify the number of shares of Series 1998-A1
Preferred Stock to be converted and the date on which such
conversion is to be effected, which date may not be prior to the
date the holder delivers such Holder Conversion Notice by facsimile
<PAGE>
(the "Holder Conversion Date"). If no Holder Conversion Date is
specified in a Holder Conversion Notice, the Holder Conversion Date
shall be the date that the Holder Conversion Notice is deemed
delivered pursuant to Section 5(i). Subject to Sections 5(b) and
5(a)(iii) hereof, each Holder Conversion Notice, once given, shall
be irrevocable. If the Holder is converting less than all shares of
Series 1998-A1 Preferred Stock represented by the certificate or
certificates tendered by the Holder with the Holder Conversion
Notice, or if a conversion hereunder cannot be effected in full for
any reason, the Company shall promptly deliver to such Holder (in
the manner and within the time set forth in Section 5(b)) a
certificate for such number of shares as have not been converted, or
the Company shall carry the balance of such remaining shares of
Holder's Series 1998-A1 Preferred Stock on the Company's preferred
stock ledger without issuing a new certificate, at Holder's option.
In the absence of receipt by the Company of Holder's election not to
receive new certificates, the Company shall deliver such
certificate(s) as provided herein. If the Company receives a Holder
Conversion Notice setting forth a Conversion Price (as defined
below) less than the Initial Conversion Price (as defined below),
then the Company may, for six months following the Original Issue
Date, redeem all or a portion of the shares of Series 1998-A1
Preferred Stock to which such Holder Conversion Notice applies for
an amount, to be paid in cash, equal to the Stated Value of such
shares, plus any accrued but unpaid dividends, on such shares
multiplied by 115%.
(ii) On the third anniversary of the Original Issue Date, the
Company may require the conversion of all of the then outstanding
and unconverted shares of Series 1998-A1 Preferred Stock at the
Conversion Ratio (subject to reduction pursuant to Section
5(a)(iii)) by delivering to the Holder of such shares to be
converted a notice in the form attached hereto as Exhibit B (the
"Company Conversion Notice"), provided, that, no such conversion is
permitted unless at the time of the delivery of the Company
Conversion Notice and on the Company Conversion Date (as defined
below), (a) the Company shall have complied in all material respects
with its obligations under the Registration Rights Agreement, (b)
the shares of Common Stock issuable upon such conversion are listed
for trading on the Nasdaq Stock Market or any other registered
national exchange on which the Common Stock is then listed for
trading and (c) the Company is in compliance with all of its
obligations under this Certificate of Designation, the Purchase
Agreement and the Registration Rights Agreement. Each Company
Conversion Notice shall specify the number of shares of Series 1998-
A1 Preferred Stock to be converted and the date on which such
conversion is to be effected, which date may not be prior to the day
after the Company delivers such Company Conversion Notice by
facsimile (the "Company Conversion Date"). If no Company Conversion
Date is specified in a Company Conversion Notice, the Company
Conversion Date shall be the date that the Company Conversion Notice
is deemed delivered pursuant to Section 5(i). A Holder Conversion
Date and a Company Conversion Date are sometimes referred to herein
as the "Conversion Date" and a Holder Conversion Notice and a
Company Conversion Notice are sometimes referred to as a "Conversion
Notice." Any conversion pursuant to this Section 5(a)(ii) shall be
subject to Section 5(b) with respect to consequences of the
Company's failure to deliver shares of Common Stock in respect of a
conversion under this Section. If the Company is converting less
<PAGE>
than all shares of Series 1998-A1 Preferred Stock represented by the
certificate or certificates tendered by the Holder in response to a
Company Conversion Notice, or if a conversion hereunder cannot be
effected in full for any reason, the Company shall promptly deliver
to such tendering Holder (in the manner and within the time set
forth in Section 5(b)) a certificate for such number of shares as
have not been converted, or the Company shall carry the balance of
such remaining shares of Holder's Series 1998-A1 Preferred Stock on
the Company's preferred stock ledger without issuing a new
certificate at Holder's option. In the absence of receipt by the
Company of Holder's election not to receive new certificates, the
Company shall deliver such certificate(s) as provided herein.
(iii) If on the Conversion Date applicable to any
conversion, (A) the Common Stock is then listed for trading on the
Nasdaq Stock Market, the American Stock Exchange or the Nasdaq
SmallCap Market, (B) the Conversion Price then in effect is such
that the aggregate number of shares of Common Stock that would then
be issuable upon conversion of all outstanding shares of Series 1998-
A1 Preferred Stock, together with any shares of Common Stock
previously issued upon conversion of Series 1998-A1 Preferred Stock
and in respect of payment of dividends hereunder, would equal or
exceed 20% of the number of shares of Common Stock outstanding on
the Original Issue Date (the "Issuable Maximum"), and (C) the
Company has not previously obtained Shareholder Approval (as defined
below), then the Company shall issue to any Holder so requesting
conversion of Series 1998-A1 Preferred Stock its pro rata portion of
the Issuable Maximum in the same ratio that the number of shares of
Series 1998-A1 Preferred Stock held by any such Holder bears to all
shares of Series 1998-A1 Preferred Stock then outstanding and, with
respect to any shares of Common Stock that otherwise would have been
issuable to such Holder in respect of the Holder Conversion Notice
at issue or in respect of payment of dividends hereunder in excess
of the Issuable Maximum, the Holder may require the Company to, as
promptly as possible, but in no event later than 75 days after such
Conversion Date if the Company has sold Series 1998-A1 Preferred
Stock, Series 1998-A2 Preferred Stock and Series 1998-A3 Preferred
Stock, either, at the Company's option, (i) convene a meeting of the
holders of the Common Stock and use its best efforts to obtain the
Shareholder Approval, or (ii) redeem, for an amount, paid in cash,
equal to the Stated Value of such shares, plus any accrued but
unpaid dividends on such shares, multiplied by 115% all or a portion
of the shares of Series 1998-A1 Preferred Stock to which such Holder
Conversion Notice applies as would cause the number of shares of
Common Stock issuable upon such conversion to exceed the Issuable
Maximum. "Shareholder Approval" means the approval by a majority of
the total votes cast on the proposal, in person or by proxy, at a
meeting of the shareholders of the Company held in accordance with
the Company's Articles of Incorporation and by-laws, of the issuance
by the Company of shares of Common Stock exceeding the Issuable
Maximum as a consequence of the conversion of Series 1998-A1
Preferred Stock into Common Stock at a price less than the greater
of the book or market value on the Original Issue Date as and to the
extent required pursuant to Rule 4460(i) of the Nasdaq Stock Market
(or any successor or replacement provision thereof).
(iv) In no event shall a Holder be permitted to convert any
shares of Series 1998-A1 Preferred Stock in excess of the number of
such shares upon the conversion of which, (x) the number of shares
<PAGE>
of Common Stock beneficially owned by such Holder (other than shares
of Common Stock issuable upon conversion of shares of Series 1998-A1
Preferred Stock) plus (y) the number of shares of Common Stock
issuable upon the conversion of such shares of Series 1998-A1
Preferred Stock, would be equal to or exceed (z) 4.999% of the
number of shares of Common Stock then issued and outstanding,
including shares issuable on conversion of the Series 1998-A1
Preferred Stock held by such Holder after application of this
Section 5(a)(iv). As used herein, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules thereunder. To the extent that the limitation contained in
this paragraph 5(a)(iv) applies, the determination of whether shares
of Series 1998-A1 Preferred Stock are convertible (in relation to
other securities owned by a Holder) and of which shares of Series
1998-A1 Preferred Stock are convertible shall be in the sole
discretion of such Holder, and the submission of shares of Series
1998-A1 Preferred Stock for conversion shall be deemed to be such
Holder's determination of whether such shares of Series 1998-A1
Preferred Stock are convertible (in relation to other securities
owned by a Holder) and of which shares of Series 1998-A1 Preferred
Stock are convertible, in each case subject to such aggregate
percentage limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination. This paragraph
may be amended (i) in order to clarify an ambiguity or otherwise to
give effect to such limitation, by the Board of Directors of the
Company and the Holders of two-thirds (2/3) of the shares of Series
1998-A1 Preferred Stock then outstanding and (ii) for any other
reason, with the further consent of the Holders of a majority of the
shares of Common Stock then outstanding, to the extent permitted by
applicable law and subject to the rights and preferences of any
securities ranking senior thereto. Nothing contained herein shall be
deemed to restrict the right of a Holder to convert such shares of
Series 1998-A1 Preferred Stock at such time as such conversion will
not violate the provisions of this paragraph. The provisions of this
Section 5(a)(iv) may be waived by a Holder of Series 1998-A1
Preferred Stock as to itself (and solely as to itself) upon not less
than 65 days prior notice to the Company, and the provisions of this
Section 5(a)(iv) shall continue to apply until such 65th day (or
later, if stated in the notice of waiver). The limitations of this
Section 5(a)(iv) shall not apply to any conversion pursuant to
Section 5(a)(ii).
(b) Not later than three (3) Trading Days after any Conversion
Date, the Company will deliver to the holder (i) a certificate or
certificates which shall be free of restrictive legends and trading
restrictions (other than those required by Section 3. l(b) of the
Purchase Agreement) representing the number of shares of Common Stock
being acquired upon the conversion of shares of Series 1998-A1 Preferred
Stock (subject to reduction pursuant to Section 5(a)(iii) and Section
5(a)(iv), (ii) one or more certificates representing the number of shares
of Series 1998-A1 Preferred Stock not converted, unless the Holder
otherwise elects to instead have such ownership indicated on the
Company's ledgers, (iii) a bank check in the amount of accrued and unpaid
dividends (if the Company has elected to pay accrued dividends in cash)
and (iv) if the Company has elected to pay accrued dividends in shares of
Common Stock, certificates, which shall be free of restrictive legends
and trading restrictions (other than those required by the Purchase
Agreement), representing such number of Shares of Common Stock as equals
such dividend divided by the Conversion Price on the Conversion Date;
<PAGE>
provided, however, that the Company shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon
conversion of any shares of Series 1998-A1 Preferred Stock until
certificates evidencing such shares of Series 1998-A1 Preferred Stock are
either delivered for conversion to the Company for the Series 1998-A1
Preferred Stock or Common Stock, or the holder of such Series 1998-A1
Preferred Stock notifies the Company that such certificates have been
lost, stolen or destroyed and provides a bond (or other adequate
security) reasonably satisfactory to the Company to indemnify the Company
from any loss incurred by it in connection therewith. The Company shall,
upon request of the holder, use its best efforts to deliver any
certificate or certificates required to be delivered by the Company under
this Section electronically through the Depository Trust Corporation or
another established clearing corporation performing similar functions. If
in the case of any Conversion Notice such certificate or certificates,
including for purposes hereof, any shares of Common Stock to be issued on
the Conversion Date on account of accrued but unpaid dividends hereunder,
are not delivered to or as directed by the applicable holder by the third
Trading Day after the Conversion Date, the holder shall be entitled by
written notice to the Company at any time on or before its receipt of
such certificate or certificates thereafter, to rescind such conversion,
in which event the Company shall immediately return the certificates
representing the shares of Series 1998-A1 Preferred Stock tendered for
conversion. If the Company fails to deliver to the Holder such
certificate or certificates pursuant to this Section, including for
purposes hereof, any shares of Common Stock to be issued on the
Conversion Date on account of accrued but unpaid dividends hereunder,
prior to the fifth Trading Day after the Conversion Date (the "Delivery
Date"), the Company shall pay to such Holder, in cash, as liquidated
damages and not as a penalty, $2,000 per day for each of the first two
days after the Delivery Date and $5,000 per day thereafter until such
certificates are delivered. Notwithstanding the foregoing, for the first
three occurrences of such a failure to timely deliver such certificates
on the Delivery Date, the Company shall not be required to pay liquidated
damages for the first five days after the Delivery Date, but shall pay
$2,000 per day for each of the first five days after such initial five
day period and $5,000 per day thereafter. If the Company fails to deliver
to the Holder such certificate or certificates pursuant to this Section
prior to the 15th day after the Conversion Date, the Company shall, at
the Holder's option (i) redeem, from funds legally available therefor at
the time of such redemption, such number of shares of Series 1998-A1
Preferred Stock then held by such Holder, as requested by such Holder,
and (ii) pay all accrued but unpaid dividends on account of the Series
1998-A1 Preferred Stock for which the Company shall have failed to issue
Common Stock certificates hereunder, in cash. The redemption price shall
be equal to the sum of (A) the aggregate of all accrued but unpaid
dividends, plus (B) the number of shares of Series 1998-A1 Preferred
Stock then held by such Holder multiplied by (1) the average Per Share
Market Value for the five Trading Days immediately preceding (x) the
Conversion Date or (y) the date of payment in full by the Company of such
prepayment price, whichever is greater, multiplied by, (2) the Conversion
Ratio calculated on the Conversion Date. If the Holder has requested that
the Company redeem shares of Series 1998-A1 Preferred Stock pursuant to
this Section and the Company fails for any reason to pay the redemption
price under (2) above within seven days after such notice is deemed
delivered pursuant to Section 5(i), the Company will pay interest on the
redemption price at a rate of 15% per annum, in cash to such Holder,
accruing from such seventh day until the redemption price and any accrued
interest thereon is paid in full. Nothing herein shall limit a Holder's
<PAGE>
right to pursue actual damages for the Company's failure to deliver
certificates representing shares of Common Stock upon conversion within
the period specified herein (including, without limitation, damages
relating to any purchase of shares of Common Stock by such Holder to make
delivery on a sale effected in anticipation of receiving certificates
representing shares of Common Stock upon conversion, such damages to be
in an amount equal to (A) the aggregate amount paid by such holder for
the shares of Common Stock so purchased minus (B) the aggregate amount of
net proceeds, if any, received by such Holder from the sale of the shares
of Common Stock issued by the Company pursuant to such conversion), and
such Holder shall have the right to pursue all remedies available to it
at law or in equity (including, without limitation, a decree of specific
performance and/or injunctive relief).
(c) (i) The conversion price for each share of Series 1998-A1
Preferred Stock (the "Conversion Price") in effect on any Conversion
Date shall be the lesser of (a) 110% of the average Per Share Market
Value for the fifteen Trading Days immediately preceding the
Original Issue Date (the "Initial Conversion Price") and (b) 100% of
the average of the four lowest closing bid prices of the Common
Stock on the Nasdaq Stock Market or other registered national
exchange on which the Common Stock is then listed or traded, during
the twenty Trading Days prior to the date of the applicable
Conversion Notice (the "Variable Conversion Price"); provided,
however, that, (a) if the Underlying Shares Registration Statement
is not filed on or prior to the 30th day after the Original Issue
Date, or (b) the Company fails to file with the Commission a request
for acceleration in accordance with Rule 12dl-2 promulgated under
the Exchange Act within eight (8) Trading Days of the date that the
Company is notified (orally or in writing, whichever is earlier) by
the Commission that an Underlying Shares Registration Statement will
not be "reviewed," or not subject to further review, or (c) if the
Underlying Shares Registration Statement is not declared effective
by the Commission on or prior to the 90th day after the Original
Issue Date, or (d) if such Underlying Shares Registration Statement
is filed with and declared effective by the Commission but
thereafter ceases to be effective as to all Registrable Securities
(as such term is defined in the Registration Rights Agreement) at
any time prior to the expiration of the "Effectiveness Period" (as
such term as defined in the Registration Rights Agreement), without
being succeeded within fifteen Trading Days by a subsequent
Underlying Shares Registration Statement filed with and declared
effective by the Commission, or (e) if trading in the Common Stock
shall be suspended or if the Common Stock is delisted for any reason
for more than three Trading Days in the aggregate, or (f) if the
conversion rights of the Holders are suspended for any reason, or
(g) if the Company breaches in a material respect any covenant or
other material term or condition to this Certificate of
Designations, the Purchase Agreement (other than a representation or
warranty contained therein), the Registration Rights Agreement or
any other agreement, document, certificate or other instrument
delivered in connection with the transactions contemplated thereby,
and such breach continues for a period of thirty days after written
notice thereof to the Company, or (h) if the Company elects to
convene a shareholders meeting pursuant to Section 5(a)(iii) and
fails to convene a meeting of shareholders within the time periods
specified in Section 5(a)(iii) or does so convene a meeting of
shareholders within such time period but fails to obtain Shareholder
Approval at such meeting, or (i) if the Company has breached Section
<PAGE>
3(p) of the Registration Rights Agreement (any such failure or
breach being referred to as an "Event," and for purposes of clauses
(a), (c) and (f) the date on which such Event occurs, or for
purposes of clause (b) the date on which such eight day period is
exceeded, or for purposes of clause (d) the date which such fifteen
Trading Day-period is exceeded, or for purposes of clause (e) the
date on which such three Trading Day period is exceeded, or for
clause (g) the date on which such thirty day period is exceeded,
being referred to as "Event Date"), the Conversion Price shall be
decreased by 2% as of the Event Date and shall be decreased an
additional 2% as of each monthly anniversary of the Event Date until
the earlier to occur of the second month anniversary after the Event
Date and such time as the applicable Event is cured. Commencing the
second month anniversary after the Event Date, the Company shall pay
to the Holders $40,000 (each holder being entitled to receive such
portion of such amount as equals its pro rata portion of the Series
1998-A1 Preferred Stock). Any decrease in the Conversion Price
pursuant to this Section shall continue notwithstanding the fact
that the Event causing such decrease has been subsequently cured.
Additionally, if the Company has failed to file a registration
statement as required by the Registration Rights Agreement within
120 days after the date it was required to file such registration
statement pursuant to the Registration Rights Agreement or if any
registration statement required to be filed by the Company pursuant
to the Registration Rights Agreement has not been declared effective
by the Commission within 240 days of the date it was required to
file such registration statement pursuant to the Registration Rights
Agreement or if the Company has let any registration statement
required to be filed pursuant to the Registration Rights Agreement
lapse for a period of 60 consecutive days, then each Holder shall
have the option to require the Company to redeem the balance of such
Holder's Series 1998-A1 Preferred Stock, together with all accrued
but unpaid dividends, in cash at a redemption price equal to the sum
of (A) the aggregate of all accrued but unpaid dividends, plus (B)
the number of shares of Series 1998-A1 Preferred Stock then held by
such holder multiplied by (l) the average Per Share Market Value for
the five Trading Days immediately preceding (x) the date of the
redemption request notice or (y) the date of payment in full by the
Company of such prepayment price, whichever is greater, multiplied
by, (2) the Conversion Ratio calculated on the redemption date. If
the Holder has requested that the Company redeem shares of Series
1998-A1 Preferred Stock pursuant to this Section and the Company
fails for any reason to pay the redemption price as calculated above
within seven days after such notice is deemed delivered, the Company
will pay interest on the redemption price at a rate of 15% per
annum, in cash to such holder, accruing from such seventh day until
the redemption price and any accrued interest thereon is paid in
full. The provisions of this Section are not exclusive and shall in
no way limit the Company's obligations under the Registration Rights
Agreement.
(ii) If the Company, at any time while any shares of Series
1998-A1 Preferred Stock are outstanding, (a) shall pay a stock
dividend or otherwise make a distribution or distributions on shares
of its Junior Securities (other than with respect to the Series 1998-
A2 Preferred Stock or Series 1998-A3 Preferred Stock payable in
shares of Common Stock, (b) subdivide outstanding shares of Common
Stock into a larger number of shares, (c) combine outstanding shares
of Common Stock into a smaller number of shares, or (d) issue by
<PAGE>
reclassification of shares of Common Stock any shares of capital
stock of the Company, the Initial Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number
of shares of Common Stock (excluding treasury shares, if any)
outstanding before such event and of which the denominator shall be
the number of shares of Common Stock outstanding after such event.
Any adjustment made pursuant to this Section 5(c)(ii) shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such dividend or distribution and
shall become effective immediately after the effective date in the
case of a subdivision, combination or re-classification.
(iii) If the Company, at any time while any shares of
Series 1998-A1 Preferred Stock are outstanding, shall issue rights
or warrants to all holders of Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per
share less than the Per Share Market Value of Common Stock at the
record date mentioned below, the Initial Conversion Price shall be
multiplied by a fraction, of which the denominator shall be the
number of shares of Common Stock (excluding treasury shares, if any)
outstanding on the date of issuance of such rights or warrants plus
the number of additional shares of Common Stock offered for
subscription or purchase, and of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any)
outstanding on the date of issuance of such rights or warrants plus
the number of shares which the aggregate offering price of the total
number of shares so offered would purchase at such Per Share Market
Value. Such adjustment shall be made whenever such rights or
warrants are issued, and shall become effective immediately after
the record date for the determination of shareholders entitled to
receive such rights or warrants. However, upon the expiration of any
right or warrant to purchase Common Stock the issuance of which
resulted in an adjustment in the Initial Conversion Price pursuant
to this Section 5(c)(iii), if any such right or warrant shall expire
and shall not have been exercised, the Initial Conversion Price
shall immediately upon such expiration be re-computed and effective
immediately upon such expiration be increased to the price which it
would have been (but reflecting any other adjustments in the Initial
Conversion Price made pursuant to the provisions of this Section 5
after the issuance of such rights or warrants) had the adjustment of
the Initial Conversion Price made upon the issuance of such rights
or warrants been made on the basis of offering for subscription or
purchase only that number of shares of Common Stock actually
purchased upon the exercise of such rights or warrants actually
exercised.
(iv) If the Company, at any time while shares of Series 1998-A1
Preferred Stock are outstanding, shall distribute to all holders of
Common Stock (and not to holders of Series 1998-A1 Preferred Stock)
evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security (excluding those referred to
in Sections 5(c)(ii) and (iii) above), then in each such case the
Initial Conversion Price at which each share of Series 1998-A1
Preferred Stock shall thereafter be convertible shall be determined
by multiplying the Conversion Price in effect immediately prior to
the record date fixed for determination of shareholders entitled to
receive such distribution by a fraction of which the denominator
shall be the Per Share Market Value of Common Stock determined as of
the record date mentioned above, and of which the numerator shall be
<PAGE>
such Per Share Market Value of the Common Stock on such record date
less the then fair market value at such record date of the portion
of such assets or evidence of indebtedness so distributed applicable
to one outstanding share of Common Stock as determined by the Board
of Directors in good faith; provided, however, that in the event of
a distribution exceeding ten percent of the net assets of the
Company, such fair market value shall be determined by a nationally
recognized or major regional investment banking firm or firm of
independent certified public accountants of recognized standing
(which may be the firm that regularly examines the financial
statements of the Company) (an "Appraiser") selected in good faith
by the holders of a majority in interest of the shares of Series
1998-A1 Preferred Stock then outstanding; and provided, further,
that the Company, after receipt of the determination by such
Appraiser shall have the right to select an additional Appraiser, in
good faith, in which case the fair market value shall be equal to
the average of the determinations by each such Appraiser. In either
case the adjustments shall be described in a statement provided to
the holders of Series 1998-A1 Preferred Stock of the portion of
assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and
shall become effective immediately after the record date mentioned
above.
(v) All calculations under this Section 5 shall be made to the
nearest cent or the nearest l/l00th of a share, as the case may be.
(vi) Whenever the Conversion Price is adjusted pursuant to
Section 5(c)(ii),(iii) or (iv), the Company shall promptly mail to
each holder of Series 1998-A1 Preferred Stock, a notice setting
forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment.
(vii) In case of any reclassification of the Common Stock,
any consolidation or merger of the Company with or into another
person pursuant to which (i) a majority of the Company's Board of
Directors will not constitute a majority of the board of directors
of the surviving entity or (ii) less than 65% of the outstanding
shares of the capital stock of the surviving entity will be held by
the same shareholders of the Company prior to such reclassification,
consolidation or merger, the sale or transfer of all or
substantially all of the assets of the Company or any compulsory
share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, the holders of the Series 1998-
A1 Preferred Stock then outstanding shall have the right thereafter
to convert such shares only into the shares of stock and other
securities, cash and property receivable upon or deemed to be held
by holders of Common Stock following such reclassification,
consolidation, merger, sale, transfer or share exchange, and the
holders of the Series 1998-A1 Preferred Stock shall be entitled upon
such event to receive such amount of securities, cash or property as
the shares of the Common Stock of the Company into which such shares
of Series 1998-A1 Preferred Stock could have been converted
immediately prior to such reclassification, consolidation, merger,
sale, transfer or share exchange would have been entitled; provided,
however, that if such reclassification, consolidation or merger is
approved by the Company's Board of Directors, each Holder shall have
the option to require the Company to redeem, from funds legally
<PAGE>
available therefor at the time of such redemption, its shares of
Series 1998-A1 Preferred Stock at a price per share equal to the
product of (i) the average Per Share Market Value for the five
Trading Days immediately preceding (1) the effective date, the date
of the closing or the date of the announcement, as the case may be,
of the reclassification, consolidation, merger, sale, transfer or
share exchange the triggering such redemption right or (2) the date
of payment in full by the Company of the redemption price hereunder,
whichever is greater, and (ii) the Conversion Ratio calculated on
the date of the closing or the effective date, as the case may be,
of the reclassification, consolidation, merger, sale, transfer or
share exchange triggering such redemption right, as the case may be.
The entire redemption price shall be paid in cash, and the terms of
payment of such redemption price shall be subject to the provisions
set forth in Section 6(b). The terms of any such consolidation,
merger, sale, transfer or share exchange shall include such terms so
as to continue to give to the holder of Series 1998-A1 Preferred
Stock the right to receive the securities, cash or property set
forth in this Section 5(c)(vii) upon any conversion or redemption
following such consolidation, merger, sale, transfer or share
exchange. This provision shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or
share exchanges.
(viii) If:
A. the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
B. the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
C. the Company shall authorize the granting to all
holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock
of any class or of any rights; or
D. the approval of any shareholders of the Company shall
be required in connection with any reclassification
of the Common Stock of the Company, any consolidation
or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets
of the Company, of any compulsory share of exchange
whereby the Common Stock is converted into other
securities, cash or property; or
E. the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of
the affairs of the Company;
then the Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of Series 1998-A1 Preferred
Stock, and shall cause to be mailed to the Holders of Series 1998-A1
Preferred Stock at their last addresses as they shall appear upon
the stock books of the Company, at least 20 calendar days prior to
the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which
<PAGE>
the holders of Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange; provided, however, that
the failure to mail such notice or any defect therein or in the
mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. Holders are entitled
to convert shares of Series 1998-A1 Preferred Stock during the 20-
day period commencing the date of such notice to the effective date
of the event triggering such notice.
(ix) If the Company (i) makes a public announcement that it
intends to enter into a Change of Control Transaction (as defined
below) or (ii) any person, group or entity (including the Company,
but excluding a Holder or any affiliate of a Holder) publicly
announces a bona fide tender offer, exchange offer or other
transaction to purchase 50% or more of the Common Stock (such
announcement being referred to herein as a "Major Announcement" and
the date on which a Major Announcement is made, the "Announcement
Date"), then, in the event that a Holder seeks to convert shares of
Series 1998-A1 Preferred Stock on or following the Announcement
Date, the Conversion Price shall, effective upon the Announcement
Date and continuing through the earlier to occur of the consummation
of the proposed transaction or tender offer, exchange offer or other
transaction and the Abandonment Date (as defined below), be equal to
the Conversion Price in effect on the Conversion Date for such
Series 1998-A1 Preferred Stock. "Abandonment Date" means with
respect to any proposed transaction or tender offer, exchange offer
or other transaction for which a public announcement as contemplated
by this paragraph has been made, the date upon which the Company (in
the case of clause (i) above) or the person, group or entity (in the
case of clause (ii) above) publicly announces the termination or
abandonment of the proposed transaction or tender offer, exchange
offer or another transaction which caused this paragraph to become
operative.
(d) If at any time conditions shall arise by reason of action taken
by the Company which in the opinion of the Board of Directors are not
adequately covered by the other provisions hereof and which might
materially and adversely affect the rights of the holders of Series 1998-
A1 Preferred Stock (different than or distinguished from the effect
generally on rights of holders of any class of the Company's capital
stock) or if at any time any such conditions are expected to arise by
reason of any action contemplated by the Company, the Company shall mail
a written notice briefly describing the action contemplated and the
material adverse effects of such action on the rights of the holders of
Series 1998-A1 Preferred Stock at least 20 calendar days prior to the
effective date of such action, and an Appraiser selected by the holders
of majority in interest of the Series 1998-A1 Preferred Stock shall give
its opinion as to the adjustment, if any (not inconsistent with the
standards established in this Section 5), of the Conversion Price
(including, if necessary, any adjustment as to the securities into which
shares of Series 1998-A1 Preferred Stock may thereafter be convertible)
and any distribution which is or would be required to preserve without
<PAGE>
diluting the rights of the holders of shares of Series 1998-A1 Preferred
Stock; provided, however, that the Company, after receipt of the
determination by such Appraiser, shall have the right to select an
additional Appraiser, in good faith, in which case the adjustment shall
be equal to the average of the adjustments recommended by each such
Appraiser. The Board of Directors shall make the adjustment recommended
forthwith upon the receipt of such opinion or opinions or the taking of
any such action contemplated, as the case may be; provided, however, that
no such adjustment of the Conversion Price shall be made which in the
opinion of the Appraiser(s) giving the aforesaid opinion or opinions
would result in an increase of the Conversion Price to more than the
Conversion Price then in effect.
(e) The Company covenants that it will at all times reserve and
keep available out of its authorized and unissued Common Stock solely for
the purpose of issuance upon conversion of Series 1998-A1 Preferred Stock
and payment of dividends on Series 1998-A1 Preferred Stock, each as
herein provided, free from preemptive rights or any other actual
contingent purchase rights of persons other than the holders of Series
1998-A1 Preferred Stock, not less than such number of shares of Common
Stock as shall (subject to any additional requirements of the Company as
to reservation of such shares set forth in the Purchase Agreement) be
issuable (taking into account the adjustments and restrictions of Section
5(c)) upon the conversion of all outstanding shares of Series 1998-A1
Preferred Stock and payment of dividends hereunder. The Company covenants
that all shares of Common Stock that shall be so issuable shall, upon
issue, be duly and validly authorized, issued and fully paid,
nonassessable and freely tradable.
(f) Upon a conversion hereunder the Company shall not be required
to issue stock certificates representing fractions of shares of Common
Stock, but may if otherwise permitted, make a cash payment in respect of
any final fraction of a share based on the Per Share Market Value at such
time. If the Company elects not, or is unable, to make such a cash
payment, the holder of a share of Series 1998-A1 Preferred Stock shall be
entitled to receive, in lieu of the final fraction of a share, one whole
share of Common Stock.
(g) The issuance of certificates for shares of Common Stock on
conversion of Series 1998-A1 Preferred Stock shall be made without charge
to the holders thereof for any documentary stamp or similar taxes that
may be payable in respect of the issue or delivery of such certificate.
(h) Shares of Series 1998-A1 Preferred Stock converted into Common
Stock shall be canceled and shall have the status of authorized but
unissued shares of undesignated stock.
(i) Any and all notices or other communications or deliveries to be
provided by the holders of the Series 1998-A1 Preferred Stock hereunder,
including, without limitation, any Conversion Notice, shall be in writing
and delivered personally, by facsimile or sent by a nationally recognized
overnight courier service, addressed to the attention of the Chief
Executive Officer and to the Secretary of the Company at the facsimile
telephone number or address of the principal place of business of the
Company as set forth in the Purchase Agreement. Any and all notices or
other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile or
sent by a nationally recognized overnight courier service, addressed to
each Holder of Series 1998-A1 Preferred Stock at the facsimile telephone
<PAGE>
number or address of such holder appearing on the books of the Company,
or if no such facsimile telephone number or address appears, at the
principal place of business of the Holder. Any notice or other
communication or deliveries hereunder shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone
number specified in this Section prior to 7:00 p.m. (Eastern Time), (ii)
the date after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in
this Section later than 7:00 p.m. (New York Time) on any date and earlier
than 11:59 p.m. (Eastern Time) on such date, (iii) upon receipt, if sent
by a nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given.
Section 6. Redemptions. (a) All outstanding and unconverted
shares of Series 1998-A1 Preferred Stock on the third anniversary of the
Original Issue Date shall be converted pursuant to Section 5(a)(ii) or
redeemed by the Company pursuant to this Section 6(a), from funds legally
available therefor at a price per share equal to the product of (i) the
average Per Share Market Value for the five Trading Days immediately
preceding (1) the third anniversary of the Original Issue Date or (2) the
date of payment in full by the Company of the redemption price hereunder,
whichever is greater, and (ii) the Conversion Ratio calculated on the
third anniversary of the Original Issue Date, plus any accrued but unpaid
dividends on such shares. Thereafter, all shares of Series 1998-A1
Preferred Stock shall cease to be outstanding and shall have the status
of authorized but undesignated stock. The entire redemption price shall
be paid in cash.
(b) If any portion of the applicable redemption price under Section
6(a) shall not be paid by the Company within seven calendar days after
the date due, interest shall accrue thereon at the rate of 15% per annum
until the redemption price plus all such interest is paid in full (which
amount shall be paid as liquidated damages and not as a penalty). In
addition, if any portion of such redemption price remains unpaid for more
than 7 calendar days after the date due, the holder of the Series 1998-A1
Preferred Stock subject to such redemption may elect, by written notice
to the Company given within 30 days after the date due, to either (i)
demand conversion in accordance with the formula and the time frame
therefor set forth in Section 5 of all of the shares of Series 1998-A1
Preferred Stock for which such redemption price, plus accrued liquidated
damages thereof, has not been paid in full (the "Unpaid Redemption
Shares"), in which event the Per Share Market Price for such shares shall
be the lower of the Per Share Market Price calculated on the date such
redemption price was originally due and the Per Share Market Price as of
the holder's written demand for conversion, or (ii) invalidate ab initio
such redemption, notwithstanding anything herein contained to the
contrary. If the holder elects option (i) above, the Company shall within
five Trading Days of its receipt of such election deliver to the holder
the shares of Common Stock issuable upon conversion of the Unpaid
Redemption Shares subject to such holder conversion demand and otherwise
perform its obligations hereunder with respect thereto; or, if the Holder
elects option (ii) above, the Company shall promptly, and in any event
not later than five Trading Days from receipt of holder's notice of such
election, return to the holder all of the Unpaid Redemption Shares.
<PAGE>
Section 7. Definitions. For the purposes hereof, the following
terms shall have the following meanings:
"Common Stock" means the Company's common stock, $.10 par value per
share, of the Company and stock of any other class into which such shares
may hereafter have been reclassified or changed.
"Conversion Ratio" means, at any time, a fraction, of which the
numerator is Stated Value plus accrued but unpaid dividends (including
any accrued but unpaid interest thereon) but only to the extent not paid
in shares of Common Stock in accordance with the terms hereof, and of
which the denominator is the Conversion Price at such time.
"Junior Securities" means the Common Stock and all other equity
securities of the Company which are junior in rights and liquidation
preference to the Series 1998-A1 Preferred Stock.
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"Original Issue Date" shall mean the date of the first issuance of
any shares of the Series 1998-A1 Preferred Stock regardless of the number
of transfers of any particular shares of Series 1998-A1 Preferred Stock
and regardless of the number of certificates which may be issued to
evidence such Series 1998-A1 Preferred Stock.
"Per Share Market Value" means on any particular date (a) the
closing bid price per share of the Common Stock on such date on the
Nasdaq Stock Market or other registered national stock exchange on which
the Common Stock is then listed or if there is no such price on such
date, then the closing bid price on such exchange or quotation system on
the date nearest preceding such date, or (b) if the Common Stock is not
listed then on the Nasdaq Stock Market or any registered national stock
exchange, the closing bid price for a share of Common Stock in the over-
the-counter market, as reported by the Nasdaq Stock Market or in the
National Quotation Bureau Incorporated or similar organization or agency
succeeding to its functions of reporting prices) at the close of business
on such date, or (c) if the Common Stock is not then reported by the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the
"Pink Sheet" quotes for the relevant conversion period, as determined in
good faith by the holder, or (d) if the Common Stock is not then publicly
traded the fair market value of a share of Common Stock as determined by
an Appraiser selected in good faith by the holders of a majority in
interest of the shares of the Series 1998-A1 Preferred Stock; provided,
however, that the Company, after receipt of the determination by such
Appraiser, shall have the right to select an additional Appraiser, in
which case, the fair market value shall be equal to the average of the
determinations by each such Appraiser; and provided, further that all
determinations of the Per Share Market Value shall be appropriately
adjusted for any stock dividends, stock splits or other similar
transactions during such period.
"Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.
<PAGE>
"Purchase Agreement" means the Convertible Series 1998-A1 Preferred
Stock Purchase Agreement, dated as of the Original Issue Date, among the
Company and the original holders of the Series 1998-A1 Preferred Stock.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Original Issue Date, by and among the Company
and the original Holders.
"Trading Day" means (a) a day on which the Common Stock is traded on
the Nasdaq Stock Market or other registered national stock exchange on
which the Common Stock has been listed, or (b) if the Common Stock is not
listed on the Nasdaq Stock Market or any registered national stock
exchange, a day or which the Common Stock is traded in the over-the-
counter market, as reported by the OTC Bulletin Board, or (c) if the
Common Stock is not quoted on the OTC Bulletin Board, a day on which the
Common Stock is quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or
agency succeeding its functions of reporting prices); provided, however,
that in the event that the Common Stock is not listed or quoted as set
forth in (a), (b) and (c) hereof, then Trading Day shall mean any day
except Saturday, Sunday and any day which shall be a legal holiday or a
day on which banking institutions in the State of New York are authorized
or required by law or other government action to close.
"Underlying Shares" means the number of shares of Common Stock into
which the Shares are convertible and the shares or Common Stock issuable
upon payment of dividends thereon, in accordance with the terms hereof
and the Purchase Agreement.
Section 8. Notices. Except as otherwise provided in the event
of con version of shares of Series 1998-A1 Preferred Stock, all notices
or other communications required hereunder shall be in writing and shall
be sent either (a) by courier, or (b) by telecopy as well as by
registered or certified mail, and shall be regarded as properly given in
the case of a courier upon actual delivery to the proper place of
address; in the case of telecopy, on the day following the date of
transmission if properly addressed and sent without transmission error to
the correct number and receipt is confirmed by telephone within 48 hours
of the transmission; in the case of a letter for which a telecopy could
not be successfully transmitted or receipt of which could not be
confirmed as herein provided, three days after the registered or
certified mailing date if the letter is properly addressed and postage
prepaid; and shall be regarded as properly addressed if sent to the
parties or their representatives at the addresses given below:
To the Company:uniView Technologies Corporation
10911 Petal Street
Dallas, Texas 75238
Attn: Patrick A. Custer
Phone: (214) 503-8880
Fax: (214) 503-8523
To the Holders:________________________________
________________________________
Attn: __________________________
Phone: _________________________
Fax: ___________________________
or such other address as any of the above may have furnished to the other
parties in writing by registered mail, return receipt requested.
<PAGE>
EXHIBIT A
NOTICE OF CONVERSION
AT THE ELECTION OF HOLDER
(To be Executed by the
Registered Holder in order to
Convert shares of Series 1998-
A1 Preferred Stock)
The undersigned hereby elects to convert the number of shares of
Series 1998-A1 Convertible Preferred Stock indicated below, into shares
of common stock, par value $.10 per share (the "Common Stock"), of
uniView Technologies Corporation (the "Company") according to the
conditions hereof, as of the date written below. If shares are to be
issued in the name of a person other than undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged
to the holder for any conversion, except for such transfer taxes, if any.
Conversion calculations:
_____________________________________
Date to Effect Conversion
_____________________________________
Number of shares of Series 1998-A1
Preferred Stock to be Converted
_____________________________________
Number of shares of Common Stock to
be Issued
_____________________________________
Applicable Conversion Price
_____________________________________
Signature
_____________________________________
Name
_____________________________________
Address
<PAGE>
EXHIBIT B
NOTICE OF CONVERSION AT
THE ELECTION OF THE COMPANY
The undersigned in the name and on behalf of uniView Technologies
Corporation (the "Company") hereby notifies the addressee hereof that the
Company hereby elects to exercise its right to convert [____] shares of
its 5% Series 1998-A1 Convertible Preferred Stock (the "Series 1998-A1
Preferred Stock") held by the Holder into shares of common stock, par
value $.10 per share (the "Common Stock") of the Company according to the
terms hereof, as of the date written below. No fee will be charged to the
Holder for any conversion hereunder, except for such transfer taxes, if
any which may be incurred by the Company if shares are to be issued in
the name of a person other than the person to whom this notice is
addressed.
Conversion calculations:
_____________________________________
Date to Effect Conversion
_____________________________________
Number of shares of Series 1998-A1
Preferred Stock to be Converted
_____________________________________
Number of shares of Common Stock to
be Issued
_____________________________________
Applicable Conversion Price
_____________________________________
Name of Holder
_____________________________________
Address of Holder
<PAGE>
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS. NEITHER
THIS WARRANT NOR ANY OF SUCH SHARES MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF REGISTRATION UNDER SAID ACT AND UNDER APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS OR EXEMPTIONS FROM SUCH
REGISTRATION
_______________ Warrant No. 1998-A1.____
UNIVIEW TECHNOLOGIES CORPORATION
STOCK PURCHASE WARRANT
Registered Owner:
This certifies that, for value received, uniView Technologies
Corporation, a Texas corporation, the ("Company") grants the following
rights to the Registered Owner, or assigns, of this Warrant:
(a) Issue. Upon tender (as defined in section (e) hereof) to the
Company, the Company shall issue to the Registered Owner, or assigns, up
to the number of shares specified in paragraph (b) hereof of fully paid
and nonassessable shares of Common Stock that the Registered Owner, or
assigns, is otherwise entitled to purchase.
(b) Number of Shares. The total number of shares of Common Stock
that the Registered Owner, or assigns, of this Warrant is entitled to
receive upon exercise of this Warrant is ________________ shares, subject
to adjustment from time to time as set forth in paragraph (f) below. The
Company shall at all times reserve and hold available sufficient shares
of Common Stock to satisfy all conversion and purchase rights represented
by outstanding convertible securities, options and warrants, including
this Warrant. The Company covenants and agrees that all shares of Common
Stock that may be issued upon the exercise of this Warrant shall, upon
issuance, be duly and validly issued, fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the purchase and
the issuance of the shares.
(c) Exercise Price. The exercise price of this Warrant, the price
at which the shares of stock purchasable upon exercise of this Warrant
may be purchased, is $3.00 per share, subject to adjustment from time to
time pursuant to the provisions of paragraph (f) below (the "Exercise
Price").
(d) Exercise Period. This Warrant may only be exercised beginning
on June 30, 1998 and up to and including June 30, 2001 three years after
the date of the Warrant, less one day. If not exercised during this
period, this Warrant and all rights granted under this Warrant shall
expire and lapse.
(e) Tender. This Warrant may be exercised, in whole or in part, by
actual delivery of (i) the Exercise Price in cash, (ii) a duly executed
Warrant Exercise Form, a copy of which is attached to this Warrant as
Exhibit A, properly executed by the Registered Owner, or assigns, of this
Warrant, and (iii) by surrender of this Warrant. The payment and Warrant
Exercise Form must be delivered, personally or by mail, to the registered
office of the Company. Documents sent by mail shall be deemed to be
delivered when they are received by the Company.
<PAGE>
(f) Adjustment of Exercise Price.
(i) If the Company, at any time while this Warrant is
outstanding, (a) shall pay a stock dividend on its Common Stock, (b)
subdivide outstanding shares of Common Stock into a larger number of
shares, (c) combine outstanding shares of Common Stock into a smaller
number of shares, or (d) issue by reclassification of shares of Common
Stock any shares of capital stock of the Company, the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any)
outstanding before such event and of which the denominator shall be the
number of shares of Common Stock outstanding after such event. Any
adjustment made pursuant to this paragraph (f)(i) shall become effective
immediately after the record date for the determination of shareholders
entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
(ii) If the Company, at any time while this Warrant is
outstanding, shall issue rights or warrants to all holders of Common
Stock entitling them to subscribe for or purchase shares of Common Stock
at a price per share less than the Per Share Market Value (as defined
below) of Common Stock at the record date mentioned below, the Exercise
Price shall be multiplied by a fraction, of which the denominator shall
be the number of shares of Common Stock (excluding treasury shares, if
any) outstanding on the date of issuance of such rights or warrants plus
the number of additional shares of Common Stock offered for subscription
or purchase, and of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding on the date
of issuance of such rights or warrants plus the number of shares which
the aggregate offering price of the total number of shares so offered
would purchase at such Per Share Market Value. Such adjustment shall be
made whenever such rights or warrants are issued, and shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such rights or warrants. However, upon
the expiration of any right or warrant to purchase Common Stock the
issuance of which resulted in an adjustment in the Exercise Price
pursuant to this paragraph (f)(ii), if any such right or warrant shall
expire and shall not have been exercised, the Exercise Price shall
immediately upon such expiration be re-computed and effective immediately
upon such expiration be increased to the price which it would have been
(but reflecting any other adjustments in the Exercise Price made pursuant
to the provisions of section (f) after the issuance of such rights or
warrants) had the adjustment of the Exercise Price made upon the issuance
of such rights or warrants been made on the basis of offering for
subscription or purchase only that number of shares of Common Stock
actually purchased upon the exercise of such rights or warrants actually
exercised.
(iii) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock evidences of
its indebtedness or assets or rights or warrants to subscribe for or
purchase any security (excluding those referred to in paragraphs (f)(i)
and (ii) above), then in each such case the Exercise Price at which the
Warrant shall thereafter be convertible shall be determined by
multiplying the Exercise Price in effect immediately prior to the record
date fixed for determination of shareholders entitled to receive such
distribution by a fraction of which the denominator shall be the Per
Share Market Value of Common Stock determined as of the record date
<PAGE>
mentioned above, and of which the numerator shall be such Per Share
Market Value of the Common Stock on such record date less the then fair
market value at such record date of the portion of such assets or
evidence of indebtedness so distributed applicable to one outstanding
share of Common Stock as determined by the Board of Directors in good
faith; provided, however, that in the event of a distribution exceeding
ten percent of the net assets of the Company, such fair market value
shall be determined by a nationally recognized or major regional
investment banking firm or firm of independent certified public
accountants of recognized standing (which may be the firm that regularly
examines the financial statements of the Company) (an "Appraiser")
selected in good faith by the holder of the Warrant; and provided,
further, that the Company, after receipt of the determination by such
Appraiser shall have the right to select an additional Appraiser, in good
faith, in which case the fair market value shall be equal to the average
of the determinations by each such Appraiser. In either case the
adjustments shall be described in a statement provided to the holder of
the Warrant of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of Common
Stock. Such adjustment shall be made whenever any such distribution is
made and shall become effective immediately after the record date
mentioned above.
(iv) All calculations under this section (f) shall be made to
the nearest cent or the nearest l/l00th of a share, as the case may be.
(v) Whenever the Exercise Price is adjusted pursuant to
paragraphs (f)(i), (ii) or (iii), the Company shall promptly mail to the
holder of the Warrant, a notice setting forth the Exercise Price after
such adjustment and setting forth a brief statement of the facts
requiring such adjustment.
(vi) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person
pursuant to which (i) a majority of the Company's Board of Directors will
not constitute a majority of the board of directors of the surviving
entity or (ii) less than 65% of the outstanding shares of the capital
stock of the surviving entity will be held by the same shareholders of
the Company prior to such reclassification, consolidation or merger, the
sale or transfer of all or substantially all of the assets of the Company
or any compulsory share exchange pursuant to which the Common Stock is
converted into other securities, cash or property, the holder of the
Warrant shall have the right thereafter to convert the Warrant only into
the shares of stock and other securities, cash and property receivable
upon or deemed to be held by holders of Common Stock following such
reclassification, consolidation, merger, sale, transfer or share
exchange, and the holder of the Warrant shall be entitled upon such event
to receive such amount of securities, cash or property as the shares of
the Common Stock of the Company into which the Warrant could have been
converted immediately prior to such reclassification, consolidation,
merger, sale, transfer or share exchange would have been entitled;
provided, however, that if such reclassification, consolidation or merger
is approved by the Company's Board of Directors, the holder of the
Warrant shall have the option to require the Company to redeem, from
funds legally available therefor at the time of such redemption, the
Warrant at a price per share equal to the product of (i) the average Per
Share Market Value for the five Trading Days immediately preceding (1)
the effective date, the date of the closing or the date of the
announcement, as the case may be, of the reclassification, consolidation,
<PAGE>
merger, sale, transfer or share exchange the triggering such redemption
right or (2) the date of payment in full by the Company of the redemption
price hereunder, whichever is greater, and (ii) the Exercise Price
calculated on the date of the closing or the effective date, as the case
may be, of the reclassification, consolidation, merger, sale, transfer or
share exchange triggering such redemption right, as the case may be. The
entire redemption price shall be paid in cash. The terms of any such
consolidation, merger, sale, transfer or share exchange shall include
such terms so as to continue to give to the holder of the Warrant the
right to receive the securities, cash or property set forth in this
paragraph (f)(vi) upon any conversion or redemption following such
consolidation, merger, sale, transfer or share exchange. This provision
shall similarly apply to successive reclassifications, consolidations,
mergers, sales, transfers or share exchanges.
(vii) If:
A. the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
B. the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
C. the Company shall authorize the granting to all holders of
the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of
any rights; or
D. the approval of any shareholders of the Company shall be
required in connection with any reclassification of the
Common Stock of the Company, any consolidation or merger
to which the Company is a party, any sale or transfer of
all or substantially all of the assets of the Company, of
any compulsory share of exchange whereby the Common Stock
is converted into other securities, cash or property; or
E. the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of
the Company;
then the Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of this Warrant, and shall cause
to be mailed to the holder of this Warrant at its address as it shall
appear below, at least 20 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be
taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to
become effective or close, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided, however, that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such notice.
The holder of this Warrant is entitled to exercise all or a portion of
<PAGE>
this Warrant during the 20-day period commencing the date of such notice
to the effective date of the event triggering such notice.
(g) Per Share Market Value. Per Share Market Value means on any
particular date (i) the closing bid price per share of the Common Stock
on such date on the Nasdaq Stock Market or other registered national
stock exchange on which the Common Stock is then listed or if there is no
such price on such date, then the closing bid price on such exchange or
quotation system on the date nearest preceding such date, or (ii) if the
Common Stock is not listed then on the Nasdaq Stock Market or any
registered national stock exchange, the closing bid price for a share of
Common Stock in the over-the-counter market, as reported by the Nasdaq
Stock Market or in the National Quotation Bureau Incorporated or similar
organization or agency succeeding to its functions of reporting prices)
at the close of business on such date, or (iii) if the Common Stock is
not then reported by the National Quotation Bureau Incorporated (or
similar organization or agency succeeding to its functions of reporting
prices), then the average of the "Pink Sheet" quotes for the relevant
conversion period, as determined in good faith by the holder, or (d) if
the Common Stock is not then publicly traded the fair market value of a
share of Common Stock as determined by an Appraiser selected in good
faith by the holder of this Warrant; provided, however, that the Company,
after receipt of the determination by such Appraiser, shall have the
right to select an additional Appraiser, in which case, the fair market
value shall be equal to the average of the determinations by each such
Appraiser; and provided, further that all determinations of the Per Share
Market Value shall be appropriately adjusted for any stock dividends,
stock splits or other similar transactions during such period.
(h) Registration Rights. The Company will undertake the
registration of the Common Stock into which such Warrants are convertible
at such times and upon such terms pursuant to the provisions of the
Registration Rights Agreement dated June 30, 1998 by and among the
Company, ________________, and ________________.
(i) Notices. All notices or other communications required
hereunder shall be in writing and shall be sent either (i) by courier, or
(ii) by telecopy as well as by registered or certified mail, and shall be
regarded as properly given in the case of a courier upon actual delivery
to the proper place of address; in the case of telecopy, on the day
following the date of transmission if properly addressed and sent without
transmission error to the correct number and receipt is confirmed by
telephone within 48 hours of the transmission; in the case of a letter
for which a telecopy could not be successfully transmitted or receipt of
which could not be confirmed as herein provided, three days after the
registered or certified mailing date if the letter is properly addressed
and postage prepaid; and shall be regarded as properly addressed if sent
to the parties or their representatives at the addresses given below:
<PAGE>
To the Company:uniView Technologies Corporation
________________________
________________________
Attn: _________________
Phone: ________________
Fax: __________________
To the holder: ________________________
________________________
________________________
Attn: _________________
Phone: ________________
Fax: __________________
or such other address as any of the above may have furnished to the other
parties in writing by registered mail, return receipt requested.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its duly authorized officer as of the date first set forth
above.
UNIVIEW TECHNOLOGIES CORPORATION
By:
Patrick A. Custer
President
EXHIBIT A
Warrant Exercise Form
TO: UNIVIEW TECHNOLOGIES CORPORATION
The undersigned hereby: (1) irrevocably subscribes for and offers to
purchase _______ shares of Common Stock of uniView Technologies
Corporation, pursuant to Warrant No. 1998-A.1___ heretofore issued to
___________________ on ____________, 1998; (2) encloses a payment of
$__________ for these shares at a price of $3.00 per share (as adjusted
pursuant to the provisions of the Warrant); and (3) requests that a
certificate for the shares be issued in the name of the undersigned and
delivered to the undersigned at the address specified below.
Date:
Investor Name:
Taxpayer Identification Number:
By:
Printed Name:
Title:
Address:
Note: The above signature should correspond exactly
with the name on the face of this Warrant Certificate
or with the name of assignee appearing in assignment
form below.
AND, if said number of shares shall not be all the shares purchasable
under the within Warrant, a new Warrant Certificate is to be issued in
the name of said undersigned for the balance remaining of the shares
purchasable thereunder less any fraction of a share paid in cash and
delivered to the address stated above.
<PAGE>
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY STATE
SECURITIES OR BLUE SKY LAWS. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT
OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
_________________ Warrant No. 1998-S-____
UNIVIEW TECHNOLOGIES CORPORATION
STOCK PURCHASE WARRANT
This Warrant is issued, for good and valuable consideration, receipt
of which is hereby acknowledged, to _____________ (the "Holder") by
uniView Technologies Corporation, a Texas corporation (the "Company").
1. Purchase of Shares. Subject to the terms and conditions
hereinafter set forth, the Holder is entitled, upon surrender of this
Warrant at the principal office of the Company (or at such other place as
the Company shall notify the Holder hereof in writing), to purchase from
the Company _____________ (_____________) shares of par value $.10
Common Stock of the Company (the "Shares"), as adjusted pursuant to the
provisions of this Warrant.
2. Exercise Price. The exercise price for the Shares shall be Two
and One-half Dollars ($2.50) per share. Such price shall be subject to
adjustment pursuant to Section 8 hereof (such price, as adjusted from
time to time, is herein referred to as the "Exercise Price").
3. Exercise Period. This Warrant is exercisable at any time and
from time to time and, except as provided below, shall remain so
exercisable for three (3) years from the date hereof. This Warrant shall
immediately terminate upon (a) the sale of all or substantially all the
assets of the Company or (b) the merger of the Company into or
consolidation with any other entity in which at least 50% of the voting
power of the Company is transferred. In the event of a transaction of
the kind described above, the Company shall notify the Holder at least 30
days prior to the consummation of such event or transaction.
4. Restricted Stock; Registration. The shares of Common Stock of
the Company purchased upon exercise of this Warrant ("Restricted Stock")
or purchasable upon exercise of this Warrant ("Underlying Stock") shall
not be transferable except upon the conditions stated below, which are
intended to insure compliance with federal and state securities laws.
The certificates representing these shares of stock, unless the same are
registered prior to exercise of this Warrant, shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"The securities represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state. The securities have been
acquired for investment and may not be sold, offered for sale
or transferred in the absence of an effective registration
under the Securities Act of 1933, as amended, and any
applicable state securities laws or an opinion of counsel
satisfactory in form and substance to counsel for the Company
that the transaction shall not result in a violation of state
or federal securities laws."
<PAGE>
5. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise,
in whole or in part, the purchase rights evidenced hereby. Such exercise
shall be effected by: (i) the surrender of the Warrant, together with a
duly executed copy of the form of exercise attached hereto, to the
Secretary of the Company at its principal offices; and (ii) the payment
to the Company of an amount equal to the aggregate Exercise Price for the
number of Shares being purchased.
6. Certificates for Shares. Upon the exercise of the purchase
rights evidenced by this Warrant, one or more certificates for the number
of Shares so purchased shall be issued as soon as practicable thereafter,
and in any event within 30 days of the delivery of the subscription
notice.
7. Reservation of Shares. The Company covenants that it will at
all times, keep available such number of authorized shares of its Common
Stock, free from all preemptive rights with respect thereto, which will
be sufficient to permit the exercise of this Warrant for the full number
of Shares specified herein, upon exercise of this Warrant. The Company
further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-
assessable and free from all taxes, liens and charges with respect to the
issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number
of and kind of securities purchasable upon exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time as
follows:
(a) Subdivisions and Combinations. If the Company shall at
any time prior to the expiration of this Warrant subdivide its Common
Stock by split-up or otherwise, or combine its Common Stock, the number
of Shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision, or
proportionately decreased in the case of a combination. Appropriate
adjustments shall also be made to the purchase price payable per share,
but the aggregate purchase price payable for the total number of Shares
purchasable under this Warrant (as adjusted) shall remain the same. Any
adjustment under this Section 7(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(b) Notice of Adjustment. When any adjustment is required to
be made in the number or kind of shares purchasable upon exercise of the
Warrant, or in the Warrant Price, the Company shall promptly notify the
Holder of such event and of the number of shares of Common Stock or other
securities or property thereafter purchasable upon exercise of the
Warrant.
9. No Fractional Shares. No fractional shares shall be issued
upon the exercise of this Warrant, and the number of shares of stock
issued upon exercise of this Warrant shall be rounded to the nearest
whole share.
10. No Stockholder Rights. Prior to the exercise of this Warrant,
the Holder shall not be entitled to any rights of a shareholder with
respect to the Shares, including (without limitation) the right to vote
such Shares, receive dividends or other distributions thereon, exercise
preemptive rights or be notified of shareholder meetings, and such Holder
<PAGE>
shall not be entitled to any notice or other communication concerning the
business or affairs of the Company.
11. Exchange of Warrant. Subject to any restriction upon transfer
set forth in this Warrant, each Warrant may be exchanged for another
Warrant or Warrants of like tenor and representing in the aggregate a
like number of Warrants. Any Holder desiring to exchange a Warrant or
Warrants shall make such request in writing delivered to the Company, and
shall surrender, properly endorsed, the Warrant or Warrants to be so
exchanged.
12. Mutilated or Missing Warrants. In case any Warrant shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver
in exchange and substitution for and upon cancellation of the mutilated
Warrant, or in lieu of and substitution for the Warrant lost, stolen or
destroyed, a new Warrant of like tenor and representing an equivalent
right or interest, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of such
Warrant and indemnity or bond, if requested, also reasonably satisfactory
to the Company. An applicant for such substitute Warrant shall also
comply with such other reasonable regulations and pay such other
reasonable charges as the Company may prescribe.
13. Payment of Taxes. The Company will pay all taxes (other than
any income taxes or other similar taxes), if any, attributable to the
initial issuance of the Warrant and the issuance of the Shares upon the
exercise of the Warrant, provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of the
issuance or delivery of any Warrant, or the transfer thereof, and no such
issuance, delivery or transfer shall be made unless and until the person
requesting such issuance or transfer has paid to the Company the amount
of any such tax, or has established, to the satisfaction of the Company,
that no such tax is payable or such tax has been paid.
14. Warrant Register. The Warrants shall be numbered and shall be
registered on the books of the Company (the "Warrant Register") as they
are issued. The Company shall be entitled to treat the registered holder
of any Warrant on the Warrant Register as the owner in fact thereof for
all purposes and shall not be bound to recognize any equitable or other
claim to or interest in such Warrant on the part of any other person, and
shall not be liable for any registration or transfer of Warrants which
are registered or to be registered in the name of a fiduciary or the
nominee of a fiduciary unless made with the actual knowledge that a
fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with knowledge of such facts that its
participation therein amounts to bad faith.
15. Transfer of Warrants. The Warrants shall be transferable on
the Warrant Register only upon delivery thereof duly endorsed by the
Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. In all cases of transfer by an attorney, the original power of
attorney, duly approved, or an official copy thereof, duly certified
shall be deposited with the Company. In case of transfer by executors,
administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced, and may be
required to be deposited with the Company in its discretion. Upon any
registration of transfer, the Company shall deliver a new Warrant or
Warrants to the Person entitled thereto. Notwithstanding the foregoing,
<PAGE>
the Company shall have no obligation to cause Warrants to be transferred
on its books to any Person, unless the Holder of such Warrants shall
furnish to the Company evidence of compliance with the Securities Act of
1933, as amended, and applicable state blue sky laws.
16. Successors and Assigns. The terms and provisions of this
Warrant shall inure to the benefit of, and be binding upon, the Company
and the holders hereof and their respective successors and assigns.
17. Amendments and Waivers. This Warrant may be amended, modified,
superseded or cancelled, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, only by a
written instrument signed by the parties to be bound thereby. Any waiver
or amendment effected in accordance with this Section shall be binding
upon each holder of any Shares purchased under this Warrant at the time
outstanding (including securities into which such Shares have been
converted), each future holder of all such Shares, and the Company.
18. Governing Law. This Warrant and the validity and
enforceability hereof shall be governed by and construed and interpreted
in accordance with the laws of the State of Texas without giving effect
to conflict of laws rules or choice of laws rules thereof.
IN WITNESS WHEREOF, the undersigned hereby executes this Stock
Purchase Warrant as of the date first written above.
UNIVIEW TECHNOLOGIES CORPORATION
By:
Patrick A. Custer, President
NOTICE OF EXERCISE
To: uniView Technologies Corporation (the "Company")
(1) The undersigned ("Holder") hereby elects to exercise its rights
to purchase __________________________ shares of the Common Stock of the
Company (the "Securities") pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price in full, together with
all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the
Securities in the name of the undersigned Holder:
_______________________________
(Name)
_______________________________
(Address)
(3) With respect to the Securities being purchased hereunder, the
Holder makes, as of the date hereof, all of the representations and
warranties set forth below:
(a) Holder is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the
Securities. Holder is purchasing these Securities for its own account
for investment purposes only and not with a view to, or for the resale in
connection with, any "distribution" thereof for purposes of the
Securities Act of 1933, as amended ("Securities Act").
<PAGE>
(b) Holder understands that the Securities have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona
fide nature of its investment intent as expressed herein. In this
connection, Holder understands that, in the view of the Securities and
Exchange Commission ("SEC"), the statutory basis for such exemption may
be unavailable if its representation was predicated solely upon a present
intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Securities, or for a
period of one year or any other fixed period in the future.
(c) Holder further understands that the Securities must be
held indefinitely unless subsequently registered under the Securities Act
or unless an exemption from registration is otherwise available. In
addition, Holder understands that the instruments or certificates
evidencing the Securities will be imprinted with a legend which prohibits
the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel for the Company.
(d) Holder is aware of the provisions of Rule 144, promulgated
under the Securities Act, which in substance, permits limited public
resale of "restricted securities" acquired, directly or indirectly, from
the issuer thereof (or from an affiliate of such issuer), in a non-public
offering subject to the satisfaction of certain conditions, including,
among other things: the availability of certain public information about
the Company; the resale occurring not less than one year after the party
has purchased and paid for the securities to be sold; the sale being made
through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under
the Securities Exchange Act of 1934, as amended) and the amount of
securities being sold during any three month period not exceeding the
specified limitations stated therein.
(e) Holder further understands that at the time Holder wishes
to sell the Securities there may be no public market upon which to make
such a sale, and that, even if such a public market then exists the
Company may not be satisfying the current public information requirements
of Rule 144, and that, in such event, Holder could be precluded from
selling the Securities under Rule 144 even if the one-year minimum
holding period had been satisfied.
(f) Holder further understands that in the event all of the
requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule
144 is not exclusive, the Staff of the SEC has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons
and their respective brokers who participate in such transactions do so
at their own risk.
__________________________ ______________________________
(Date) (Signature and Title)
______________________________
(Name printed)
<PAGE>
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY STATE
SECURITIES OR BLUE SKY LAWS. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT
OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
_______________________ Warrant No. 1998-A1.___
UNIVIEW TECHNOLOGIES CORPORATION
STOCK PURCHASE WARRANT
This Warrant is issued for good and valuable consideration, receipt
of which is hereby acknowledged, to _________________ (the "Holder") by
uniView Technologies Corporation, a Texas corporation (the "Company").
1. Purchase of Shares. Subject to the terms and conditions
hereinafter set forth, the Holder is entitled, upon surrender of this
Warrant at the principal office of the Company (or at such other place as
the Company shall notify the Holder hereof in writing), to purchase from
the Company Two Hundred Thousand (200,000) shares of par value $.10
Common Stock of the Company (the "Shares"), as adjusted pursuant to the
provisions of this Warrant.
2. Exercise Price. The exercise price for the Shares shall be Two
and 80/100 Dollars ($2.80) per share. Such price shall be subject to
adjustment pursuant to Section 8 hereof (such price, as adjusted from
time to time, is herein referred to as the "Exercise Price").
3. Exercise Period. This Warrant is exercisable at any time and
from time to time and, except as provided below, shall remain so
exercisable for five (5) years from the date hereof. This Warrant shall
immediately terminate upon (a) the sale of all or substantially all the
assets of the Company or (b) the merger of the Company into or
consolidation with any other entity in which at least 50% of the voting
power of the Company is transferred. In the event of a transaction of
the kind described above, the Company shall notify the Holder at least
twenty (20) days prior to the consummation of such event or transaction.
4. Restricted Stock; Registration. The shares of Common Stock of
the Company purchased upon exercise of this Warrant ("Restricted Stock")
or purchasable upon exercise of this Warrant ("Underlying Stock") shall
not be transferable except upon the conditions stated below, which are
intended to insure compliance with federal and state securities laws.
The certificates representing these shares of stock, unless the same are
registered prior to exercise of this Warrant, shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"The securities represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state. The securities have been
acquired for investment and may not be sold, offered for sale
or transferred in the absence of an effective registration
under the Securities Act of 1933, as amended, and any
applicable state securities laws or an opinion of counsel
satisfactory in form and substance to counsel for the Company
that the transaction shall not result in a violation of state
or federal securities laws."
<PAGE>
5. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise,
in whole or in part, the purchase rights evidenced hereby. Such exercise
shall be effected by: (i) the surrender of the Warrant, together with a
duly executed copy of the form of exercise attached hereto, to the
Secretary of the Company at its principal offices; and (ii) the payment
to the Company of an amount equal to the aggregate Exercise Price for the
number of Shares being purchased.
6. Certificates for Shares. Upon the exercise of the purchase
rights evidenced by this Warrant, one or more certificates for the number
of Shares so purchased shall be issued as soon as practicable thereafter,
and in any event within 30 days of the delivery of the subscription
notice.
7. Reservation of Shares. The Company covenants that it will at
all times, keep available such number of authorized shares of its Common
Stock, free from all preemptive rights with respect thereto, which will
be sufficient to permit the exercise of this Warrant for the full number
of Shares specified herein, upon exercise of this Warrant. The Company
further covenants that such Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and non-
assessable and free from all taxes, liens and charges with respect to the
issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number
of and kind of securities purchasable upon exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time as
follows:
(a) Subdivisions and Combinations. If the Company shall at
any time prior to the expiration of this Warrant subdivide its Common
Stock by split-up or otherwise, or combine its Common Stock, the number
of Shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision, or
proportionately decreased in the case of a combination. Appropriate
adjustments shall also be made to the purchase price payable per share,
but the aggregate purchase price payable for the total number of Shares
purchasable under this Warrant (as adjusted) shall remain the same. Any
adjustment under this Section 7(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(b) Notice of Adjustment. When any adjustment is required to
be made in the number or kind of shares purchasable upon exercise of the
Warrant, or in the Warrant Price, the Company shall promptly notify the
Holder of such event and of the number of shares of Common Stock or other
securities or property thereafter purchasable upon exercise of the
Warrant.
9. No Fractional Shares. No fractional shares shall be issued
upon the exercise of this Warrant, and the number of shares of stock
issued upon exercise of this Warrant shall be rounded to the nearest
whole share.
10. No Stockholder Rights. Prior to the exercise of this Warrant,
the Holder shall not be entitled to any rights of a shareholder with
respect to the Shares, including (without limitation) the right to vote
such Shares, receive dividends or other distributions thereon, exercise
preemptive rights or be notified of shareholder meetings, and such Holder
<PAGE>
shall not be entitled to any notice or other communication concerning the
business or affairs of the Company.
11. Exchange of Warrant. Subject to any restriction upon transfer
set forth in this Warrant, each Warrant may be exchanged for another
Warrant or Warrants of like tenor and representing in the aggregate a
like number of Warrants. Any Holder desiring to exchange a Warrant or
Warrants shall make such request in writing delivered to the Company, and
shall surrender, properly endorsed, the Warrant or Warrants to be so
exchanged.
12. Mutilated or Missing Warrants. In case any Warrant shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver
in exchange and substitution for and upon cancellation of the mutilated
Warrant, or in lieu of and substitution for the Warrant lost, stolen or
destroyed, a new Warrant of like tenor and representing an equivalent
right or interest, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of such
Warrant and indemnity or bond, if requested, also reasonably satisfactory
to the Company. An applicant for such substitute Warrant shall also
comply with such other reasonable regulations and pay such other
reasonable charges as the Company may prescribe.
13. Payment of Taxes. The Company will pay all taxes (other than
any income taxes or other similar taxes), if any, attributable to the
initial issuance of the Warrant and the issuance of the Shares upon the
exercise of the Warrant, provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of the
issuance or delivery of any Warrant, or the transfer thereof, and no such
issuance, delivery or transfer shall be made unless and until the person
requesting such issuance or transfer has paid to the Company the amount
of any such tax, or has established, to the satisfaction of the Company,
that no such tax is payable or such tax has been paid.
14. Warrant Register. The Warrants shall be numbered and shall be
registered on the books of the Company (the "Warrant Register") as they
are issued. The Company shall be entitled to treat the registered holder
of any Warrant on the Warrant Register as the owner in fact thereof for
all purposes and shall not be bound to recognize any equitable or other
claim to or interest in such Warrant on the part of any other person, and
shall not be liable for any registration or transfer of Warrants which
are registered or to be registered in the name of a fiduciary or the
nominee of a fiduciary unless made with the actual knowledge that a
fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with knowledge of such facts that its
participation therein amounts to bad faith.
15. Transfer of Warrants. The Warrants shall be transferable on
the Warrant Register only upon delivery thereof duly endorsed by the
Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. In all cases of transfer by an attorney, the original power of
attorney, duly approved, or an official copy thereof, duly certified
shall be deposited with the Company. In case of transfer by executors,
administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced, and may be
required to be deposited with the Company in its discretion. Upon any
registration of transfer, the Company shall deliver a new Warrant or
Warrants to the Person entitled thereto. Notwithstanding the foregoing,
<PAGE>
the Company shall have no obligation to cause Warrants to be transferred
on its books to any Person, unless the Holder of such Warrants shall
furnish to the Company evidence of compliance with the Securities Act of
1933, as amended, and applicable state blue sky laws.
16. Successors and Assigns. The terms and provisions of this
Warrant shall inure to the benefit of, and be binding upon, the Company
and the holders hereof and their respective successors and assigns.
17. Amendments and Waivers. This Warrant may be amended, modified,
superseded or cancelled, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, only by a
written instrument signed by the parties to be bound thereby. Any waiver
or amendment effected in accordance with this Section shall be binding
upon each holder of any Shares purchased under this Warrant at the time
outstanding (including securities into which such Shares have been
converted), each future holder of all such Shares, and the Company.
18. Governing Law. This Warrant and the validity and
enforceability hereof shall be governed by and construed and interpreted
in accordance with the laws of the State of Texas without giving effect
to conflict of laws rules or choice of laws rules thereof.
IN WITNESS WHEREOF, the undersigned hereby executes this Stock
Purchase Warrant as of the date first written above.
UNIVIEW TECHNOLOGIES CORPORATION
By:
Patrick A. Custer, President
NOTICE OF EXERCISE
To: uniView Technologies Corporation (the "Company")
(1) The undersigned ("Holder") hereby elects to exercise its rights
to purchase __________________________ shares of the Common Stock of the
Company (the "Securities") pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price in full, together with
all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the
Securities in the name of the undersigned Holder:
_______________________________
(Name)
_______________________________
(Address)
(3) With respect to the Securities being purchased hereunder, the
Holder makes, as of the date hereof, all of the representations and
warranties set forth below:
(a) Holder is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the
Securities. Holder is purchasing these Securities for its own account
for investment purposes only and not with a view to, or for the resale in
connection with, any "distribution" thereof for purposes of the
Securities Act of 1933, as amended ("Securities Act").
<PAGE>
(b) Holder understands that the Securities have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona
fide nature of its investment intent as expressed herein. In this
connection, Holder understands that, in the view of the Securities and
Exchange Commission ("SEC"), the statutory basis for such exemption may
be unavailable if its representation was predicated solely upon a present
intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Securities, or for a
period of one year or any other fixed period in the future.
(c) Holder further understands that the Securities must be
held indefinitely unless subsequently registered under the Securities Act
or unless an exemption from registration is otherwise available. In
addition, Holder understands that the instruments or certificates
evidencing the Securities will be imprinted with a legend which prohibits
the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel for the Company.
(d) Holder is aware of the provisions of Rule 144, promulgated
under the Securities Act, which in substance, permits limited public
resale of "restricted securities" acquired, directly or indirectly, from
the issuer thereof (or from an affiliate of such issuer), in a non-public
offering subject to the satisfaction of certain conditions, including,
among other things: the availability of certain public information about
the Company; the resale occurring not less than one year after the party
has purchased and paid for the securities to be sold; the sale being made
through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under
the Securities Exchange Act of 1934, as amended) and the amount of
securities being sold during any three month period not exceeding the
specified limitations stated therein.
(e) Holder further understands that at the time Holder wishes
to sell the Securities there may be no public market upon which to make
such a sale, and that, even if such a public market then exists the
Company may not be satisfying the current public information requirements
of Rule 144, and that, in such event, Holder could be precluded from
selling the Securities under Rule 144 even if the one-year minimum
holding period had been satisfied.
(f) Holder further understands that in the event all of the
requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule
144 is not exclusive, the Staff of the SEC has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons
and their respective brokers who participate in such transactions do so
at their own risk.
__________________________ ______________________________
(Date) (Signature and Title)
______________________________
(Name printed)
<PAGE>
July 17, 1998
uniView Technologies Corporation
10911 Petal Street
Dallas, Texas 75238
Gentlemen:
I have acted as counsel to uniView Technologies Corporation, a Texas
corporation (the "Company") in connection with the proposed public
offering of up to 2,980,000 shares of the Company's Common Stock, $.10
par value (the "Common Stock"), as described in the Registration
Statement on Form S-3 filed with the Securities and Exchange Commission
on the date hereof (the "Registration Statement").
I have, as counsel, as I have deemed necessary examined such
corporate records, certificates and other documents and reviewed such
questions of law as I have deemed necessary, relevant or appropriate to
enable me to render the opinions expressed below. In rendering such
opinions, I have assumed the genuineness of all signatures and the
authenticity of all documents examined by me. As to various questions of
fact material to such opinions, I have relied upon representations of the
Company.
Based upon such examination and representations, I advise you that,
in my opinion, the shares of Common Stock which are to be sold and
delivered by the Company and certain selling stockholders of the Company
(the "Selling Stockholders") as contemplated by the Plan of Distribution
specified in the Registration Statement, have been duly and validly
authorized by the Company and, in the case of the shares of Common Stock
to be sold by the Selling Stockholders, have been validly issued and are
fully paid and non-assessable.
I consent to the filing of this opinion as Exhibit "5" to the
Registration Statement and to the reference to myself under the caption
"Legal Matters" in the prospectus contained therein.
Sincerely,
/s/ Billy J. Robinson
Billy J. Robinson, General Counsel
uniView Technologies Corporation
<PAGE>
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of uniView Technologies Corporation on Form S-3 of our report
dated August 6, 1997 appearing in the Annual Report on Form 10-K of
uniView Technologies Corporation as of June 30, 1997 and 1996 and for
each of the years in the three-year period ended June 30, 1997 and to the
reference to us under the heading "Experts" in the Prospectus, which is
part of this Registration Statement.
/s/ King Griffin & Adamson P.C.
KING GRIFFIN & ADAMSON P.C.
Dallas, Texas
July 17, 1998
<PAGE>
AGREEMENT FOR
CORPORATE FINANCE SERVICES
THIS AGREEMENT is entered into on this June 3, 1998, between Pacific
Continental Securities Corp., a California corporation, hereinafter,
Pacific, with its principal place of business at 8484 Wilshire Boulevard,
Suite 744, Beverly Hills, California 90211, and UniView Technologies
Corp. with their principal place of business at 10911 Petal Street,
Dallas, TX 75238.
HEREINAFTER, UniView Technologies Corp. and Pacific are collectively
referred to as "Parties" and singularly as "Party."
WHEREAS, Pacific is engaged in performing various corporate finance
services as hereinafter specified;
WHEREAS, UniView Technologies Corp. desires to engage Pacific for
the purpose of arranging financing for its business;
WHEREAS, the Parties desire to set forth the terms and conditions
under which the said services shall be performed;
NOW, THEREFORE, in consideration of these promises and of mutual
covenants herein, the Parties hereto agree as follows:
ARTICLE I - SCOPE OF SERVICES
Pacific agrees to perform for UniView Technologies Corp. any or all
of the corporate finance services set forth below:
1) On a best efforts basis, secure financing from a Qualified
Institutional Buyer(s) (the Investor(s)) to invest up to US$8
million pursuant to Regulation D under the Securities Act of 1933.
2) The financing of up to US$8 million defined in a term sheet
attached hereto as Exhibit A or as otherwise agreed to between
UniView Technologies Corp. and any investor.
The scope of services to be performed shall not be materially different
from or more or less extensive than those referenced above unless such
modifications are reduced to writing and signed by authorized
representatives of UniView Technologies Corp. and Pacific.
ARTICLE II - PERIOD OF PERFORMANCE
The period of performance under this Agreement shall be for a
primary term of seven (7) business days from the date hereof; however,
once the investor(s) has committed, shall be extended until June 24, 1998
to complete a definitive agreement(s).
ARTICLE III - COMPENSATION
As full consideration for the performance of services described
herein, UniView Technologies Corp. shall pay Pacific compensation as
follows:
1) An underwriting fee of 6% of the total amount raised due upon
acceptance of a written commitment and payable upon closing of the
transaction.
<PAGE>
2) 200,000 five year warrants at 125% of the average closing bid price
for the five trading days prior to the date of closing the transaction
per traunch.
3) Reimbursement of attorney's fees not to exceed $10,000 upon
completion of the placement to be deducted from the proceeds.
ARTICLE IV - NON-CIRCUMVENTION
UniView Technologies Corp. agrees not to circumvent Pacific with
respect to future private placement investments made into UniView
Technologies Corp. by investors introduced to UniView Technologies Corp.
by Pacific.
ARTICLE V - CONFIDENTIAL INFORMATION
All the UniView Technologies Corp. company information furnished to
Pacific by UniView Technologies Corp. or prepared by Pacific in
connection with this Agreement is confidential and shall be and remain
the property of UniView Technologies Corp., and may not be copied or
otherwise reproduced or used in any way, except in connection with the
services performed under this Agreement, or disclosed to third parties or
used in any manner detrimental to the interests of UniView Technologies
Corp., unless expressly approved by UniView Technologies Corp. in
writing.
ARTICLE VI - ACCURACY OF INFORMATION
UniView Technologies Corp. warrants and represents that, to the best
of its knowledge, all information supplied to Pacific shall be complete,
true and correct and shall not omit to state any material facts necessary
to such information and shall not be misleading. UniView Technologies
Corp. further covenants that it shall remain at all times in material
compliance with State, Federal or other laws to which it may be subject.
All arrangements listed above shall include any of UniView
Technologies Corp.'s affiliates, licenses, franchises, associations, US
subsidiaries, domestic or foreign corporations joint ventures, affiliated
individuals partnerships corporations, trusts, or any such other
individual or entity directly or indirectly related to UniView
Technololgies Corp. which may receive the benefit of the above referenced
services.
ARTICLE VII - REPRESENTATIVE AND NOTICES
Notices provided for hereunder may be served personally to the
UniView Technologies Corp. representative executing this Agreement and
Pacific's representative executing this agreement, at their respective
places of business or by registered mail to the address of each Party
shown on the face hereof.
<PAGE>
ARTICLE VIII - ARBITRATION
Any controversy or claim arising out of or relating to this
agreement, or the breach thereof, may be settled by arbitration in the
city of Los Angeles, California, in accordance with the rules of the
American Arbitration Association then in effect. The prevailing party
shall be entitled to costs and attorneys' fees. Such judgment upon the
award rendered therein may be entered in any Court having jurisdiction
thereof.
ARTICLE IX - ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between UniView
Technologies Corp. and Pacific relating to providing financial services.
It shall be binding upon both Parties and their respective successors,
assigns, and executors. It supersedes all prior or contemporaneous
communication, representations or agreements, whether oral or written,
with respect to the subject matter hereof and has been induced by no
representations, statements or agreements other than those herein
expressed. No agreement hereafter made between the Parties shall be
binding on either Party unless reduced to writing and signed by an
authorized officer of the Party to be bound thereby.
This Agreement shall in all respects be interpreted and construed and the
rights of the Parties hereto shall be governed by the laws of the State
of California.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed by their duly authorized officers.
PACIFIC CONTINENTAL SECURITIES
CORPORATION
(a California Corporation)
Date: 6/3/98 By:/s/ Matthew Littauer
Title: President
Date: 6/4/98 UniView Technologies Corp.
(a Texas Corporation)
By:/s/ Pat Custer
Title: President
<PAGE>
EXHIBIT A
Proposed Term Sheet
uniView Technologies Corp. (NASDAQ): UVEW
(5% Convertible Preferred Private Placement)
Securities:
The Securities shall consist of an aggregate amount of 5% Convertible
Preferred of three year term with mandatory conversion at end of term.
Securities convertible into the common stock of UVEW ("Company") equal to
an amount of up to $8,000,000 in four traunches of $2,000,000 each
separated by three months pursuant to Regulation D under the Securities
Act of 1933.
Investors:
(QIB's) Qualified institutional buyers (domestic U.S. funds with assets
exceeding $100 million) approved by UVEW.
Conversion:
The Investor may, anytime after three (3) months from the date of closing
of the transaction, convert the Preferred shares to common stock of UVEW,
subject to the Anti-dilution paragraph contained herein.
Conversion Price:
The conversion price will equal the lesser of:
1) The Fixed Strike Price (defined below)
or
2) 100% of the average of the five lowest closing prices for 15
consecutive trading days immediately preceding the date of
conversion.
Fixed Strike Price:
A fixed strike shall be set equal to 110% of the average closing price of
the common stock for the 15 trading days immediately preceding the date
of closing.
Dividend:
Annual dividend of 5% payable semiannually in cash or stock at Company's
discretion.
SEC Registration:
The issuer agrees to register all shares of common stock issuable with
the SEC in respect to the Preferred, for the resale. If the shares of
common stock are not registered within three months from closing, Company
shall pay a penalty of 2% per month in cash or stock, at Company's
discretion, for each 30 day period the stock remains unregistered beyond
the initial three month period, up to a maximum penalty of 6%. After
four months, Company must redeem all remaining principal plus 10%
interest.
Antidilution:
Restriction on conversion of no more than 20% of the original purchase
amount in any one month. For example, 20% is convertible in month four,
20% in month five, etc. Each issue fully convertible eight months after
closing.
<PAGE>
Redemption Provision:
If Company receives a conversion notice with conversion price less than
the Fixed Strike Price, Company may redeem securities served for
conversion in cash at a price equivalent to the return expected from
conversion into stock or 15% interest, plus any accrued dividends.
Redemption may be in whole or in part.
Placement Fees:
Company shall pay to Pacific Continental Securities Corp. (placement
agent) a fee equal to 6% of the total proceeds raised in cash and 200,000
five-year warrants exercisable at 125% of the average closing market
price for 15 days prior to closing per traunch.
Closing:
Letter of commitment on first traunch shall occur no later than June 16,
1998.
Funding:
Funding of each traunch shall be within two (2) business days of closing,
by wire transfer of
100% of the proceeds less fees into Company designated account.
<PAGE>
THE SECURITIES OFFERED HEREIN ARE SUBJECT TO
SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY
SECURITIES SUBSCRIPTION AGREEMENT
1. uniView Technologies Corporation, a Texas corporation (the
"Company"), has offered for sale and the undersigned purchaser (the
"Purchaser") hereby tenders this subscription and applies for the
purchase of shares of Series Q, Class A Preference Shares (the "Class A
Preferred Stock") of the Company, [together with the shares of the
Company's Common Stock, par value $0.10, issuable upon conversion of the
Series Q, Class A Preferred Stock (the "Shares")] at a purchase price per
Share of $25,000, and containing all the rights, obligations, and
conditions as more fully set out in the form of the Certificate of
Designation of Class A Preferred Stock attached hereto as Exhibit "A" and
incorporated herein for all purposes (the "Offering"). Together with
this Subscription Agreement, the Purchaser is delivering to the Escrow
Agent by wire transfer the full amount of the purchase price for the
Shares for which it is subscribing pursuant hereto against delivery of
the Class A Preferred Stock certificates. Time is of the essence in
connection with this Subscription Agreement.
2. Representations and Warranties of Purchaser. In order to induce
the Company to accept this subscription, the Purchaser hereby represents
and warrants to, and covenants with, the Company as follows:
A. (i) The purchaser has received and carefully reviewed the
Company's most recent Annual Report on Form 10-K, its subsequent
Quarterly Reports on Form 10-Q, its most recent Registration
Statement on Form S-3, and its Current Reports on Form 8-K
(collectively, the "SEC Reports"), and a copy of the Certificate of
Designation for the Series Q Class A Preferred Stock;
(ii) The Purchaser has had a reasonable opportunity to ask
questions of and receive answers from the Company concerning the
Company and the Offering, and all such questions, if any, have been
answered to the full satisfaction of the Purchaser;
(iii) The Purchaser is an accredited investor and has
such knowledge and expertise in financial and business matters that
the Purchaser is capable of evaluating the merits and risks involved
in an investment in the Class A Preferred Stock and acknowledges
that an investment in the Class A Preferred Stock entails a number
of very significant risks and funds should only be invested by
persons able to withstand the total loss of their investment;
(iv) Except as set forth in this Agreement, no
representations or warranties have been made to the Purchaser by the
Company or any agent, employee or affiliate of the Company and in
entering into this transaction the Purchaser is not relying upon any
information, other than that contained in this Agreement, the SEC
Reports and the results of independent investigation by the
Purchaser;
(v) The Purchaser understands that the Class A Preferred
Stock is being offered and sold to it in reliance on specific
exemptions from the registration requirements of the United States
Federal and State securities laws and that the Company is relying
upon the truth and accuracy of the representations, warranties,
<PAGE>
agreements, acknowledgments and understandings of the Purchaser set
forth herein in order to determine the applicability of such
exemptions and the suitability of the Purchaser to acquire the Class
A Preferred Stock;
(vi) The Purchaser has full power and authority to execute
and deliver this Agreement and to perform its obligations hereunder;
and this Agreement is a legally binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms; and
3. Representations of the Company. The Company represents and
warrants:
A. The Company is a Reporting Issuer as defined by Regulation
D. The Company is in full compliance, to the extent applicable,
with all reporting obligations under either Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
B. The execution, delivery and performance of this Agreement
by the Company and the performance of its obligations hereunder do
not and will not constitute a breach or violation of any of the
terms and provisions of, or constitute a default under or conflict
with or violate any provision of (i) the Company's Certificate of
Incorporation or By-laws, (ii) any indenture, mortgage, deed of
trust, agreement or other instrument to which the Company is a party
or by which it or any of its property is bound, (iii) any applicable
statute of regulation, (iv) or any judgment, decree or order of any
court or governmental body having jurisdiction over the Company or
any of its property.
C. The Company is a corporation duly organized, validly
existing and in good standing under the law of its jurisdiction of
incorporation and is duly qualified as a foreign corporation in all
jurisdictions where the failure to be so qualified would have a
materially adverse effect on its business, taken as a whole.
D. The execution, delivery and performance of this Agreement
and the consummation of the issuance of the Class A Preferred Stock
and the transactions contemplated by this Agreement are within the
Company's corporate powers and have been duly authorized by all
necessary corporate and stockholder action on behalf of the Company.
E. There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now
pending or, to the knowledge of the Company, threatened, against or
affecting the Company, or any of its properties, which might result
in any material adverse change in the condition (financial or
otherwise) or in the earnings, business affairs or business
prospects of the Company, or which might materially and adversely
affect the properties or assets thereof.
F. The Company is not in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or
other material instrument or agreement to which it is a party or by
which it or its property may be bound; and neither the execution,
nor the delivery by the Company, nor the performance by the Company
of its obligations under, this Agreement or, the Class A Preferred
<PAGE>
Stock will conflict with or result in the breach or violation of any
of the terms or provisions of, or constitute a default or result in
the creation or imposition of any lien or charge on any assets or
properties of the Company under, any material indenture, mortgage,
deed of trust or other material agreement or instrument to which the
Company is a party or by which it is bound or any statute or the
Certificate of Incorporation or Bylaws of the Company, or any
decree, judgment, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or
its properties.
G. None of the Company's filings with the Securities and
Exchange Commission contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statement therein in light of the
circumstances under which they were made, not misleading. The
Company has timely filed all requisite forms, reports and exhibits
thereto with the Securities and Exchange Commission.
H. There has been no material adverse change in the financial
condition, earnings, business affairs or business prospects of the
Company since the date of the Company's most recent SEC Report filed
with the Securities and Exchange Commission.
I. As of the date hereof, the conduct of the business
complies in all material respects with all statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees
applicable thereto. The Company has not received notice of any
alleged violation of any statute, law, regulation ordinance, rule,
judgment, order or decree from any governmental authority which
would materially adversely affect the business of the Company.
J. There is no fact known to the Company (other than general
economic conditions known to the public generally) that has not been
disclosed in writing to the Purchaser that (i) could reasonably be
expected to have a material adverse effect on the condition
(financial or otherwise) or in the earnings, business affairs,
business prospects, properties or assets of the Company or (ii)
could reasonably be expected to materially and adversely affect the
ability of the Company to perform its obligations pursuant to this
Agreement and the Class A Preferred Stock.
K. There is no action pending for delisting of the Common
Stock nor is the Company aware of any threatened action relating
thereto.
L. During the twelve (12) months immediately preceding the
date hereof, the Company has not issued any securities pursuant to
Regulation S or Regulation D under the Act, except as may be
reflected in the Company's filings with the U.S. Securities and
Exchange Commission pursuant Sections 13(a) or 15(d) of the Exchange
Act.
4. The Purchaser understands that this subscription is not binding
upon the Company until the Company accepts it, which acceptance is at the
sole discretion of the Company and is to be evidenced by the Company's
execution of this Agreement where indicated. This Agreement shall be
null and void if the Company does not accept it as aforesaid. Upon
acceptance by the Company and receipt by the Escrow Agent of the total
<PAGE>
purchase price, the Company will issue to the Escrow Agent one or more
certificates for the full number of shares of Class A Preferred Stock
subscribed for.
5. Covenants of the Company. For so long as any Class A Preferred
Stock held by the Purchaser remain outstanding, the Company covenants and
agrees with the Purchaser that:
(a) It will reserve from its authorized but unissued shares of
Common Stock a sufficient number of shares of Common Stock to permit
the conversion in full of the outstanding Class A Preferred Stock.
(b) It will maintain the listing of its Common Stock on
NASDAQ.
6. Any holder of Series Q Class A Preferred Stock (an "Eligible
Holder") may at any time convert any whole number of shares of Series Q
Class A Preferred Stock in accordance with this Part. For the purposes
of conversion, the Series Q Class A Preferred Stock shall be valued at
$25,000 per share ("Value"), and, if converted, the Series Q Class A
Preferred Stock shall be converted into such number of Common Shares of
the Company $.10 par value (the "Conversion Shares") as is obtained by
dividing the aggregate Value of the shares of Series Q Class A Preferred
Stock being so converted by the "Conversion Price." For purposes of this
Part, the "Conversion Price" means Seventy-five percent (75%), or such
lesser amount which reflects any penalty which may accrue in accordance
with Paragraph 7 of this Subscription Agreement, of the average daily
closing bid price of Common Stock as reported by NASDAQ for the period of
5 consecutive trading days immediately preceding the date of the
conversion of the Series Q Class A Preferred Stock in respect of which
such Conversion Price is determined. The number of Conversion Shares so
determined shall be rounded to the nearest whole number of shares.
6.1 The conversion right provided by the above section may be
exercised only by an Eligible Holder of Series Q Class A Preferred Stock,
in whole or in part, by the surrender of the share certificate or share
certificates representing the Series Q Class A Preferred Stock to be
converted at the principal office of the Corporation (or at such other
place as the Corporation may designate in a written notice sent to the
holder by first-class mail, postage prepaid, at its address shown on the
books of the Corporation) against delivery of that number of whole Common
Shares as shall be computed by dividing (1) the aggregate Value of the
Series Q Class A Preferred Stock so surrendered, if any, by (2) the
Conversion Price. Each Series Q Class A Preferred Stock certificate
surrendered for conversion shall be endorsed by its holder. In the event
of any exercise of the conversion right of the Series Q Class A Preferred
Stock granted herein (i) share certificates representing the Common Stock
purchased by virtue of such exercise, free of restrictive legend or stop
transfer orders, shall be delivered to such holder within 5 business days
after receipt by the Corporation of the original Notice of Conversion and
the certificate representing the Series Q Class A Preferred Stock (the
fifth business day after receipt of such original documents, not counting
the date of receipt, being the "Delivery Date"), and (ii) unless the
Series Q Class A Preferred Stock has been fully converted, a new share
certificate representing the Series Q Class A Preferred Stock not so
converted, if any, shall also be delivered to such holder on or before
such Delivery Date, or carried on the Corporation's ledger, at holder's
option. Any Eligible Holder may exercise its right to convert the Series
Q Class A Preferred Stock by telecopying an executed and completed Notice
<PAGE>
of Conversion to the Corporation, and within 72 hours thereafter,
delivering the original Notice of Conversion and the certificate
representing the Series Q Class A Preferred Stock to the Corporation by
express courier. Each date on which a telecopied Notice of Conversion is
received by the Corporation in accordance with the provisions hereof
shall be deemed a Conversion Date. The Corporation will cause delivery
of the Common Stock certificates issuable upon conversion of any Series Q
Class A Preferred Stock (together with the certificates representing the
Series Q Class A Preferred Stock not so converted, if requested) to the
Eligible Holder via express courier on or before the Delivery Date if the
Corporation has received the original Notice of Conversion and Series Q
Class A Preferred Stock certificate being so converted in accordance with
this paragraph.
6.2 All Common Shares which may be issued upon conversion of
Series Q Class A Shares will, upon issuance, be duly issued, fully paid
and nonassessable and free from all taxes, liens, and charges with
respect to the issue thereof. At all times that any Series Q Class A
Shares are outstanding, the Corporation shall have authorized, and shall
have reserved for the purpose of issuance upon such conversion, a
sufficient number of Common Shares to provide for the conversion into
Common Shares of all Series Q Class A Shares then outstanding at the then
effective Conversion Price. Without limiting the generality of the
foregoing, if, at any time, the Conversion Price is decreased, the number
of Common Shares authorized and reserved for issuance upon the conversion
of the Series Q Class A Shares shall be proportionately increased.
6.3 Notwithstanding the provisions hereof, in no event shall
the holder be entitled to convert any Series Q Class A Preferred Stock in
excess of that number of shares upon conversion of which the sum of (1)
the number of shares of Common Stock beneficially owned by the Purchaser
and its affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unconverted portion of
the Preferred Stock), and (2) the number of shares of Common Stock
issuable upon the conversion of the Preferred Stock with respect to which
the determination of this proviso is being made, would result in
beneficial ownership by the Purchaser and its affiliates of more than
4.9% of the outstanding shares of Common Stock. For purposes of the
proviso to the immediately preceding sentence, beneficial ownership shall
be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and Regulation 13 D-G thereunder, except as
otherwise provided in clause (1) of such proviso.
7. Registration. The Company shall be required, at the Company's
expense, to effect the registration of twice the number of the Underlying
Shares issuable on the "Closing Date" (June 5, 1998) upon conversion of
the Class A Preferred Stock under the Act and relevant Blue Sky laws.
The Company and the Purchaser shall cooperate in good faith in connection
with the furnishing of information required for such registration and the
taking of such other actions as may be legally or commercially necessary
in order to effect such registration. The Company shall file a
registration statement or amended registration statement and shall use
its best efforts to cause such registration statement or amended
registration statement to become effective as soon as practicable
thereafter. Such best efforts shall include, but not be limited to,
promptly responding to all comments received from the staff of the
Securities and Exchange Commission with respect to such registration
statement and promptly preparing and filing amendments to such
registration statement which are responsive to the comments received from
<PAGE>
the staff of the Securities and Exchange Commission. Once declared
effective by the Securities and Exchange Commission the Company shall
cause such registration statement to remain effective until the earlier
of (i) the sale by the Purchaser of all Underlying Shares registered or
(ii) one year after the effective date of such registration statement.
In the event the registration statement or amended registration statement
is not declared effective within 90 days after the date of filing, at
Purchaser's option, either (i) the current Twenty-five percent (25%)
discount provided in the Conversion Price shall increase by three percent
(3%) and such discount shall continue to increase by two percent (2%) for
each thirty (30) day period thereafter until the registration statement
is declared effective by the SEC, or until the discount reached is thirty-
five percent (35%), and additional Common Stock shall be issued to the
Purchaser upon conversion in accordance with such additional discounts,
or (ii) Purchaser may convert any whole number of shares of Series Q
Class A Preferred Stock into Common Shares of the Corporation pursuant to
Regulation S, provided that Purchaser demonstrates to the Corporation's
reasonable satisfaction that Purchaser is qualified at all relevant times
as an investor under Regulation S.
8. Indemnification.
A. The Purchaser agrees to indemnify the Company and hold it
harmless from and against any and all losses, damages, liabilities,
costs and expenses which it may sustain or incur in connection with
the breach by the Purchaser of any representation, warranty or
covenant made by it herein.
B. The Company agrees to indemnify the Purchaser and hold it
harmless from and against any and all losses, damages, liabilities,
costs and expenses which it may sustain or incur in connection with
the breach by the Company of any representation, warranty or
covenant made by it herein.
9. Neither this Agreement nor any of the rights of the Purchaser
hereunder may be transferred or assigned by the Purchaser.
10. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware. Each of the parties
consents to the jurisdiction of the federal courts whose districts
encompass any part of the City of New York or the City of Dallas, or the
state courts of the State of New York sitting in the City of New York, or
the state courts of the State of Texas sitting in the City of Dallas in
connection with any dispute arising under this Agreement and hereby
waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions. A facsimile transmission of this
signed Agreement shall be legal and binding on all parties hereto. This
Agreement may be signed in one or more counterparts, each of which shall
be deemed an original. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. 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. This Agreement may be amended only
by an instrument in writing signed by the party to be charged with
enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject
matter hereof.
<PAGE>
11. Unless the context otherwise requires, all personal pronouns
used in this Agreement, whether in the masculine, feminine or neuter
gender, shall include all other genders.
12. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered
personally or mailed by certified or registered mail, return receipt
requested, postage prepaid, as follows: If to Purchaser, to the address
set forth on the signature page of this Agreement and if to the Company,
to uniView Technologies Corporation, 10911 Petal Street, Dallas, Texas
75238, or to such other address as the Company or the Purchaser shall
have designated to the other by like notice.
13. Restricted Legend. The Purchaser recognizes that the Class A
Preferred Stock, when issued, will not have been registered for public
sale under the Securities Act of 1933 (the "Act") or the securities laws
of any state and that the share certificate will bear a "Restricted
Stock" legend as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER SAID ACT, OR (2) AN OPINION OF COMPANY COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED."
Signatures Follow
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of June 5, 1998.
The Purchaser declares under penalty of perjury that the statements,
representations and warranties contained in the foregoing Securities
Purchase Agreement and in the following Purchaser Acknowledgments are
true, correct and complete.
PURCHASER:______________________________
______________________________
(Signature) (Title)
______________________________
(Print Name)
Exact Name(s) in which ownership of Securities is to be registered:
______________________________________
Principal Place of Business: _________________________________________
_________________________________________
_________________________________________
Federal Tax ID Number: __________________________________________
Amount of Subscription: $______________________
AGREED AND ACCEPTED:
UNIVIEW TECHNOLOGIES CORPORATION
By:______________________________
Patrick A. Custer
President and CEO
<PAGE>
APPENDIX "A"
PURCHASER ACKNOWLEDGMENTS
In order to induce the Company to accept the foregoing Securities
Purchase Agreement, the Purchaser expressly acknowledges the following by
placing his or her initials (or, if the Purchaser is a person other than
an individual, the initials of an individual duly empowered to act for
the Purchaser) in each of the spaces provided below:
THE PURCHASER HAS RECEIVED, HAS CAREFULLY REVIEWED INFORMATION ON
THE COMPANY AND HAS MADE AN INDEPENDENT INVESTIGATION AND ANALYSIS OF THE
INVESTMENT.
THE PURCHASER HAS CAREFULLY READ THE FOREGOING SECURITIES PURCHASE
AGREEMENT AND IN PARTICULAR, HAS CAREFULLY READ AND UNDERSTANDS THE
PURCHASER'S REPRESENTATIONS AND WARRANTIES MADE THEREIN AND CONFIRMS THAT
ALL SUCH REPRESENTATIONS AND WARRANTIES ARE TRUE AND CORRECT.
THE PURCHASER QUALIFIES UNDER THE FOLLOWING CATEGORY OR CATEGORIES
OF DEFINITIONS OF "ACCREDITED INVESTOR" (INDICATE EACH APPLICABLE
CATEGORY):
(1) The Purchaser is a natural person whose individual net worth,
or joint net worth with that person's spouse, exceeds
$1,000,000.
(______) Yes (______) No
(2) The Purchaser is a natural person who had an individual income
in excess of $200,000 in each of the two most recent years or
joint income with that person's spouse in excess of $300,000 in
each of those years and has a reasonable expectation of
realizing the same income level in the current year.
(______) Yes (______) No
(3) The Purchaser is a broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended.
(______) Yes (______) No
(4) The Purchaser is an insurance company, a registered securities
broker or dealer, a licensed Small Business Investment Company,
a registered investment company, a business development company
as defined in Section 2(a)(48) of the Investment Company Act of
1940 or a private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940.
(______) Yes (______) No
(5) The Purchaser is an organization described in Section 501(c)(3)
of the Internal Revenue Code of 1986, as amended, or a
corporation, Massachusetts or similar business trust or
partnership, not formed for the specific purpose of acquiring
the Units, with total assets in excess of $5,000,000.
(______) Yes (______) No
<PAGE>
(6) The Purchaser is a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring
the Units offered, whose purchase is directed by a person who
has such knowledge and experience that he or she is capable of
evaluating the merits and risks of the proposed investment.
(______) Yes (______) No
(7) The Purchaser is a bank, savings and loan association or
similar institution acting in its individual or fiduciary
capacity, or an employee benefit plan with total assets in
excess of $5,000,000.
(______) Yes (______) No
(8) The Purchaser is a Plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of
a state or its political subdivisions for the benefit of its
employees, with total assets in excess of $5,000,000.
(______) Yes (______) No
(9) The Purchaser is an employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974 ("ERISA"),
the investment decisions for which are made by a plan
fiduciary, as defined in Section 3(21) of ERISA, which is
either a bank, savings and loan association, insurance company,
or registered investment adviser, or is an employee benefit
plan that has total assets in excess of $5,000,000.
(______) Yes (______) No
(10) The Purchaser is an entity in which all of the equity owners
are accredited investors or individuals who are accredited
investors (as defined above).
(______) Yes (______) No
IN WITNESS WHEREOF, the Purchaser has executed and delivered this
Purchaser Acknowledgment as of the day and year specified above.
Official Signatory of Purchaser:
Name of Company: ___________________
By: _______________________________
(Signature)
Name Printed: _______________________
Title: ______________________________
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SERIES Q, CLASS A PREFERRED STOCK
REGISTRATION RIGHTS AGREEMENT, dated as the date shown hereinbelow
by and among uniView Technologies Corporation, a Texas corporation (the
"Company"), and the purchasers named on the signature pages hereto (the
"Purchasers").
PRELIMINARY STATEMENT
Pursuant to the Purchase Agreement (as defined below), the
Purchasers have agreed to purchase the Series Q, Class A Preference
Shares (as defined in the Purchase Agreement, "Class A Preferred Stock")
on the condition, among others, that the Company grant the registration
rights set forth in this Agreement.
ACCORDINGLY, to induce the Purchasers to purchase the Class A
Preferred Stock and in consideration of the mutual representations and
agreements set forth in this Agreement, the Company and the Purchasers,
intending to be legally bound, now agree as follows:
STATEMENT OF AGREEMENT
SECTION 1. DEFINITIONS.
1.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" means any entity controlling, controlled by or under
common control with a designated Person. For the purposes of this
definition, "control" shall have the meaning specified as of the date of
this Agreement for that word in Rule 405 promulgated by the SEC under the
Securities Act.
"Equity Security" shall mean any stock or similar security,
including without limitation securities containing equity features and
securities containing profit participation features, or any security
convertible or exchangeable, with or without consideration, into or for
any stock or similar security, or any security carrying any warrant or
right to subscribe to or purchase any stock or similar security, or any
such warrant or right.
"Purchase Agreement" shall mean the Securities Subscription
Agreement dated as of June 5, 1998 among the Company and the Purchasers.
"Registrable Securities" shall mean (i) the Common Stock issuable
upon conversion of the Class A Preferred Stock, and any Common Stock
issued with respect to the Common Stock described above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
"Rule 144" means Rule 144 promulgated by the SEC under the Exchange
Act, as such rule may be amended from time to time, or any successor rule
thereto.
1.2 Incorporated Definitions. Capitalized terms used in this
Agreement and not otherwise defined herein shall have the meanings set
forth in the Purchase Agreement.
<PAGE>
SECTION 2. REGISTRATION.
2.1 The Company shall be required, at the Company's expense, to
effect the registration of twice the number of the Underlying Shares
issuable on the Closing Date upon conversion of the Class A Preferred
Stock under the Act and relevant Blue Sky laws. The Company and the
Purchaser shall cooperate in good faith in connection with the furnishing
of information required for such registration and the taking of such
other actions as may be legally or commercially necessary in order to
effect such registration. The Company shall file a registration statement
on or before June 26, 1998, and shall use its best efforts to cause such
registration statement to become effective as soon as practicable
thereafter. Such best efforts shall include, but not be limited to,
promptly responding to all comments received from the staff of the
Securities and Exchange Commission with respect to such registration
statement and promptly preparing and filing amendments to such
registration statement which are responsive to the comments received from
the staff of the Securities and Exchange Commission. Once declared
effective by the Securities and Exchange Commission the Company shall
cause such registration statement to remain effective until the earlier
of (i) the sale by the Purchaser of all Underlying Shares registered or
(ii) one year after the effective date of such registration statement.
In the event the registration statement is not declared effective within
90 days after the date of filing, at Purchaser's option, either (i) the
current Twenty-five percent (25%) discount provided in the Conversion
Price shall increase by three percent (3%) and such discount shall
continue to increase by two percent (2%) for each thirty (30) day period
thereafter until the registration statement is declared effective by the
SEC, or until the discount reached is thirty-five percent (35%), and
additional Common Stock shall be issued to the Purchaser upon conversion
in accordance with such additional discounts, or (ii) Purchaser may
convert any whole number of shares of Series Q Class A Preferred Stock
into Common Shares of the Corporation pursuant to Regulation S, provided
that Purchaser demonstrates to the Corporation's reasonable satisfaction
that Purchaser is qualified at all relevant times as an investor under
Regulation S.
2.2 Method of Distribution. The Purchasers shall determine the
method of distribution of the Registrable Securities so included.
2.3 Registration Statement Form. Registrations under this
Section 2 shall be on such appropriate registration form of the SEC (i)
as shall be selected by the Company and as shall be reasonably acceptable
to the Purchasers, and (ii) as shall permit the disposition of such
Registrable Securities in accordance with the method or methods of
disposition selected pursuant to Section 2.2 hereof.
2.4 Expenses. Except as otherwise provided in this Section 2.4,
all expenses incurred in connection with the effective registration
pursuant to this Section 2 (excluding underwriting discounts and
commissions applicable to Registrable Securities and any expenses of
counsel to the Purchasers), including, without limitation, in each case,
all registration, filing and NASD fees; all fees and expenses of
complying with securities or blue sky laws; all word processing,
duplicating and printing expenses, messenger, delivery and shipping
expenses; fees and disbursements of the accountants and counsel for the
Company including the expenses of any special audits or "cold comfort"
letters or opinions required by or incident to such registrations; and
any fees and disbursements of underwriters customarily paid by issuers or
<PAGE>
sellers of securities, but excluding underwriting discounts and
commissions, if any, shall be borne by the Company. In all cases, the
Purchasers shall pay the underwriting discounts and commissions
applicable to the securities sold by the Purchasers.
2.5 Effective Registration Statement. A registration requested
pursuant to this Section 2 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective
(unless a substantial cause of the failure of such registration statement
to become effective shall be attributable to the Purchasers), (ii) if
after it has become effective, such registration is interfered with by
any stop order, injunction or other order or requirement of the SEC or
other governmental agency or court for any reason, resulting in a failure
to consummate the offering of Registrable Securities offered thereby,
(iii) if after a registration statement with respect thereto has become
effective, the offering of Registrable Securities offered thereby is not
consummated due to factors beyond the control of the Purchasers, other
than the fact that the underwriters have advised the Purchasers that the
Registrable Securities cannot be sold at a net price equal to or above
the net price anticipated at the time of filing of the preliminary
prospectus, or (iv) if the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in connection
with such registration are not satisfied (unless a substantial cause of
such conditions to closing not being satisfied shall be attributable to
the Purchasers).
2.6 Selection of Underwriters. If a registration pursuant to this
Section 2 involves an underwritten offering, the underwriter or
underwriters thereof shall be selected by the Company with the approval
of the Purchasers, which approval shall not be unreasonably withheld.
SECTION 3. REGISTRATION PROCEDURES.
3.1 Procedures. If and whenever the Company is required to use
reasonable efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Section 2 hereof, the
Company will, subject to the limitations provided herein, as
expeditiously as possible:
(a) prepare and file with the SEC the requisite registration
statement to effect such registration, and thereafter, use
reasonable efforts to cause such registration statement to become
effective; provided that the Company may discontinue any
registration of its securities which are not Registrable Securities
(and, under the circumstances specified in Section 3.1 hereof, its
securities which are Registrable Securities) at any time prior to
the effective date of the registration statement relating thereto;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions
of the Securities Act with respect to the disposition of all
securities covered by such registration statement until such time as
all of such securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set
forth in such registration statement; provided, however, that the
Company shall not in any event be required to keep the registration
statement effective for a period of more than twelve months after
<PAGE>
such registration statement becomes effective; and provided further
that the Company may, at any time, delay the filing or suspend the
effectiveness of any registration under this Agreement, or without
suspending such effectiveness, instruct the Purchasers not to sell
any Registrable Securities included in any such registration, (i) if
the Company shall have determined upon the advice of counsel that
the Company would be required to disclose any actions taken or
proposed to be taken by the Company in good faith and for valid
business reasons, including without limitation, the acquisition or
divestiture of assets, which disclosure would have a material
adverse effect on the Company or on such actions, or (ii) if
required by law, to update the prospectus relating to any such
registration to include updated financial statements (a "Suspension
Period") by providing the Purchasers with written notice of such
Suspension Period and the reasons therefor; provided, however, that
the Company will not be required to disclose such reasons with
particularity if an authorized executive officer of the Company
certifies that the Company believes it is required by law to delay
the filing or suspend the effectiveness of any such registration.
In addition, the Company shall not be required to keep any
registration effective, or may without suspending such
effectiveness, instruct the Purchasers if it has Registrable
Securities included in such registration not to sell such
securities, during any period which the Company is instructed,
directed, ordered or otherwise requested by any governmental agency
or self-regulatory organization to stop or suspend such trading or
sales ("Supplemental Extension Period"). In the event of a
Suspension Period or Supplemental Extension Period, the period
during which any registration under this Agreement is to remain
effective pursuant to this Section 3.1(b) shall be tolled until the
end of any such Suspension Period or Supplemental Extension Period.
The Company will use reasonable efforts to restrict any Suspension
Period or Supplemental Extension Period to less than 30 days and not
to exceed two, twenty-day periods within a twelve month period;
(c) furnish to the Purchasers such number of conformed copies
of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such
number of copies of the prospectus contained in such registration
statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, and such other documents, as the Purchasers may
reasonably request;
(d) use its reasonable efforts to cause all Registrable
Securities covered by such registration statement to be registered
with or approved by such other United States Federal or state
governmental agencies or authorities as may be necessary to enable
the Purchasers to consummate the disposition of such Registrable
Securities;
(e) notify the Purchasers, if Registrable Securities are
covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any
event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
<PAGE>
therein not misleading in the light of the circumstances under which
they were made, and at the request of the Purchasers prepare and
furnish to the Purchasers a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made.
(f) otherwise use reasonable efforts to comply with all
applicable rules and regulations of the SEC and make available to
its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months beginning
with the first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(g) provide and cause to be maintained a transfer agent for
all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such
registration statement; and
(h) use its reasonable efforts to list all Registrable
Securities covered by such registration statement on any securities
exchange on which any of the Company's Common Stock is then listed.
3.2 Information Requirements. It shall be a condition precedent to
the obligations of the Company to take any action with respect to
registering the Purchasers' Registrable Securities pursuant to this
Section 3 that the Purchasers, furnish the Company in writing such
information regarding the Purchasers, the Registrable Securities and
other securities of the Company held by the Purchasers, and the
distribution of such securities as the Company may from time to time
reasonably request in writing. If a Purchaser refuses to provide the
Company with any of such information on the grounds that it is not
necessary to include such information in the registration statement, the
Company may exclude the Purchaser's Registrable Securities from the
registration statement unless such Purchaser provides the Company with an
opinion of counsel to the effect that such information need not be
included in the registration statement.
The Purchasers agree by acquisition of such Registrable Securities
that upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3.1(e), the Purchasers will
forthwith discontinue the Purchasers' disposition of Registrable
Securities pursuant to the registration statement relating to such
Registrable Securities until the Purchasers' receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3.1(e) and, if
so directed by the Company, will deliver to the Company copies, other
than permanent file copies then in the Purchasers' possession, of the
prospectus relating to such Registrable Securities current at the time of
receipt of such notice.
<PAGE>
SECTION 4. UNDERWRITTEN OFFERINGS.
If requested by the underwriters for any underwritten offering of
Registrable Securities pursuant to a registration under Section 2 hereof,
the Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to be satisfactory in
substance and form to the Purchasers and the underwriters and to contain
such representations and warranties by the Company and such other terms
as are generally prevailing in agreements of this type, including,
without limitation, indemnities to the effect and to the extent provided
in Section 6 hereof. The Purchasers will cooperate with the Company in
the negotiation of the underwriting agreement and will give consideration
to the reasonable requests of the Company regarding the form thereof,
provided that nothing herein contained shall diminish the foregoing
obligations of the Company. The Purchasers shall not be required to make
any representations, warranties or agreements with the Company other than
representations, warranties or agreements regarding the Purchasers,
Purchasers' Registrable Securities and other securities of the Company,
the Purchasers' intended method of distribution, and any representations,
warranties or agreements required by law.
SECTION 5. PREPARATION.
In connection with the preparation and filing of the registration
statement under the Securities Act pursuant to this Agreement, and
subject to the rights and obligations of the Company under the Securities
Act and other applicable laws, the Purchasers shall have the right to
review and approve those portions of such registration statement that
directly pertain to the Purchasers.
SECTION 6. INDEMNIFICATION.
6.1 Indemnification by the Company. In the event any Registrable
Securities are included in a registration statement under this Agreement,
to the extent permitted by law, the Company will, and hereby does,
indemnify and hold harmless each Purchaser, its directors and officers,
each other Person who participates as an underwriter in the offering or
sale of such securities and each other Person, if any, who controls each
Purchaser or any such underwriter within the meaning of the Securities
Act, against any losses, damages or liabilities, joint or several, to
which each Purchaser or any such director or officer or underwriter or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, damages or liabilities arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or
any amendment or supplement thereto or any other document prepared in
connection therewith, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Company will
reimburse the Purchasers and each such director, officer, underwriter and
controlling person for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, liability, action or proceeding; provided that the Company shall
not be liable in any such case to the extent that any such loss, damage,
liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final
<PAGE>
prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by
the Purchasers, and provided further that the Company shall not be liable
to any Person who participates as an underwriter in the offering or sale
of Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to
the extent that any such loss, damage, liability or expense arises out of
such Person's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended to the Person asserting an
untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of
Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus and such delivery would have mitigated
liability. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Purchasers or
any such director, officer, underwriter or controlling person and shall
survive the transfer of such securities by such seller.
6.2 Indemnification by the Purchasers. The Company may require, as
a condition to including any Registrable Securities in any registration
statement filed pursuant to Section 3 hereof, that the Company shall have
received an undertaking reasonably satisfactory to it from each Purchaser
to indemnify and hold harmless (in the same manner and to the same extent
as set forth in subdivision 6.1 of this Section 6) each underwriter, each
Person who controls such underwriter within the meaning of the Securities
Act, the Company, each director of the Company, each officer of the
Company and each other Person, if any, who controls the Company within
the meaning of the Securities Act, with respect to any statement or
alleged statement in such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or
any amendment or supplement thereto, if such statement or alleged
statement was made in reliance upon and in strict conformity with written
information furnished to the Company by the Purchasers expressly for use
in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement; provided that the Purchasers shall not be liable to any
Person who participates as an underwriter in the offering or sale of
Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to
the extent that any such loss, damage, liability or expense arises out of
such Person's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, to the Person asserting an
untrue statement or alleged untrue statement at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement was corrected in such final prospectus. Such indemnity shall
remain in full force and effect regardless of any investigation made by
or on behalf of any underwriter, the Company or any such director,
officer or controlling Person and shall survive the transfer of such
securities by such seller.
6.3 Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in Sections 6.1 and 6.2, such
indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action; provided that the failure of any indemnified
party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this Section 6, except to the extent that the indemnifying party is
<PAGE>
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
6.4 Indemnification Payments. The indemnification required by this
Section 6 shall be made by periodic advancements of the amount thereof as
and when loss, damage or liability is incurred and evidence of an
indemnifiable expense is presented to the indemnifying party.
6.5 Contribution. If the indemnification provided for in this
Section 6 from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such loss, damages,
liabilities or expenses in such proportion as is appropriate to reflect
the relative fault of the indemnifying party and indemnified parties in
connection with the actions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue statement of
material fact or omission or alleged omission to state a material fact,
has been made by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result
of the losses, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in Section 6.3
hereof, any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.6 were determined by pro rata
allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 6.6
no underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Registrable Securities
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
<PAGE>
If indemnification is available under this Section 6, the
indemnifying parties shall indemnify each indemnified party to the full
extent provided in Section 6.1 through Section 6.5 hereof without regard
to the relative fault of said indemnifying party or indemnified party or
any other equitable consideration provided for in this Section 6.6.
SECTION 7. REPORTING REQUIREMENTS UNDER EXCHANGE ACT.
The Company shall use its best efforts to keep effective the
registration of its Common Stock under Section 12 of the Exchange Act and
shall timely file such information, documents and reports as the SEC may
require or prescribe under Section 13 of the Exchange Act. The Company
shall timely file such information, documents and reports which a
corporation, partnership or other entity subject to Section 13 or 15(d)
(whichever is applicable) of the Exchange Act is required to file.
So long as the Company is subject to the reporting requirements of
either Section 13 or 15(d) of the Exchange Act, the Company shall
forthwith upon request furnish the Purchasers (i) a written statement by
the Company that it has complied with such reporting requirements, (ii) a
copy of the most recent annual or quarterly report of the Company, and
(iii) such other reports and documents filed by the Company with the SEC
as the Purchasers may reasonably request in availing itself of an
exemption for the sale of Registrable Securities without registration
under the Securities Act. The Company acknowledges and agrees that the
purpose of the requirements contained in this Section 7 are to enable the
Purchasers to comply with the current public information requirement
contained in Paragraph (c) of Rule 144 under the Securities Act should
the Purchasers ever wish to dispose of any of the Securities of the
Company acquired by it without registration under the Securities Act in
reliance upon Rule 144 (or any other similar exemptive provision). In
addition, the Company shall take such other measures and file such other
information, documents and reports, as shall hereafter be required by the
SEC as a condition to the availability of Rule 144 under the Securities
Act (or any similar exemptive provision hereafter in effect).
SECTION 8. SHAREHOLDER INFORMATION.
The Company may require the Purchasers to furnish the Company such
information in writing with respect to the Purchasers and the
distribution of its Registrable Securities as the Company may from time
to time reasonably request in writing and as shall be required by law or
by the SEC in connection therewith.
SECTION 9. FORMS.
All references in this Agreement to particular forms of registration
statements are intended to include, and shall be deemed to include,
references to all successor forms which are intended to replace, or to
apply to similar transactions as, the forms herein referenced.
SECTION 10. TRANSFER OF REGISTRATION RIGHTS.
The registration rights granted to the Purchasers under this
Agreement may not be transferred without the prior written consent of the
Company.
<PAGE>
SECTION 11. AMENDMENT.
This Agreement may be amended only by a written agreement signed by
the Company and the Purchasers.
SECTION 12. NOTICES.
All notices, requests, consents and other communications required or
permitted hereunder shall be in writing and shall be delivered, or mailed
first-class postage prepaid, registered or certified mail,
(a) If to a Purchaser at its respective address as shown on
the books of the Company, or at such other address as such Purchaser
may specify by written notice to the Company, or
(b) If to the Company at 10911 Petal Street, Dallas, Texas
75238, Attention: Chief Executive Officer; or at such other address
as the Company may specify by written notice to the Purchaser,
and such notices and other communications shall for all purposes of this
Agreement be treated as being effective or having been given if delivered
personally, or, if sent by mail, when received.
SECTION 13. COUNTERPARTS.
This Agreement may be executed concurrently in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 14. CHOICE OF LAW and VENUE.
This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Delaware. Each of the parties consents to
the jurisdiction of the federal courts whose districts encompass any part
of the City of New York or the City of Dallas, or the state courts of the
State of New York sitting in the City of New York, or the state courts of
the State of Texas sitting in the City of Dallas in connection with any
dispute arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on
forum non conveniens, to the bringing of any such proceeding in such
jurisdictions.
SECTION 15. SEVERABILITY.
Should any one or more of the provisions of this Agreement or any
agreement entered into pursuant to this Agreement be determined to be
illegal or unenforceable, all other provisions of this Agreement and of
each other agreement entered into pursuant to this Agreement, shall be
given effect separately from the provision or provisions determined to be
illegal or unenforceable and shall not be affected thereby.
SECTION 16. WHOLE AGREEMENT.
This Agreement, along with an Escrow Agreement, and a Securities
Subscription Agreement (including all attachments) of even date herewith,
constitutes the complete agreement and understanding by and among the
parties hereto and shall supersede any prior understanding, agreement or
representation by or among the parties, whether written or oral, related
to the subject matter of this transaction. A facsimile transmission of
this signed Agreement shall be legal and binding on all parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives effective as of June
5, 1998.
UNIVIEW TECHNOLOGIES CORPORATION
By:
Patrick A. Custer
President and CEO
PURCHASERS: ___________________________
__________________________________________
Print Name: ___________________________
__________________________________________
Print Name: ___________________________
<PAGE>
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement"),
dated as of _____________, 1998, between uniView Technologies
Corporation, a Texas corporation (the "Company"), and
________________________, referred to herein as a "Purchaser" and are
collectively referred to herein as the "Purchasers."
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers, and
the Purchasers desire to acquire from the Company, shares of the
Company's 5% Series 1998-A1 Convertible Preferred Stock, par value $1.00
per share (the "Series 1998-A1 Preferred"), the Company's 5% Series 1998-
A2 Convertible Preferred Stock, par value $1.00 per share (the "Series
1998-A2 Preferred") and the Company's 5% Series 1998-A3 Convertible
Preferred Stock, par value $1.00 per share (the "Series 1998-A3
Preferred" and together with the Series 1998-A1 Preferred and the Series
1998-A2 Preferred, the "Preferred Stock").
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company and each Purchaser agree as follows:
ARTICLE I
PURCHASE AND SALE OF PREFERRED SHARES
1.1 Purchase and Sale.
(a) Subject to the terms and conditions set forth herein, the
Company shall issue and sell to the Purchasers, and the Purchasers,
severally and not jointly, shall purchase from the Company: (i) 80 shares
of Series 1998-A1 Preferred (the "Series 1998-A1 Shares"); (ii) up to 80
shares of Series 1998-A2 Preferred (the "Series 1998-A2 Shares"); and
(iii) up to 80 shares of Series 1998-A3 Preferred (the "Series 1998-A3
Shares" and together with the Series 1998-A1 Shares and the Series 1998-
A2 Shares, the "Shares"). Notwithstanding anything to the contrary set
forth in this Agreement, the aggregate number of Shares to be sold
hereunder shall not exceed 240 (the "Maximum Share Amount").
(b) The Series 1998-A1 Preferred shall have the respective rights,
preferences and privileges set forth in Exhibit A attached hereto (the
"Series 1998-A1 Terms"), which shall be incorporated into a Certificate
of Designation (the "Series 1998-A1 Designation") to be approved by the
Purchasers and the Company's Board of Directors and filed on or prior to
the Series 1998-A1 Closing (as defined below) by the Company with the
Secretary of State of Texas. The Series 1998-A2 Preferred and Series 1998-
A3 Preferred shall have respective rights, preferences and privileges
identical to the Series 1998-A1 Terms, mutatis mutandis, and shall rank
pari passu with the Series 1998-A1 Preferred with regard to dividends,
liquidation, voting rights and any other preferential rights designated
therein, except that the Conversion Price (as defined below) for
conversion of the Series 1998-A2 Shares and Series 1998-A3 Shares shall
be determined as of the Original Issue Date (as defined below) for such
Series 1998-A2 and Series 1998-A3 Shares.
The Series 1998-A2 Preferred and Series 1998-A3 Preferred shall be
authorized pursuant to certificates of designation identical to the
Series 1998-A1 Designation, mutatis mutandis, prepared by the Company,
subject to the approval of the Purchasers, and filed at or prior to the
Series 1998-A2 Closing Date (as defined below) and Series 1998-A3 Closing
<PAGE>
Date (as defined below), as applicable, by the Company with the Secretary
of State of Texas (such certificates of designation, together with the
Series 1998-A1 Designation, are referred to as the "Certificates of
Designation").
For purposes of this Agreement, "Conversion Price," "Original Issue
Date," "Conversion Date" "Trading Day" and "Per Share Market Value" shall
have the meanings set forth in Exhibit A; and "Market Price" at any date
shall mean the average Per Share Market Value for the five (5) Trading
Days immediately preceding such date.
1.2 Purchase Price. The purchase price per Share shall be $25,000.
1.3 The Closings.
(a) The Series 1998-A1 Closing.
(i) The closing of the purchase and sale of the Series 1998-A1
Shares (the "Series 1998-A1 Closing") shall take place at the offices of
Akin, Gump, Strauss, Hauer & Feld, L.L.P. ("Akin, Gump"), 590 Madison
Avenue, New York, New York 10022, immediately following the execution
hereof or such later date or different location as the parties shall
agree, but not prior to the date that the conditions set forth in Section
4.1 have been satisfied or waived by the appropriate party. The date of
the Series 1998-A1 Closing is hereinafter referred to as the "Series 1998-
A1 Closing Date." At the Series 1998-A1 Closing, the Company shall sell
and issue to the Purchasers, and the Purchasers shall, severally and not
jointly, purchase from the Company, Eighty (80) Series 1998-A1 Shares for
an aggregate purchase price of $2,000,000 (the "Series 1998-A1 Purchase
Price").
(ii) At the Series 1998-A1 Closing, (a) immediately after
receipt of the Purchase Price therefor, the Company shall deliver to each
Purchaser stock certificates representing the Series 1998-A1 Shares
purchased by such Purchaser as set forth next to such Purchaser's name on
Schedule 1 attached hereto, each registered in the name of such
Purchaser, and all other documents, instruments and writings required to
have been delivered at or prior to the Series 1998-A1 Closing by the
Company pursuant to this Agreement and the Registration Rights Agreement,
dated the date hereof, by and between the Company and the Purchasers, in
the form of Exhibit B (the "Registration Rights Agreement"), and (b) each
Purchaser shall deliver to the Company the portion of the Series 1998-A1
Purchase Price set forth next to its name on Schedule 1, in United States
dollars in immediately available funds by wire transfer to an account
designated in writing by the Company for such purpose on or prior to the
Series 1998-A1 Closing Date, and all documents, instruments and writings
required to have been delivered at or prior to the Series 1998-A1 Closing
by such Purchaser pursuant to this Agreement and the Registration Rights
Agreement.
(b) The Series 1998-A2 Closing.
(i) Subject to the terms and conditions set forth in Section
4.2 and elsewhere in this Agreement, the Company shall, if the average
Per Share Market Value for the thirty Trading Days prior to the date of
the Series 1998-A2 Subsequent Financing Notice is greater than $1.50,
have the right to deliver a written notice to the Purchasers (a "Series
1998-A2 Subsequent Financing Notice") requiring the Purchasers to
purchase Series 1998-A2 Shares. The Company may deliver a Series 1998-A2
<PAGE>
Subsequent Financing Notice no earlier than 90 days after the Series 1998-
A1 Closing Date and no later than 180 days after the Series 1998-A1
Closing Date (such 180th day, the "Series 1998-A2 Closing Expiration
Date") and such Series 1998-A2 Subsequent Financing Notice shall set
forth the dollar amount of Series 1998-A2 Shares that the Company intends
to sell to the Purchasers, provided, however, that the minimum amount of
such sale and purchase shall be $1,000,000 and the maximum amount of such
sale and purchase shall be $2,000,000; provided, further, that the
Purchasers shall not be required to purchase any Series 1998-A2 Shares if
the average Per Share Market Value for the thirty Trading Days prior to
the date of the Series 1998-A2 Closing is less than $1.50. If, at the
Series 1998-A2 Expiration Date, the Company has not delivered the Series
1998-A2 Subsequent Financing Notice to the Purchasers, then the
Purchasers shall have the option to purchase the Series 1998-A2 Shares
subject to the terms and conditions of this Agreement. The Purchasers
must deliver written notice (the "Series 1998-A2 Purchase Notice") to the
Company of their intent to purchase the Series 1998-A2 Shares within ten
days after the Series 1998-A2 Closing Expiration Date, which Series 1998-
A2 Purchase Notice shall set forth the dollar amount of Series 1998-A2
Shares to be purchased, subject to the limitations on such amount set
forth above. At the Series 1998-A2 Closing each Purchaser shall be
obligated (subject to the terms and conditions herein) to purchase such
portion of such Series 1998-A2 Shares as equals such Purchaser's pro rata
portion of the purchase price for the Series 1998-A1 Shares issued and
sold at the Series 1998-A1 Closing. The closing of the purchase and sale
of the Series 1998-A2 Shares (the "Series 1998-A2 Closing") shall take
place in the same manner as the Series 1998-A1 Closing, on such date
indicated in the Series 1998-A2 Subsequent Financing Notice or Series
1998-A2 Purchase Notice, as applicable (which may not be subsequent to
the fifth (5th) Trading Day after receipt by the Purchasers of the Series
1998-A2 Subsequent Financing Notice or receipt by the Company of the
Series 1998-A2 Purchase Notice, as applicable, or as otherwise agreed to
by the parties); provided that in no case shall the Series 1998-A2
Closing take place unless and until the conditions listed in Section 4.2
have been satisfied or waived by the appropriate party. The date of the
Series 1998-A2 Closing is hereinafter referred to as the "Series 1998-A2
Closing Date" and the purchase price paid for the Series 1998-A2 Shares
is hereinafter referred to as the "Series 1998-A2 Purchase Price.")
(ii) At the Series 1998-A2 Closing, (a) immediately after
receipt of the Purchase Price therefor, the Company shall deliver (A) to
each Purchaser (1) a pro rata portion of the Series 1998-A2 Shares
(determined by reference to the amount of Series 1998-A1 Shares issued
and sold at the Series 1998-A1 Closing) to be issued and sold thereat (or
such other amount upon which the parties may agree), registered in the
name of the appropriate Purchaser, (2) the legal opinion referenced in
Section 4.2(l), substantially in the form attached hereto as Exhibit C,
and (3) all other documents, instruments and writings required to have
been delivered at or prior to the Series 1998-A2 Closing by the Company
to the Purchasers pursuant to this Agreement; and (b) each Purchaser
shall deliver to the Company (1) the purchase price for the Series 1998-
A2 Shares being purchased by it at the Series 1998-A2 Closing in United
States dollars in immediately available funds by wire transfer to an
account designated in writing by the Company for such purpose on or prior
to the Series 1998-A2 Closing Date and (2) all documents, instruments and
writings required to have been delivered at or prior to the Series 1998-
A2 Closing by such Purchaser pursuant to this Agreement.
<PAGE>
(c) The Series 1998-A3 Closing.
(i) Subject to the terms and conditions set forth in Section
4.2 and elsewhere in this Agreement, the Company shall, if the average
Per Share Market Value for the thirty Trading Days prior to the date of
the Series 1998-A3 Subsequent Financing Notice is greater than $1.50 have
the right to deliver a written notice to the Purchasers (a "Series 1998-
A3 Subsequent Financing Notice") requiring the Purchasers to purchase
Series 1998-A3 Shares. The Company may deliver a Series 1998-A3
Subsequent Financing Notice no earlier than 90 days after the Series 1998-
A2 Closing Date and no later than 180 days after the Series 1998-A2
Closing Date (such 180th day, the "Series 1998-A3 Closing Expiration
Date") and such Subsequent Financing Notice shall set forth the dollar
amount of Series 1998-A3 Shares that the Company intends to sell to the
Purchasers, provided, however, that the minimum amount of such sale and
purchase shall be $1,000,000 and the maximum amount of such sale and
purchase shall be $2,000,000; provided, further, that the Purchasers
shall not be required to purchase any Series 1998-A3 Shares if the
average Per Share Market Value for the thirty Trading Days prior to the
date of the Series 1998-A3 Closing is less than $1.50. If, at the Series
1998-A3 Expiration Date, the Company has not delivered the Series 1998-A3
Subsequent Financing Notice to the Purchasers, then the Purchasers shall
have the option to purchase the Series 1998-A3 Shares subject to the
terms and conditions of this Agreement. The Purchasers must deliver
written notice (the "Series 1998-A3 Purchase Notice") to the Company of
their intent to purchase the Series 1998-A3 Shares within ten days after
the Series 1998-A3 Closing Expiration Date, which Series 1998-A3 Purchase
Notice shall set forth the dollar amount of Series 1998-A3 Shares to be
purchased, subject to the limitations on such amount set forth above. At
the Series 1998-A3 Closing each Purchaser shall be obligated (subject to
the terms and conditions herein) to purchase such portion of such Series
1998-A3 Shares as equals such Purchaser's pro rata portion of the
purchase price for the Series 1998-A1 Shares issued and sold at the
Series 1998-A1 Closing. The closing of the purchase and sale of the
Series 1998-A3 Shares (the "Series 1998-A3 Closing") shall take place in
the same manner as the Series 1998-A1 Closing on such date indicated in
the Series 1998-A3 Subsequent Financing Notice or Series 1998-A3 Purchase
Notice, as applicable (which may not be subsequent to the fifth (5th)
Trading Day after receipt by the Purchasers of the Series 1998-A3
Subsequent Financing Notice or Series 1998-A3 Purchase Notice, as
applicable, or as otherwise agreed to by the parties); provided that in
no case shall the Series 1998-A3 Closing take place unless and until the
conditions listed in Section 4.2 have been satisfied or waived by the
appropriate party. The date of the Series 1998-A3 Closing is hereinafter
referred to as the "Series 1998-A3 Closing Date."
(ii) At the Series 1998-A3 Closing, (a) immediately after
receipt of the Purchase Price therefor, the Company shall deliver (A) to
each Purchaser (1) a pro rata portion of the Series 1998-A3 Shares
(determined by reference to the amount of Series 1998-A1 Shares issued
and sold at the Series 1998-A1 Closing) to be issued and sold thereat (or
such other amount upon which the parties may agree), registered in the
name of the appropriate Purchaser, (2) the legal opinion referenced in
Section 4.1(xii), substantially in the form attached hereto as Exhibit C,
and (3) all other documents, instruments and writings required to have
been delivered at or prior to the Series 1998-A3 Closing by the Company
to the Purchasers pursuant to this Agreement; and (b) each Purchaser
shall deliver to the Company (1) the purchase price for the Series 1998-
A3 Shares being purchased by it at the Series 1998-A3 Closing in United
<PAGE>
States dollars in immediately available funds by wire transfer to an
account designated in writing by the Company for such purpose on or prior
to the Series 1998-A3 Closing Date and (2) all documents, instruments and
writings required to have been delivered at or prior to the Series 1998-
A3 Closing by such Purchaser pursuant to this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company. The
Company hereby makes the following representations and warranties to the
Purchasers:
(a) Organization and Qualification. The Company is a corporation,
duly incorporated, validly existing and in good standing under the laws
of the State of Texas, with the requisite corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. The Company has no subsidiaries other than as set
forth in Schedule 2.1(a) (collectively the "Subsidiaries"). Each of the
Subsidiaries is a corporation, duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the full corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. Each of the Company and the Subsidiaries is duly
qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, would
not, individually or in the aggregate, (x) adversely affect the legality,
validity or enforceability of the Preferred Stock or any of the
Transaction Documents (as defined below), (y) have or result in a
material adverse effect on the results of operations, assets, prospects,
or financial condition of the Company and the Subsidiaries, taken as a
whole or (z) adversely impair the Company's ability to perform fully on a
timely basis its obligations under any Transaction Document (any of (x),
(y) or (z), being a "Material Adverse Effect").
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and the other Transaction
Documents, and otherwise to carry out its obligations hereunder and
thereunder. This Agreement, the Certificates of Designation, the Warrants
and the Registration Rights Agreement are collectively referred to as the
"Transaction Documents". The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary action on the part of the Company and no further action is
required by the Company. Each of the Transaction Documents has been duly
executed by the Company and when delivered in accordance with the terms
hereof will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or
by other equitable principles of general application. Neither the Company
nor any Subsidiary is in violation of any of the provisions of its
respective articles of incorporation, by-laws or other charter documents.
Prior to each of the closing dates the respective Certificate of
Designation has been filed with the Secretary of State of the State of
<PAGE>
Texas and will be in full force and effect, enforceable against the
Company in accordance with the terms thereof.
(c) Capitalization. The authorized, issued and outstanding capital
stock of the Company is set forth in Schedule 2.1(c). No shares of Common
Stock are entitled to preemptive or similar rights, nor is any holder of
the Common Stock entitled to preemptive or similar rights arising out of
any agreement or understanding with the Company by virtue of any of the
Transaction Documents. Except as disclosed in Schedule 2.1(c), there are
no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or, except as a
result of the purchase and sale of the Shares, securities, rights or
obligations convertible into or exchangeable for, or giving any person
any right to subscribe for or acquire any shares of Common Stock, or
contracts, commitments, understandings, or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. To the knowledge of the
Company, except as specifically disclosed in the SEC Documents (as
defined below) or Schedule 2.1(c), no Person or group of related Persons
beneficially owns (as determined pursuant to Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) or
has the right to acquire by agreement with or by obligation binding upon
the Company beneficial ownership of in excess of 5% of the Common Stock.
A "Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
(d) Issuance of Shares. The Shares are duly authorized, and when
issued and paid for in accordance with the terms hereof, shall be validly
issued, fully paid and nonassessable, free and clear of all liens,
encumbrances and rights of first refusal of any kind (collectively,
"Liens"). The Company has and, at the Series 1998-A1 Closing Date, the
Series 1998-A2 Closing Date and the Series 1998-A3 Closing Date (each a
"Closing Date"), as the case may be, will have and at all times while the
Shares are outstanding will maintain an adequate reserve of duly
authorized shares of Common Stock to enable it to perform its obligations
under this Agreement, the Warrants and the Certificates of Designation
with respect to the number of Shares issued and outstanding at such
Closing Date and in no circumstances shall such reserved and available
shares of Common Stock be less than the sum of (i) 175% times the maximum
number of shares of Common Stock which would be issuable upon conversion
of the Shares issued pursuant to the terms hereof with respect to the
number of Shares issued and outstanding at such Closing Date were such
conversion effected on the Original Issue Date for such Shares and (ii)
the number of shares Common Stock which would be issuable upon payment of
dividends on the Shares, assuming each Share is outstanding for two
years. The shares of Common Stock issuable upon conversion of the Shares,
which may be issued as payment of dividends on the Shares and which are
issuable upon exercise of the Warrants are collectively referred to
herein as the "Underlying Shares." When issued in accordance with the
Certificates of Designation, the Underlying Shares will be duly
authorized, validly issued, fully paid and nonassessable, free and clear
of all Liens.
(e) No Conflicts. The execution, delivery and performance of this
Agreement and the other Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and
<PAGE>
thereby do not and will not (i) conflict with or violate any provision of
its articles of incorporation, bylaws or other charter documents (each as
amended through the date hereof) or (ii) subject to obtaining the
consents referred to in Section 2.1(f), conflict with, or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument (evidencing a Company debt or otherwise) to which the Company
is a party or by which any property or asset of the Company is bound or
affected, or (iii) result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company is subject (including Federal
and state securities laws and regulations), or by which any material
property or asset of the Company is bound or affected, except in the case
of each of clauses (ii) and (iii), such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as
would not, individually or in the aggregate, have or result in a Material
Adverse Effect. The business of the Company is not being conducted in
violation of any law, ordinance or regulation of any governmental
authority.
(f) Consents and Approvals. Except as specifically set forth in
Schedule 2.1(f), neither the Company nor any Subsidiary is required to
obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other person in
connection with the execution, delivery and performance by the Company of
the Transaction Documents, other than (i) the approval of the Company's
Board of Directors and the filings of the Certificates of Designation
with respect to the Preferred Stock with the Secretary of State of Texas,
which filings and approvals with respect to each of the Series 1998-A1
Shares, the Series 1998-A2 Shares and the Series 1998-A3 Shares shall be
effected prior to the Series 1998-A1 Closing Date, the Series 1998-A2
Closing Date and the Series 1998-A3 Closing Date, as appropriate, (ii)
the filing of Underlying Shares Registration Statements with the
Securities and Exchange Commission (the "Commission"), which shall be
filed in accordance with and in the time periods set forth in the
Registration Rights Agreement, (iii) the application(s) or any letter(s)
acceptable to the Nasdaq Stock Market for the listing of the Underlying
Shares with the Nasdaq Stock Market (and with any other national
securities exchange or market on which the Common Stock is then listed),
and (iv) any filings, notices or registrations under applicable state
securities laws (together with the consents, waivers, authorizations,
orders, notices and filings referred to in Schedule 2.1(f), the "Required
Approvals").
(g) Litigation; Proceedings. Except as specifically set forth in
Schedule 2.1(g) or as disclosed in the Disclosure Materials (as
hereinafter defined) there is no action, suit, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or
any of their respective properties before or by any court, governmental
or administrative agency or regulatory authority (federal, state, county,
local or foreign) which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or the
Preferred Stock or (ii) could reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect.
(h) No Default or Violation. Neither the Company nor any Subsidiary
<PAGE>
(i) is in default under or in violation of any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound (A) except as specifically
set forth in Schedule 2.1(h), and (B) which could reasonably be expected
to, individually or in the aggregate, have a Material Adverse Effect,
(ii) is in violation of any order of any court, arbitrator or
governmental body applicable to it, or (iii) is in violation of any
statute, rule or regulation of any governmental authority to which it is
subject.
(i) Schedules. The Schedules to this Agreement furnished by or on
behalf of the Company do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they
were made, not misleading.
(j) Private Offering. Neither the Company nor any Person acting on
its behalf has taken or will take any action which might subject the
offering, issuance or sale of the Securities to the registration
requirements of the Securities Act of 1933, as amended (the "Securities
Act").
(k) SEC Documents; Financial Statements; No Adverse Change. The
Company has filed all reports required to be filed by it under the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the three years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing
materials being collectively referred to herein as the "SEC Documents"
and, together with the Schedules to this Agreement, the "Disclosure
Materials") on a timely-basis or has received a valid extension of such
time of filing and has filed any such SEC Documents prior to the
expiration of any such extension. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Documents, when
filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. All material agreements to which the
Company is a party or to which the property or assets of the Company are
subject have been filed as exhibits to the SEC Documents as required;
neither the Company nor any of its subsidiaries is in breach of any
agreement where such breach could reasonably be expected to, individually
or in the aggregate, have a Material Adverse Effect. The financial
statements of the Company included in the SEC Documents comply in all
material respects with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect at
the time of filing. Such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto, and fairly
present in all material respects the financial position of the Company as
of and for the dates thereof and the results of operations and cash flows
for the periods then ended, subject, in the case of unaudited statements,
to normal year-end audit adjustments. Since the date of the financial
statements included in the Company's last filed Quarterly Report on Form
10-Q for the period ended March 31, 1998, there has been no event,
occurrence or development that has had a Material Adverse Effect which
has not been specifically disclosed to the Purchasers by the Company. The
<PAGE>
Company last filed audited financial statements with the Commission on
September 11, 1997, and has not received any comments from the Commission
in respect thereof.
(l) Seniority. No class of equity securities of the Company is
senior to the Preferred Stock in right of payment, whether upon
liquidation, dissolution or otherwise.
(m) Investment Company. The Company is not, and is not controlled
by or under common control with an affiliate (an "Affiliate") of, an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
(n) Certain Fees. Except for fees payable to ______________
("_________") pursuant to the section entitled "Fees and Expenses" of the
letter agreement (the "Term Letter") dated June 19, 1998 between the
Company and ______________, and fees payable to the Company's placement
agent in connection with this transaction, no fees or commissions will be
payable by the Company to any broker, financial advisor, finder,
investment banker, or bank with respect to the transactions contemplated
by this Agreement. The Purchasers shall have no obligation with respect
to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section 2.1(n) that may
be due in connection with the transactions contemplated by this
Agreement. The Company shall indemnify and hold harmless each of the
Purchasers, its employees, officers, directors, agents, and partners, and
their respective Affiliates (as such term is defined under Rule 405
promulgated under the Securities Act), from and against all claims,
losses, damages, costs (including the costs of preparation and attorney's
fees) and expenses suffered in respect of any such claimed or existing
fees.
(o) Solicitation Materials. The Company has not (i) distributed any
offering materials in connection with the offering and sale of the Shares
or the Underlying Shares other than the Disclosure Materials and any
amendments and supplements thereto or (ii) solicited any offer to buy or
sell the Shares or the Underlying Shares by means of any form of general
solicitation or advertising. None of the Disclosure Materials or any
other information provided to the Purchasers by or on behalf of the
Company contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(p) Form S-3 Eligibility. The Company is, and at each Closing Date
will be, eligible to register securities for resale with the Commission
under Form S-3 promulgated under the Securities Act.
(q) Exclusivity. The Company shall not issue and sell the Preferred
Stock to any Person other than the Purchasers pursuant to this Agreement
other than with the specific prior written consent of each of the
Purchasers.
(r) Listing and Maintenance Requirements Compliance. Except in
connection with the recent change in the Nasdaq minimum bid price
requirement, with which the Company is currently in compliance, the
Company has not in the two years preceding the date hereof received
notice (written or oral) from any stock exchange, market or trading
facility on which the Common Stock is or has been listed (or on which it
has been quoted) to the effect that the Company is not in compliance with
<PAGE>
the listing or maintenance requirements of such exchange or market. After
giving effect to the transactions contemplated in this Agreement, the
Company believes that it is in compliance with all such maintenance
requirements.
(s) Patents and Trademarks. The Company has, or has rights to use,
all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and rights
(collectively, the "Intellectual Property Rights") which are necessary
for use in connection with its business, as currently conducted and as
described in the SEC Documents, and which the failure to so have would
have a Material Adverse Effect. Except as disclosed in Schedule 2.1(s),
to the best knowledge of the Company, there is no existing infringement
by another Person of any of the Intellectual Property Rights which are
necessary for use in connection with the Company's business which could
reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect.
(t) Acknowledgment of Dilution. The Company acknowledges that the
issuance of the Underlying Shares upon conversion of the Shares and
payment of dividends thereon in accordance with the Certificates of
Designation may result in dilution of the outstanding shares of Common
Stock, which dilution may be substantial under certain market conditions.
The Company further acknowledges that its obligation to issue Underlying
Shares upon conversion of the Shares and payment of dividends thereon in
accordance with the Certificates of Designation is unconditional and
absolute regardless of the effect of any such dilution.
(u) Registration Rights; Rights of Participation. Except as
described on Schedule 2.1(u) hereto, (A) the Company has not granted or
agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered
with the Commission or any other governmental authority which has not
been satisfied and (B) no Person, including, but not limited to, current
or former shareholders of the Company, underwriters, brokers or agents,
has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by
this Agreement or any other Transaction Document.
(v) Title. Except as disclosed in Schedule 2.1(v), the Company and
the Subsidiaries have good and marketable title in fee simple to all real
property and personal property owned by them which is material to the
business of the Company and its Subsidiaries, in each case free and clear
of all Liens, except for liens, claims or encumbrances as do not
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and
its Subsidiaries. Any real property and facilities held under lease by
the Company and its Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries.
(w) Regulatory Permits. The Company and its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses as described in the SEC Documents except
where the failure to possess such permits would not, individually or in
the aggregate, have a Material Adverse Effect ("Material Permits"), and
neither the Company nor any such Subsidiary has received any notice of
<PAGE>
proceedings relating to the revocation or modification of any Material
Permit.
2.2 Representations and Warranties of the Purchasers. Each of the
Purchasers, severally and not jointly, hereby represents and warrants to
the Company as follows:
(a) Organization; Authority. Such Purchaser is a corporation duly
incorporated or a limited liability company or limited partnership duly
formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with the requisite power
and authority, corporate or otherwise, to enter into and to consummate
the transactions contemplated hereby and by the Registration Rights
Agreement and otherwise to carry out its obligations hereunder and
thereunder. The purchase by such Purchaser of the Shares hereunder has
been duly authorized by all necessary action on the part of such
Purchaser. Each of this Agreement and the Registration Rights Agreement
has been duly executed and delivered by such Purchaser and constitutes
the valid and legally binding obligation of such Purchaser, enforceable
against such Purchaser, in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.
(b) Investment Intent. Such Purchaser is acquiring the Shares and
the Underlying Shares for its own account for investment purposes only
and not with a view to or for distributing or reselling such Shares or
Underlying Shares or any part thereof or interest therein, without
prejudice, however, to such Purchaser's right, subject to the provisions
of this Agreement and the Registration Rights Agreement, at all times to
sell or otherwise dispose of all or any part of such Shares or Underlying
Shares pursuant to an effective registration statement under the
Securities Act and in compliance with applicable State securities laws or
under an exemption from such registration.
(c) Purchaser Status. At the time such Purchaser was offered the
Shares, and at each Closing Date, (i) it was and will be, an "accredited
investor" as defined in Rule 501 under the Securities Act, or (ii) such
Purchaser either alone or together with its representatives, had and will
have such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks
of the prospective investment in the Shares and the Underlying Shares,
and had and will have so evaluated the merits and risks of such
investment.
(d) Ability of Purchaser to Bear Risk of Investment. Such Purchaser
is able to bear the economic risk of an investment in the Shares and the
Underlying Shares and, at the present time, is able to afford a complete
loss of such investment.
(e) Access to Information. Each Purchaser acknowledges receipt of
the Disclosure Materials.
(f) Reliance. Each Purchaser understands and acknowledges that (i)
the Shares are being offered and sold to the Purchaser without
registration under the Securities Act in a private placement that is
exempt from the registration provisions of the Securities Act under
Section 4(2) of the Securities Act or Regulation D promulgated thereunder
and (ii) the availability of such exemption, depends in part on, and the
<PAGE>
Company will rely upon the accuracy and truthfulness of, the foregoing
representations and such Purchaser hereby consents to such reliance.
The Company acknowledges and agrees that the Purchasers make no
representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this
Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions.
(a) If any Purchaser should decide to dispose of Shares (and upon
conversion thereof any of the Underlying Shares) held by it, each
Purchaser understands and agrees that it may do so only pursuant to an
effective registration statement under the Securities Act, to the Company
or pursuant to an available exemption from the registration requirements
of the Securities Act. In connection with any transfer of any Shares or
any Underlying Shares other than pursuant to an effective registration
statement or to the Company, the Company may require the transferor
thereof to provide to the Company a written opinion of counsel
experienced in the area of United States securities laws selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred securities under the Securities
Act. Notwithstanding the foregoing, the Company hereby consents to and
agrees to register (i) any transfer of Shares by one Purchaser to another
Purchaser, and agrees that no documentation other than executed transfer
documents shall be required for any such transfer, and (ii) any transfer
by any Purchaser to an Affiliate of such Purchaser or to an Affiliate of
another Purchaser, or any transfer among any such Affiliates, provided
that transferee certifies to the Company that it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Any such
transferee shall be bound by the terms of this Agreement and shall have
the rights of a Purchaser under this Agreement and the Registration
Rights Agreement.
(b) Each Purchaser agrees to the imprinting, so long as is required
by this Section 3.1(b), of the following legend on the Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
The Underlying Shares issuable upon conversion of Shares or as
payment of dividends thereon shall not contain the legend set forth above
if the conversion of such Shares or the payment of such dividends occurs
at any time while the Underlying Shares Registration Statement is
effective under the Securities Act or in the event there is not an
effective Underlying Shares Registration Statement at such time, if in
the written opinion of counsel to the Company experienced in the area of
United States securities laws such legend is not required under
applicable requirements of the Securities Act (including judicial
<PAGE>
interpretations and pronouncements issued by the staff of the
Commission). The Company agrees that it will provide each Purchaser, upon
request, with a certificate or certificates representing Underlying
Shares, free from such legend at such time as such legend is no longer
required hereunder.
3.2 Stop Transfer Instruction. The Company may not make any
notation on its records or give instructions to any transfer agent of the
Company which enlarge the restrictions of transfer set forth in Section
3.1.
3.3 Furnishing of Information. As long as any Purchaser owns Shares
or Underlying Shares, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date
hereof pursuant to Section 13(a) or 15(d) of the Exchange Act and to
promptly furnish the Purchasers with true and complete copies of all such
filings. As long as any Purchaser owns Shares or Underlying Shares, if
the Company is not required to file reports pursuant to Section 13(a) or
15(d) of the Exchange Act, it will prepare and furnish to the Purchasers
and make publicly available in accordance with Rule 144(c) promulgated
under the Securities Act annual and quarterly financial statements,
together with a discussion and analysis of such financial statements in
form and substance substantially similar to those that would otherwise be
required to be included in reports required by Section 13(a) or 15(d) of
the Exchange Act, as well as any other information required thereby, in
the time period that such filings would have been required to have been
made under the Exchange Act. The Company further covenants that it will
take such further action as any holder of Shares may reasonably request,
all to the extent required from time to time to enable such Person to
sell Underlying Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 promulgated
under the Securities Act, including the legal opinion referenced above in
Section 3.1(b). Upon the request of any such Person, the Company shall
deliver to such Person a written certification of a duly authorized
officer as to whether it has complied with such requirements.
3.4 Blue Sky Laws. In accordance with the Registration Rights
Agreement, the Company shall qualify the Underlying Shares under the
securities or Blue Sky laws of such jurisdictions as the Purchasers may
request and shall continue such qualification at all times through the
third anniversary of the last Closing Date.
3.5 Integration. The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security
(as defined in Section 2 of the Securities Act) that would be integrated
with the offer or sale of the Shares or the Underlying Shares in a manner
that would require the registration under the Securities Act of the sale
of the Shares or the Underlying Shares to any Purchaser.
3.6 Certain Agreements. As long as any Purchaser owns Shares, the
Company shall not and shall cause the Subsidiaries not to, without the
consent of the holders of all of the Shares then outstanding, (i) amend
its articles of incorporation, bylaws or other charter documents so as to
adversely affect any rights of any Purchaser; (ii) declare, authorize,
set aside or pay any dividend or other distribution with respect to the
Common Stock except as permitted under the Certificates of Designation
and as would not adversely affect the rights of any Purchaser hereunder
or under the Certificates of Designation; (iii) repay, repurchase or
<PAGE>
offer to repay, repurchase or otherwise acquire shares of its Common
Stock in any manner, except as may be subject to prior commitments
reflected in the Disclosure Materials; (iv) issue any series of preferred
stock or other securities with rights senior (in respect of liquidations,
dividends, preferences and similar rights) to those of the Shares, or (v)
enter into any agreement with respect to any of the foregoing.
3.7 Listing and Reservation of Underlying Shares.
(a) The Company shall (i) not later than the fifth Business Day
following the applicable Closing Date prepare and file with the Nasdaq
Stock Market (as well as any other national securities exchange or market
on which the Common Stock is then listed) an additional shares listing
application or a letter acceptable to the Nasdaq Stock Market covering
and listing a number of shares of Common Stock which is at least equal to
175% of the maximum number of Underlying Shares then issuable assuming
the payment of all future dividends on the Shares then outstanding were
made in shares of Common Stock, (ii) take all steps necessary to cause
the Underlying Shares to be approved for listing in the Nasdaq Stock
Market (as well as on any other national securities exchange or market on
which the Common Stock is then listed) as soon as possible thereafter,
and (iii) provide to the Purchasers evidence of such listing, and the
Company shall maintain the listing of its Common Stock on such exchange.
(b) The Company shall reserve for issuance upon conversion of the
Shares and for payment of dividends thereupon in shares of Common Stock
pursuant to the terms of the Certificates of Designation the number of
shares to be listed on the Nasdaq Stock Market (and such other national
securities exchange or market on which the Common Stock is then listed or
traded) as set forth in Section 3.7(a). Shares of Common Stock reserved
for issuance upon the conversion of the Shares as set forth in Section
3.7(a) shall be allocated pro rata to each of the Purchasers in
accordance with the amount of Shares issued and delivered to such
Purchaser at each Closing, as applicable.
3.8 No Violation of Applicable Law. Notwithstanding any provision
of this Agreement to the contrary, if the redemption of Shares or
Underlying Shares otherwise required under this Agreement, any applicable
Certificate of Designations or the Registration Rights Agreement would be
prohibited by the relevant provisions of the Texas Business Corporation
Act, such redemption shall be effected as soon as it is permitted under
such law; provided, however, that from the 5th day after such redemption
notice until such redemption price is paid in full, interest on any such
unpaid amount shall accrue at the rate of 15% per annum.
3.9 Notice of Breaches.
(a) Each of the Company and each Purchaser shall give prompt
written notice to the other of any breach of any representation, warranty
or other agreement contained in this Agreement or in the Registration
Rights Agreement, as well as any events or occurrences arising after the
date hereof and prior to, with respect to the Series 1998-A2 Closing, the
Series 1998-A2 Closing Date and with respect to the Series 1998-A3
Closing, the Series 1998-A3 Closing Date, which would reasonably be
likely to cause any representation or warranty or other agreement of such
party, as the case may be, contained herein to be incorrect or breached
as of such Closing Date. However, no disclosure by either party pursuant
to this Section 3.9 shall be deemed to cure any breach of any
representation, warranty or other agreement contained herein or in the
Registration Rights Agreement.
<PAGE>
(b) Notwithstanding the generality of Section 3.9(a) the Company
shall promptly notify each Purchaser of any notice or claim (written or
oral) that it receives from any lender of the Company to the effect that
the consummation of the transactions contemplated hereby and by the
Registration Rights Agreement violates or would violate any written
agreement or understanding between such lender and the Company, and the
Company shall promptly furnish by facsimile to the holders of the Shares
a copy of any written statement in support of or relating to such claim
or notice.
(c) The default by any Purchaser of any of its obligations,
representations or warranties under any Transaction Document shall not be
imputed to, and shall have no effect upon, any other Purchaser or affect
the Company's obligations under the Transaction Documents to any non-
defaulting Purchaser.
3.10 Conversion Obligations of the Company. The Company covenants to
convert Shares and to deliver Underlying Shares in accordance with the
terms and conditions and time period set forth in the respective
Certificates of Designation.
3.11 Subsequent Registrations. Other than Underlying Shares and
other "Registrable Securities" (as defined in the Registration Rights
Agreement) to be registered in accordance with the Registration Rights
Agreement, the Company shall not, for a period of not less than 30
Trading Days after the date that the Underlying Shares Registration
Statement relating to the securities issued at the Series 1998-A1 Closing
Date, the Series 1998-A2 Closing Date and the Series 1998-A3 Closing Date
is declared effective by the Commission, without the prior written
consent of the Purchasers, (i) issue or sell any of its or any of its
Affiliates' equity or equity-equivalent securities pursuant to Regulation
S promulgated under the Securities Act, or (ii) register for resale any
securities of the Company. Any days that any Purchaser is unable to sell
Underlying Shares under an Underlying Shares Registration Statement shall
be added to such 30 Trading Day period for the purposes of (i) and (ii)
above.
3.12 Use of Proceeds. The Company shall use all of the proceeds from
the sale of the Shares for working capital and general corporate purposes
and not for the satisfaction of any portion of Company borrowings outside
the normal course of business or to redeem Company equity or equity-
equivalent securities. Pending application of the proceeds of this
placement in the manner permitted hereby, the Company will invest such
proceeds in interest bearing accounts and/or short-term, investment grade
interest bearing securities.
3.13 Reimbursement. In the event that any Purchaser, other than by
reason of its gross negligence or willful misconduct, becomes involved in
any capacity in any action, proceeding or investigation brought by or
against any person, including shareholders of the Company, in connection
with or as a result of the consummation of the transactions contemplated
pursuant to the Transaction Documents, the Company will reimburse such
Purchaser for its legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith. In
addition, with respect to each Purchaser, other than with respect to any
matter in which such Purchaser is a named party, the Company will pay
such Purchaser the charges, as reasonably determined by such Purchaser,
for the time of any officers or employees of such Purchaser devoted to
appearing and preparing to appear as witnesses, assisting in preparation
<PAGE>
for hearings, trials or pretrial matters, or otherwise with respect to
inquiries, hearings, trials, and other proceedings relating to the
subject matter of this Agreement. The reimbursement obligations of the
Company under this paragraph shall be in addition to any liability which
the Company may otherwise have, shall extend upon the same terms and
conditions to any affiliate of each Purchaser and partners, directors,
agents, employees and controlling persons (if any), as the case may be,
of each Purchaser and any such affiliate, and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, each Purchaser and any such affiliate and
any such person. The Company also agrees that no Purchaser or any such
affiliates, partners, directors, agents, employees or controlling persons
shall have any liability to the Company or any person asserting claims on
behalf of or in right of the Company in connection with or as a result of
the consummation of the Transaction Documents except to the extent that
any losses, claims, damages, liabilities or expenses incurred by the
Company result from the gross negligence or willful misconduct of such
Purchaser or entity in connection with the transactions contemplated by
this Agreement.
ARTICLE IV
CONDITIONS
4.1 (a) Conditions Precedent to the Obligation of the Company to
Sell the Series 1998-A1 Shares. The obligation of the Company to sell the
Series 1998-A1 Shares hereunder is subject to the satisfaction or waiver
by the Company, at or before the Series 1998-A1 Closing, of each of the
following conditions:
(i) Accuracy of the Purchasers' Representations and
Warranties. The representations and warranties of each Purchaser shall be
true and correct in all material respects as of the date when made and as
of the Series 1998-A1 Closing Date, as though made on and as of such
date;
(ii) Performance by the Purchasers. Each Purchaser shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Purchaser at or prior to
the Series 1998-A1 Closing; and
(iii) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement or the Registration Rights
Agreement.
(b) Conditions Precedent to the Obligation of the Purchasers to
Purchase the Series 1998-A1 Shares. The obligation of each Purchaser
hereunder to acquire and pay for the Series 1998-A1 Shares is subject to
the satisfaction or waiver by such Purchaser, at or before the Series
1998-A1 Closing, of each of the following conditions:
(i) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company set forth in this
Agreement and in the Registration Rights Agreement shall be true and
correct in all material respects as of the date when made and as of the
Series 1998-A1 Closing Date as though made on and as of such date;
<PAGE>
(ii) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the
Series 1998-A1 Closing;
(iii) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement or the Registration Rights
Agreement;
(iv) Adverse Changes. Since the date of the financial
statements included in the Company's Quarterly Report on Form 10-Q or
Annual Report on Form 10-K, whichever is more recent, last filed prior to
the date of this Agreement, no event which had a Material Adverse Effect
and no material adverse change in the financial condition or prospects of
the Company shall have occurred which is not disclosed in the Disclosure
Materials (for purposes hereof changes in the market price of the Common
Stock may be considered in determining whether there has occurred an
event which has had a Material Adverse Effect or whether a material
adverse change has occurred);
(v) No Suspensions of Trading in Common Stock. The trading in
the Common Stock shall not have been suspended by the Commission or on
the Nasdaq Stock Market which suspension shall remain in effect;
(vi) Listing of Common Stock. The Company shall have filed a
listing application to list the Underlying Shares for trading on the
Nasdaq Stock Market at such time as it is required to do so pursuant to
NASD rules;
(vii) Legal Opinion. The Company shall have delivered to
the Purchasers the opinions of Billy J. Robinson, the Company's general
counsel, in substantially the form attached hereto as Exhibit C;
(viii) Required Approvals. All Required Approvals shall have
been obtained other than those relating solely to the Series 1998-A2
Shares and the Series 1998-A3 Shares;
(ix) Shares of Common Stock. On or prior to the Series 1998-A1
Closing Date, the Company shall have duly reserved the number of
Underlying Shares required by the Transaction Documents to be reserved
for issuance upon conversion of Series 1998-A1 Shares and payment of
dividends thereon;
(x) Delivery of Stock Certificates. The Company shall have
delivered to the Company's general counsel for delivery to each Purchaser
or such Purchaser's designee upon receipt by the Company of the Purchase
Price therefor, the stock certificate(s) representing the Series 1998-A1
Shares, registered in the name of such Purchaser, each in form
satisfactory to the Purchaser;
(xi) Registration Rights Agreement. The Company shall have
executed and delivered the Registration Rights Agreement;
<PAGE>
(xii) Certificates of Designation. The Series 1998-A1
Designation shall have been duly approved by the Company's Board of
Directors and filed with the Secretary of State of Texas, and the Company
shall have delivered a copy thereof to the Purchaser certified as filed
by the office of the Secretary of State of Texas;
(xiii) Change of Control. No Change of Control (as hereafter
defined) shall have occurred between the date hereof and the Series 1998-
A1 Closing Date; and
(xiv) Transfer Agent Instructions. The Irrevocable Transfer
Agent Instructions, in the form of Exhibit D attached hereto, shall have
been delivered to and acknowledged in writing by the Company's transfer
agent.
(xv) Series 1998-A1 Warrant. The Company shall at the Series
1998-A1 Closing, deliver a warrant (the "Series 1998-A1 Warrant"), in the
form attached hereto as Exhibit E, to purchase 100,000 shares of the
Common Stock to the Purchasers. The warrant shall have a term of three
years, an exercise price of $3.00 per share and shall not be redeemable
by the Company.
(xvi) Cancellation Warrant. The Company shall, at the
Series 1998-A1 Closing, issue in the name of the Purchasers a three-year
warrant (the "Cancellation Warrant") to purchase 200,000 shares of Common
Stock at an exercise price of $3.00. The Company shall hold the
Cancellation Warrant in escrow pending such time as the Company enters
into a negotiated agreement approved by the Board of Directors of the
Company and providing for the consolidation or merger of the Company with
or into another person or pursuant to which the shares of Common Stock of
the Company will be converted into shares of stock or other securities,
cash or property and such agreement provides or contemplates that the
issuance and sale of the Series 1998-A2 Shares and Series 1998-A3 Shares
to the Purchasers will not take place. The Cancellation Warrant shall be
delivered to the Purchasers upon the approval by the Board of Directors
of such an agreement or transaction, but shall only become exercisable
upon the closing or consummation of such agreement or transactions. If
such transaction or agreement shall not, after such approval, be
consummated, the Cancellation Warrant shall be returned to escrow with
the Company and the Purchasers' rights under this Agreement to purchase
the Series 1998-A2 Shares and the Series 1998-A3 Shares pursuant to the
provisions of this Agreement will be automatically reinstated.
4.2 Conditions Precedent to the Obligation of the Purchasers to
Purchase the Series 1998-A2 Shares and the Series 1998-A3 Shares. The
obligation of each Purchaser hereunder to acquire and pay for the Series
1998-A2 Shares and the Series 1998-A3 Shares is subject to the
satisfaction or waiver by each Purchaser, at or before the Series 1998-A2
Closing or the Series 1998-A3 Closing, as applicable, of each of the
following conditions:
(a) Series 1998-A1 Closing. The Series 1998-A1 Closing shall have
occurred.
<PAGE>
(b) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company contained herein and in the
Registration Rights Agreement shall be true and correct in all material
respects as of the date when made and as of the Series 1998-A2 Closing
Date and the Series 1998-A3 Closing Date, as applicable, as though made
on and as of such date.
(c) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement and the Registration
Rights Agreement to be performed, satisfied or complied with by the
Company at or prior to the Series 1998-A2 Closing Date and the Series
1998-A3 Closing Date, as applicable.
(d) Underlying Shares Registration Statements. With respect to the
Series 1998-A2 Closing, the Underlying Shares Registration Statement with
respect to the Underlying Shares issuable on conversion of all
outstanding Series 1998-A1 Shares and as payment of dividends thereon
shall have been declared effective under the Securities Act by the
Commission; and with respect to the Series 1998-A3 Closing, the
Underlying Shares Registration Statement with respect to the Underlying
Shares issuable on conversion of all outstanding Series 1998-A2 Shares
and as payment of dividends thereon shall have been declared effective
under the Securities Act by the Commission; and on each such Closing Date
such Underlying Shares Registration Statement shall be effective, not
subject to any stop order and not be subject to any suspension pursuant
to Section 3(p) of the Registration Rights Agreement, and shall have been
effective and shall not have been subject to any stop order for the
thirty (30) days prior to such Closing Date and no stop order shall be
pending or threatened as at such Closing Date.
(e) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court of governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement or the Registration Rights
Agreement relating to the issuance or conversion of any of the Shares.
(f) Adverse Changes. During the period which is 10 Trading Days
prior to the date of the delivery of either a Series 1998-A2 Subsequent
Financing Notice or a Series 1998-A3 Subsequent Financing Notice and the
date of the Series 1998-A2 Closing and the Series 1998-A3 Closing,
respectively, the closing bid price on the Common Stock shall not have
decreased by more than 50% from the highest closing bid price during such
period; provided, however, that if the closing bid price shall have so
decreased by more than 50%, but shall have subsequently increased so that
on the applicable Closing Date it is no more than 25% below the highest
closing bid price during such period, then this condition shall be
satisfied.
(g) Litigation. No litigation shall have been instituted or
threatened against the Company which could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.
(h) Management. In the reasonable judgment of each Purchaser, there
have been no substantial changes in the senior management of the Company.
<PAGE>
(i) No Suspensions of Trading in Common Stock. The trading in the
Common Stock shall not have been suspended by the Commission or on the
Nasdaq Stock Market (except for any suspension of trading of limited
duration solely to permit dissemination of material information regarding
the Company).
(j) Listing of Common Stock. The Common Stock shall have been at
all times since the Series 1998-A1 Closing Date, and on the Series 1998-
A2 Closing Date and the Series 1998-A3 Closing Date be listed for trading
on the Nasdaq Stock Market.
(k) Change of Control. No Change of Control in the Company shall
have occurred. "Change of Control" means the occurrence of any of (i) an
acquisition after the date hereof by an individual or legal entity or
"group" (as described in Rule 13d5(b)(1) promulgated under the Exchange
Act) of in excess of 50% of the voting securities of the Company, (ii) a
replacement of more than one-half of the members of the Company's board
of directors which is not approved by those individuals who are members
of the board of directors on the date hereof in one or a series of
related transactions, (iii) the merger of the Company with or into
another entity, consolidation or sale of all or substantially all of the
assets of the Company in one or a series of related transactions or (iv)
the execution by the Company of an agreement to which the Company is a
party or by which it is bound, providing for any of the events set forth
above in (i), (ii) or (iii).
(l) Legal Opinion. The Company shall have delivered to the
Purchasers the opinions of the Company's general counsel, in
substantially the form attached hereto as Exhibit C, dated the applicable
Closing Date.
(m) Required Approvals. All Required Approvals shall have been
obtained.
(n) Shares of Common Stock. On each of the Series 1998-A2 Closing
Date and the Series 1998-A3 Closing Date the Company shall have duly
reserved the number of Underlying Shares required by this Agreement to be
reserved for issuance upon conversion of Series 1998-A2 Shares and Series
1998-A3 Shares, respectively, and payment of dividends thereon.
(o) Delivery of Stock Certificates. The Company shall have
delivered to the Company's general counsel for delivery to each Purchaser
or such Purchaser's designee upon receipt of the Company of the Purchase
Price therefor, the stock certificate(s) representing the Shares being
purchased at such Closing, registered in the name of such Purchaser, each
in form satisfactory to such Purchaser.
(p) Performance of Conversion/Exercise Obligations. The Company
shall have delivered Underlying Shares upon conversion of Shares and
otherwise performed its obligations in accordance with the terms,
conditions and timing requirements of each Certificate of Designation.
(q) Common Stock Price. The average Per Share Market Value for the
thirty Trading Days prior to the applicable Closing Date shall have been
at least $1.50 per share.
(r) Transfer Agent Instructions. The Irrevocable Transfer Agent
Instructions, in the form of Exhibit D attached hereto, shall have been
delivered to and acknowledged in writing by the Company's transfer agent.
<PAGE>
(s) Warrants. The Company shall, at each of the Series 1998-A2
Closing and the Series 1998-A3 Closing, deliver a warrant (respectively
the "Series 1998-A2 Warrant" and the "Series 1998-A3 Warrant" and,
together with the Series 1998-A1 Warrant and the Cancellation Warrant,
the "Warrants"), in the form attached hereto as Exhibit E, to purchase
100,000 shares of the Common Stock to the Purchasers. Each such warrant
shall have a term of three years, an exercise price of $3.00 per share
and shall not be redeemable by the Company.
(t) Officer's Certificate. On each Closing Date the Company shall
deliver to the Purchasers an Officer's Certificate dated the Closing Date
and signed by an executive officer of the Company confirming the accuracy
of the Company's representations, warranties and covenants as of such
Closing Date and confirming the compliance by the Company with the
conditions precedent set forth in this Section 4.2 as of such Closing
Date.
(u) Beneficial Ownership of Common Stock. No Purchaser would,
after such Series 1998-A2 Closing or Series 1998-A3 Closing, beneficially
own, as calculated in accordance with the provisions of Rule 13d-3
promulgated under the Exchange Act, as such provisions may be amended or
superseded, or any successor statute or rule promulgated by the
Commission, more than 9.999% of the issued and outstanding shares of
Common Stock.
(v) Fees. The Company shall have, concurrent with the delivery of
the Applicable Subsequent Financing Notice or its receipt of the
Applicable Purchase Notice, paid ______________ the sum of $3,000 for
expected reasonable supplementary legal costs associated with such
transactions.
(w) Interim Financings. The Purchasers shall have no obligation to
purchase the Series 1998-A2 Preferred or the Series 1998-A3 Preferred if,
after the Series 1998-A1 Closing or after the Series 1998-A2 Closing,
respectively, the Company has sold or issued, in a private placement
transaction or series of such transactions to a single entity or a group
of entities under common control or which are related such that they
could be considered a single entity, equity or equity equivalent
securities in an amount exceeding $500,000.
ARTICLE V
MISCELLANEOUS
5.1 Fees and Expenses. Except (i) as set forth in the Term Letter
under the caption "Fees and Expenses," (ii) as set forth in the
Registration Rights Agreement and (iii) as otherwise set forth in this
Agreement, each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall
pay all stamp and other taxes and duties levied in connection with the
issuance of the Shares pursuant hereto.
5.2 Entire Agreement; Amendments. This Agreement, together with the
Exhibits and Schedules hereto, the Registration Rights Agreement and each
Certificate of Designation (each when filed) contain the entire
understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written,
with respect to such matters.
<PAGE>
5.3 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed
to have been received (a) upon hand delivery (receipt acknowledged) or
delivery by telex (with correct answer back received), telecopy or
facsimile (with transmission confirmation report) at the address or
number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first
business day following such delivery (if delivered on a business day
after during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or
upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be as set forth below each
parties' name on Schedule 1, and if to any Purchaser with copies to
________________, Attn: ____________, fax: ___________, or such other
address as may be designated in writing hereafter, in the same manner, by
such person.
5.4 Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of
an amendment, by both the Company and the Purchasers; or, in the case of
a waiver, by the party against whom enforcement of any such waiver is
sought. No waiver of any default with respect to any provision, condition
or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any
such right accruing to it thereafter. Notwithstanding the foregoing, no
such amendment shall be effective to the extent that it applies to less
than all of the holders of the Shares outstanding. The Company shall not
offer or pay any consideration to a Purchaser for consenting to such an
amendment or waiver unless the same consideration is offered to each
Purchaser and the same consideration is paid to each Purchaser which
consents to such amendment or waiver.
5.5 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
5.6 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and
permitted assigns. The Company may not assign this Agreement or any
rights or obligations hereunder without the prior written consent of each
of the Purchasers. No Purchaser may assign this Agreement (other than to
an Affiliate of such Purchaser) or any rights or obligations hereunder
without the prior written consent of the Company, except that any
Purchaser may assign its rights hereunder and under the Transaction
Documents without the consent of the Company as long as such assignee
demonstrates to the reasonable satisfaction of the Company its
satisfaction of the representations and warranties set forth in Section
2.2. This provision shall not limit a Purchaser's right to transfer
securities or transfer or assign rights hereunder or under the
Registration Rights Agreement.
5.7 No Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted
successors and assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
<PAGE>
5.8 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State
of New York without regard to the principles of conflicts of law thereof.
Each party hereby irrevocably submits to the nonexclusive jurisdiction of
the state and federal courts sitting in the City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
improper.
5.9 Survival. The agreements, covenants, representations,
warranties and provisions contained in this Agreement shall survive the
delivery of the Shares pursuant to this Agreement and each Closing
hereunder and any conversion of Shares.
5.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission, such
signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature page were an
original thereof.
5.11 Publicity. The Company and each Purchaser shall consult with
each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and
neither party shall issue any such press release or otherwise make any
such public statement without the prior written consent of the other,
which consent shall not be unreasonably withheld or delayed, except that
no prior consent shall be required if such disclosure is required by law,
in which such case the disclosing party shall provide the other party
with prior notice of such public statement. The Company shall not
publicly or otherwise disclose the names of any of the Purchasers without
each such Purchaser's prior written consent.
5.12 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this
Agreement shall not in any way be affecting or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision
which shall be a reasonable substitute therefor, and upon so agreeing,
shall incorporate such substitute provision in this Agreement.
5.13 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the
Purchasers will be entitled to specific performance of the obligations of
the Company under the Transaction Documents. Each of the Company and the
Purchasers (severally and not jointly) agree that monetary damages would
not be adequate compensation for any loss incurred by reason of any
breach of its obligations described in the foregoing sentence and hereby
agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
<PAGE>
5.14 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any
other Purchaser hereunder. Nothing contained herein or in any other
agreement or document delivered at any Closing, and no action taken by
any Purchaser pursuant hereto or thereto, shall be deemed to constitute
the Purchasers as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Purchasers are in
any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Purchaser shall be
entitled to protect and enforce its rights, including without limitation
the rights arising out of this Agreement or out of the other Transaction
Documents, and it shall not be necessary for any other Purchaser to be
joined as an additional party in any proceeding for such purpose.
5.15 No Reliance. Each party acknowledges that (i) it has such
knowledge in business and financial matters as to be fully capable of
evaluating this Agreement, the other Transaction Documents and the
transactions contemplated hereby and thereby, (ii) it is not relying on
any advice or representation of the other party in connection with
entering into this Agreement, the other Transaction Documents or such
transactions (other than the representations made in this Agreement or
the other Transaction Documents), (iii) it has not received from such
party any assurance or guarantee as to the merits (whether legal,
regulatory, tax, financial or otherwise) of entering into this Agreement
or the other Transaction Documents or the performance of its obligations
hereunder and thereunder, and (iv) it has consulted with its own legal,
regulatory, tax, business, investment, financial and accounting advisors
to the extent that it has deemed necessary, and has entered into this
Agreement and the other Transaction Documents based on its own
independent judgment and on the advice of its advisors as it has deemed
necessary, and not on any view (whether written or oral) expressed by
such party.
5.16 Termination. The Company or any Purchaser may terminate this
Agreement with or without cause at any time after June 30, 1998 upon five
days written notice to the other parties to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Convertible
Preferred Stock Purchase Agreement to be duly executed by their
respective authorized persons as of the date first indicated above.
UNIVIEW TECHNOLOGIES CORPORATION
By:
Name: Patrick A. Custer
Title: President
______________
By:
Name:
Title:
______________
By:
Name:
Title:
<PAGE>
Company:
uniView Technologies Corporation
10911 Petal Street
Dallas, Texas 75238
Attn: Patrick A. Custer
Fax: __________________
Purchasers:
_______________________
_______________________
_______________________
Attn: __________________
Fax: ___________________
Portion of Series 1998-A1 Purchase Price - $__________
Series 1998-A1 Shares - _____
_______________________
_______________________
_______________________
Attn: __________________
Fax: ___________________
Portion of Series 1998-A1 Purchase Price - $_________
Series 1998-A1 Shares - ____
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of ____________, 1998, among uniView Technologies
Corporation, a Texas corporation (the "Company"), _________________,
referred to herein as a "Purchaser" and are collectively referred to
herein as the "Purchasers."
This Agreement is made pursuant to the Convertible Preferred
Stock Purchase Agreement, dated as of the date hereof among the Company
and the Purchasers (the "Purchase Agreement").
The Company and the Purchasers hereby agree as follows:
1. Definitions
Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. As used in
this Agreement, the following terms shall have the following meanings:
"Advice" shall have meaning set forth in Section 3(o).
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition,
"control," when used with respect to any Person, means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise; and the terms of
"affiliated," controlling" and "controlled" have meanings correlative to
the foregoing.
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions
in the state of New York generally are authorized or required by law or
other government actions to close.
"Closing Date" shall have the meaning set forth in the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value $.10
per share.
"Effectiveness Date" means (i) with respect to the Registration
Statement to be filed with respect to the Series 1998-A1 Shares, the 90th
day following the Series 1998-A1 Closing Date, (ii) with respect to the
Registration Statement to be filed with respect to the Series 1998-A2
Shares, the 90th day following the Series 1998-A2 Closing Date and (iii)
with respect to the Registration Statement to be filed with respect to
the Series 1998-A3 Shares, the 90th day following the Series 1998-A3
Closing Date.
"Effectiveness Period" shall have the meaning set forth in
Section 2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE>
"Filing Date" means (i) with respect to the shares of Common
Stock issuable upon conversion of the Series 1998-A1 Shares and upon the
exercise of the Series 1998-A1 Warrants, the 30th day following the
Series 1998-A1 Closing Date, (ii) with respect to the shares of Common
Stock issuable upon conversion of the Series 1998-A2 Shares and upon the
exercise of the Series 1998-A2 Warrants, the 30th day following the
Series 1998-A2 Closing Date and (iii) with respect to the shares of
Common Stock issuable upon conversion of the Series 1998-A3 Shares and
upon the exercise of the Series 1998-A3 Warrants, the 30th day following
the Series 1998-A3 Closing Date.
"Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section
5(c).
"Indemnifying Party" shall have the meaning set forth in
Section 5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
"Preferred Stock" means the shares of 5% Series 1998-A1, Series
1998-A2 and Series 1998-A3 Preferred Stock, par value $1.00 per share, of
the Company issued to the Purchasers pursuant to the Purchase Agreement.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of
the Registrable Securities covered by the Registration Statement, and all
other amendments and supplements to the Prospectus, including post-
effective amendments, and all material incorporated by reference in such
Prospectus.
"Registrable Securities" means (a) with respect to the
Registration Statement to be filed after the Series 1998-A1 Closing, the
shares of Common Stock issuable upon (i) conversion of the Series 1998-A1
Shares, (ii) payment of dividends in respect of the Series 1998-A1 Shares
and (iii) exercise of the Series 1998-A1 Warrant, (b) with respect to the
Registration Statement to be filed after the Series 1998-A2 Closing, the
shares of Common Stock issuable upon (i) conversion of the Series 1998-A2
Shares, (ii) payment of dividends in respect of the Series 1998-A2 Shares
and (iii) the exercise of the Series 1998-A2 Warrant and (c) with respect
to the Registration Statement to be filed after the Series 1998-A3
Closing Date, the shares of Common Stock issuable upon (i) conversion of
the Series 1998-A3 Shares, (ii) payment of dividends with respect to the
Series 1998-A3 Shares and (iii) the exercise of the Series 1998-A3
<PAGE>
Warrant; provided, however that in order to account for the fact that the
number of shares of Common Stock that are issuable upon conversion of
shares of Preferred Stock is determined in part upon the market price of
the Common Stock at the time of conversion, in the case of each of (a),
(b) and (c), Registrable Securities shall include (but not be limited to)
a number of shares of Common Stock equal to no less than the sum of (1)
175% times the maximum number of shares of Common Stock into which the
applicable series of Preferred Stock are convertible, assuming such
conversion occurred on the particular Closing Date for such series of
Preferred Stock and (2) the number of shares of Common Stock issuable on
payment of dividends on such Preferred Shares during the two-year period
after the applicable Closing Date assuming all such dividends were paid
in shares of Common Stock. Such registered shares of Common Stock shall
be allocated among the Holders pro rata based on the total number of
Registrable Securities issued or issuable as of each date that a
Registration Statement, as amended, relating to the resale of the
Registrable Securities is declared effective by the SEC. Notwithstanding
anything herein contained to the contrary, if the actual number of shares
of Common Stock into which the shares of Preferred Stock are convertible
exceeds twice the number of shares of Common Stock into which the
particular series of Preferred Stock are convertible based upon a
computation as at a particular Closing Date, the term "Registrable
Securities" shall be deemed to include such additional shares of Common
Stock.
"Registration Statement" means the registration statements and
any additional registration statements contemplated by Section 2(a),
including (in each case) the Prospectus, amendments and supplements to
such registration statement or Prospectus, including pre- and post-
effective amendments, all exhibits thereto, and all material incorporated
by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Series 1998-A1 Warrant" means the warrant issuable at the
Series 1998-A1 Closing.
"Series 1998-A2 Warrant" means the warrant issuable at the
Series 1998-A2 Closing.
"Series 1998-A3 Warrant" means the warrant issuable at the
Series 1998-A3 Closing.
"Special Counsel" means any special counsel to the Holders, for
which the Holders will be reimbursed by the Company pursuant to Section 4.
<PAGE>
"Underwritten Registration or Underwritten Offering" means a
registration in connection with which securities of the Company are sold
to an underwriter for reoffering to the public pursuant to an effective
registration statement.
2. Shelf Registration
(a) On or prior to each applicable Filing Date the Company
shall prepare and file with the Commission a "Shelf" Registration
Statement covering all Registrable Securities for an offering to be made
on a continuous basis pursuant to Rule 415. The Registration Statement
shall be on Form S-3 (except if otherwise directed by the Holders of a
majority in interest of the applicable Registrable Securities in
accordance herewith or if the Company is not then eligible to register
for resale the Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form in accordance
herewith). The Company shall (i) not permit any securities other than the
Registrable Securities and those securities listed in Schedule 2.1(u) of
the Purchase Agreement to be included in the Registration Statement and
(ii) use its commercially reasonable efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly
as possible after the filing thereof, but in any event prior to the
Effectiveness Date, and to keep such Registration Statement continuously
effective under the Securities Act until the date which is two years
after the date that such Registration Statement is declared effective by
the Commission or such earlier date when all Registrable Securities
covered by such Registration Statement have been sold or may be sold
without volume restrictions pursuant to Rule 144 as determined by the
counsel to the Company pursuant to a written opinion letter, addressed to
the Company's transfer agent to such effect (the "Effectiveness Period").
If an additional Registration Statement is required to be filed because
the actual number of shares of Common Stock into which the Preferred
Stock is convertible plus shares issuable upon payment of dividends
exceeds the number of shares of Common Stock initially registered in
respect of any particular series of Preferred Stock based upon the
computation on a particular Closing Date, the Company shall have 15
Business Days to file such additional Registration Statement, and the
Company shall use its best efforts to cause such additional Registration
Statement to be declared effective by the Commission as soon as possible.
(b) If the Holders of a majority of the Registrable Securities
so elect, an offering of Registrable Securities pursuant to the
Registration Statement may be effected on no more than two occasions in
the form of an Underwritten Offering. In such event, and if the managing
underwriters advise the Company and such Holders in writing that in their
opinion the amount of Registrable Securities proposed to be sold in such
Underwritten Offering exceeds the amount of Registrable Securities which
can be sold in such Underwritten Offering, there shall be included in
such Underwritten Offering the amount of such Registrable Securities
which in the opinion of such managing underwriters can be sold, and such
amount shall be allocated pro rata among the Holders proposing to sell
Registrable Securities in such Underwritten Offering.
(c) If any of the Registrable Securities are to be sold in an
Underwritten Offering, the investment banker in interest that will
administer the offering will be selected by the Holders of a majority of
the Registrable Securities included in such offering provided that the
Company shall consent to the inclusion of such investment banker, which
consent shall not be unreasonably withheld. No Holder may participate in
<PAGE>
any Underwritten Offering hereunder unless such Holder (i) agrees to sell
its Registrable Securities on the basis provided in any underwriting
agreements approved by the Persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents
required under the terms of such arrangements.
3. Registration Procedures
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) Prepare and file with the Commission on or prior to each
applicable Filing Date, a Registration Statement on Form S-3 (or if the
Company is not then eligible to register for resale the Registrable
Securities on Form S-3 such registration shall be on another appropriate
form in accordance herewith, or, in connection with an Underwritten
Offering hereunder, such other form agreed to by the Company and by a
majority-in-interest of Holders of Registrable Securities) in accordance
with the method or methods of distribution thereof as specified by the
Holders (except if otherwise directed by the Holders), and cause the
Registration Statement to become effective and remain effective as
provided herein; provided, however, that not less than five (5) Business
Days prior to the filing of the Registration Statement or any related
Prospectus or any amendment or supplement thereto (including any document
that would be incorporated therein by reference), the Company shall, if
reasonably practicable (i) furnish to the Holders, their Special Counsel
and any managing underwriters, copies of all such documents proposed to
be filed, which documents (other than those incorporated by reference)
will be subject to the review of such Holders, their Special Counsel and
such managing underwriters, and ( i) cause its officers and directors,
counsel and independent certified public accountants to respond to such
inquiries as shall be necessary, in the reasonable opinion of respective
counsel to such Holders and such underwriters, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of
the Registrable Securities, their Special Counsel, or any managing
underwriters, shall reasonably object in writing within three (3)
Business Days of their receipt thereof.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may
be necessary to keep the Registration Statement continuously effective as
to the applicable Registrable Securities for the Effectiveness Period and
prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all
of the Registrable Securities; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424 (or any similar
provisions then in force) promulgated under the Securities Act; (iii)
respond as promptly as possible to any comments received from the
Commission with respect to the Registration Statement or any amendment
thereto and as promptly as possible provide the Holders true and complete
copies of all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration
Statement during the applicable period in accordance with the intended
<PAGE>
methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify the Holders of Registrable Securities to be sold,
their Special Counsel and any managing underwriters as promptly as
possible (and, in the case of (i)(A) below, not less than five (5) days
prior to such filing) and (if requested by any such Person) confirm such
notice in writing no later than one (1) Business Day following the day
(i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement is proposed to be filed; (B) when
the Commission notifies the Company whether there will be a "review" of
such Registration Statement and whenever the Commission comments in
writing on such Registration Statement and (C) with respect to the
Registration Statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to
the Registration Statement or Prospectus or for additional information;
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) if at any time any of the representations and warranties of
the Company contained in any agreement (including any underwriting
agreement) contemplated hereby ceases to be true and correct in all
material respects; (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (vi) of the occurrence of any event that makes any statement
made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in
any material respect or that requires any revisions to the Registration
Statement, Prospectus or other documents so that, in the case of the
Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the
effectiveness of the Registration Statement or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable
moment.
(e) If requested by any managing underwriter or the Holders of
a majority in interest of the Registrable Securities to be sold in
connection with an Underwritten Offering, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration
Statement such information as the Company reasonably agrees should be
included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after
the Company has received notification of the matters to be incorporated
in such Prospectus supplement or post-effective amendment; provided,
however, that the Company shall not be required to take any action
pursuant to this Section 3(e) that would, in the opinion of counsel for
the Company, violate applicable law or be materially detrimental to the
business prospects of the Company.
<PAGE>
(f) Furnish to each Holder, their Special Counsel and any
managing underwriters, without charge, at least one conformed copy of
each Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed
to be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents
with the Commission.
(g) Promptly deliver to each Holder, their Special Counsel,
and any underwriters, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and the
Company hereby consents to the use of such Prospectus and each amendment
or supplement thereto by each of the selling Holders and any underwriters
in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Holders, any underwriters and their Special Counsel in connection with
the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions within the United
States as any Holder or underwriter requests in writing, to keep each
such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or
things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the Company shall not be required to
qualify generally to do business in any jurisdiction where it is not then
so qualified or to take any action that would subject it to general
service of process in any such jurisdiction where it is not then so
subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(i) Cooperate with the Holders and any managing underwriters
to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to a Registration
Statement, which certificates shall be free, to the extent permitted by
applicable law, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered in such
names as any such managing underwriters or Holders may request at least
two Business Days prior to any sale of Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section
3(c)(vi), as promptly as possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, and file any other
required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
<PAGE>
(k) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on the Nasdaq Stock
Market and any other securities exchange, quotation system, market or
over-the-counter bulletin board, if any, on which similar securities
issued by the Company are then listed as and when required pursuant to
the Purchase Agreement.
(l) Enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in Underwritten
Offerings) and take all such other actions in connection therewith
(including those reasonably requested by any managing underwriters and
the Holders of a majority of the Registrable Securities being sold) in
order to expedite or facilitate the disposition of such Registrable
Securities, and whether or not an underwriting agreement is entered into,
(i) make such representations and warranties to such Holders and such
underwriters as are customarily made by issuers to underwriters in
underwritten public offerings, and confirm the same if and when
requested; (ii) in the case of an Underwritten Offering obtain and
deliver copies thereof to the managing underwriters, if any, of opinions
of counsel to the Company and updates thereof addressed to each such
underwriter, in form, scope and substance reasonably satisfactory to any
such managing underwriters and Special Counsel to the selling Holders
covering the matters customarily covered in opinions requested in
Underwritten Offerings and such other matters as may be reasonably
requested by such Special Counsel and underwriters; (iii) immediately
prior to the effectiveness of the Registration Statement, and, in the
case of an Underwritten Offering, at the time of delivery of any
Registrable Securities sold pursuant thereto, obtain and deliver copies
to the Holders and the managing underwriters, if any, of "cold comfort"
letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and
financial data is, or is required to be, included in the Registration
Statement), addressed to each selling Holder and each of the
underwriters, if any, in form and substance as are customary in
connection with Underwritten Offerings; (iv) if an underwriting agreement
is entered into, the same shall contain indemnification provisions and
procedures no less favorable to the selling Holders and the underwriters,
if any, than those set forth in Section 6 (or such other provisions and
procedures acceptable to the managing underwriters, if any, and holders
of a majority of Registrable Securities participating in such
Underwritten Offering; and (v) deliver such documents and certificates as
may be reasonably requested by the Holders of a majority of the
Registrable Securities being sold, their Special Counsel and any managing
underwriters to evidence the continued validity of the representations
and warranties made pursuant to clause 3(1)(i) above and to evidence
compliance with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company.
(m) Make available for inspection by the selling Holders, any
representative of such Holders, any underwriter participating in any
disposition of Registrable Securities, and any attorney or accountant
retained by such selling Holders or underwriters, at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and
its subsidiaries, and cause the officers, directors, agents and employees
of the Company and its subsidiaries to supply all information in each
case reasonably requested by any such Holder, representative,
<PAGE>
underwriter, attorney or accountant in connection with the Registration
Statement; provided, however, that any information that is determined in
good faith by the Company in writing to be of a confidential nature at
the time of delivery of such information shall be kept confidential by
such Persons, unless (i) disclosure of such information is required by
court or administrative order or is necessary to respond to inquiries of
regulatory authorities; (ii) disclosure of such information, in the
opinion of counsel to such Person, is required by law; (iii) such
information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by such Person; or (iv)
such information becomes available to such Person from a source other
than the Company and such source is not known by such Person to be bound
by a confidentiality agreement with the Company.
(n) Comply in all material respects with all applicable rules
and regulations of the Commission and make generally available to its
security holders earning statements satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 not later than 45 days after the
end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to underwriters
in a firm commitment or best efforts Underwritten Offering and (ii) if
not sold to underwriters in such an offering, commencing on the first day
of the first fiscal quarter of the Company after the effective date of
the Registration Statement, which statement shall conform to the
requirements of Rule 158.
(o) The Company may require each selling Holder to furnish to
the Company information regarding such Holder and the distribution of
such Registrable Securities as is required by law to be disclosed in the
Registration Statement, and the Company may exclude from such
registration the Registrable Securities of any such Holder who
unreasonably fails to furnish such information within a reasonable time
after receiving such request.
If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such
Holder shall have the right to require (if such reference to such Holder
by name or otherwise is not required by the Securities Act or any similar
Federal statute then in force) the deletion of the reference to such
Holder in any amendment or supplement to the Registration Statement filed
or prepared subsequent to the time that such reference ceases to be
required.
Each Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has
received copies of the Prospectus as then amended or supplemented as
contemplated in Section 3(g) and notice from the Company that such
Registration Statement and any post-effective amendments thereto have
become effective as contemplated by Section 3(c) and (ii) it and its
officers, directors or Affiliates, if any, will comply with the
prospectus delivery requirements of the Securities Act as applicable to
them in connection with sales of Registrable Securities pursuant to the
Registration Statement.
Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(c)(ii),
3(c)(iii), 3(c)(iv), 3(c)(v) or 3(c)(vi), such Holder will forthwith
<PAGE>
discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated
by reference in such Prospectus or Registration Statement.
(p) If (a) there is material non-public information regarding
the Company which the Company's Board of Directors reasonably determines
not to be in the Company's best interest to disclose and which the
Company is not otherwise required to disclose, or (b) there is a
significant business opportunity (including but not limited to the
acquisition or disposition of assets (other than in the ordinary course
of business) or any merger, consolidation, tender offer or other similar
transaction) available to the Company which the Company's Board of
Directors reasonably determines not to be in the Company's best interest
to disclose, then the Company may postpone or suspend filing or
effectiveness of a registration statement for a period not to exceed 20
consecutive days, provided that the Company may not postpone or suspend
its obligation under this Section 3(p) for more than 60 days in the
aggregate during any 12 month period; provided, however, that no such
postponement or suspension shall be permitted for consecutive 20 day
periods, arising out of the same set of facts, circumstances or
transactions.
4. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company, except as and to the
extent specified in Section 4(b), shall be borne by the Company whether
or not pursuant to an Underwritten Offering and whether or not the
Registration Statement is filed or becomes effective and whether or not
any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence
shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to
filings required to be made with the Nasdaq Stock Market and each other
securities exchange or market on which Registrable Securities are
required hereunder to be listed and (B) in compliance with state
securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel for the Holders in connection with Blue Sky
qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws
of such jurisdictions as the managing underwriters, if any, or the
Holders of a majority of Registrable Securities may designate)), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is requested by the managing underwriters,
if any, or by the holders of a majority of the Registrable Securities
included in the Registration Statement), (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Company
and Special Counsel for the Holders, in the case of the Special Counsel,
to a maximum amount of $10,000, (v) Securities Act liability insurance,
if the Company so desires such insurance, and (vi) fees and expenses of
all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement. In
addition, the Company shall be responsible for all of its internal
<PAGE>
expenses incurred in connection with the consummation of the transactions
contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.
(b) If the Holders require an Underwritten Offering pursuant
to the terms hereof, the Company shall be responsible for all costs, fees
and expenses in connection therewith, except for the fees and
disbursements of the Underwriters (including any underwriting commissions
and discounts) and their legal counsel and accountants (which shall be
borne by the Holders). Therefore, in such circumstances the Holder shall
bear the expenses of the fees and disbursements of any legal counsel or
accounting firm retained by the underwriters in connection with such
Underwritten Offering and the costs of any determination (but not filing)
by the underwriters of the eligibility of the Registrable Securities for
investment under the applicable state securities laws. By way of
illustration which is not intended to diminish from the provisions of
Section 4(a), the Holders shall not be responsible for, and the Company
shall be required to pay the fees or disbursements incurred by the
Company (including by its legal counsel and accountants) in connection
with, the preparation and filing of a Registration Statement and related
Prospectus for such offering, the maintenance of such Registration
Statement in accordance with the terms hereof, the listing of the
Registrable Securities in accordance with the requirements hereof, and
printing expenses incurred to comply with the requirements hereof.
5. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder, the officers, directors, agents (including any
underwriters retained by such Holder in connection with the offer and
sale of Registrable Securities), brokers (including brokers who offer and
sell Registrable Securities as principal as a result of a pledge or any
failure to perform under a margin call of Common Stock), investment
advisors and employees of each of them, each Person who controls any such
Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees
of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation
and attorneys' fees) and expenses (collectively, "Losses"), as incurred,
arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus or
any form of prospectus or in any amendment or supplement thereto or in
any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus
or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading (in the case of
any Prospectus or form of Prospectus or supplement thereto, in light of
the circumstances under which they were made), except to the extent, but
only to the extent, that such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, which information was
reasonably relied on by the Company for use therein or to the extent that
such information relates to such Holder or such Holder's proposed method
<PAGE>
of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment
or supplement thereto. The Company shall notify the Holders promptly of
the institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement.
(b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, the directors,
officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons, to the fullest extent permitted by applicable
law, from and against all Losses, as incurred, arising solely out of or
based solely upon any untrue statement of a material fact contained in
the Registration Statement, any Prospectus, or any form of prospectus, or
arising solely out of or based solely upon any omission of a material
fact required to be stated therein or necessary to make the statements
therein not misleading to the extent, but only to the extent, that such
untrue statement or omission is contained in any information so furnished
in writing by such Holder to the Company specifically for inclusion in
the Registration Statement or such Prospectus and that such information
was reasonably relied upon by the Company for use in the Registration
Statement, such Prospectus or such form of prospectus or to the extent
that such information relates to such Holder or such Holder's proposed
method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified Party"), such Indemnified Party promptly shall
notify the Person from whom indemnity is sought (the "Indemnifying
Party") in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses incurred
in connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a
court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have proximately and
materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has
agreed in writing to pay such fees and expenses; or (2) the Indemnifying
Party shall have failed promptly to assume the defense of such Proceeding
and to employ counsel reasonably satisfactory to such Indemnified Party
in any such Proceeding; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and
the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to exist if the
same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel
<PAGE>
at the expense of the Indemnifying Party, the Indemnifying Party shall
not have the right to assume the defense thereof and such counsel shall
be at the expense of the Indemnifying Party). The Indemnifying Party
shall not be liable for any settlement of any such Proceeding effected
without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent
of the Indemnified Party, effect any settlement of any pending Proceeding
in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party
from all liability on claims that are the subject matter of such
Proceeding.
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party,
as incurred, within 10 Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined
that an Indemnified Party is not entitled to indemnification hereunder;
provided, that the Indemnifying Party may require such Indemnified Party
to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled
to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party because of a failure
or refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then
each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Losses, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party and Indemnified
Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be
deemed to include, subject to the limitations set forth in Section 5(c),
any reasonable attorneys' or other reasonable fees or expenses incurred
by such party in connection with any Proceeding to the extent such party
would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party
in accordance with its terms.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined
by pro rata allocation or by any other method of allocation that does not
take into account the equitable considerations referred to in the
immediately preceding paragraph. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation.
<PAGE>
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties
may have to the Indemnified Parties.
6. Rule 144
As long as any Holder owns Shares or Underlying Shares, the
Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to Section 13(a) or
l5(d) of the Exchange Act and to promptly furnish the Holders with true
and complete copies of all such filings. As long as any Holder owns
Shares or Underlying Shares, if the Company is not required to file
reports pursuant to Section 13(a) or l5(d) of the Exchange Act, it will
prepare and furnish to the Holders and make publicly available in
accordance with Rule 144(c) promulgated under the Securities Act annual
and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in
reports required by Section 13(a) or 15(d) of the Exchange Act, as well
as any other information required thereby, in the time period that such
filings would have been required to have been made under the Exchange
Act. The Company further covenants that it will take such further action
as any Holder may reasonably request, all to the extent required from
time to time to enable such Person to sell Underlying Shares without
registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act,
including providing any legal opinions referred to in the Purchase
Agreement. Upon the request of any Holder, the Company shall deliver to
such Holder a written certification of a duly authorized officer as to
whether it has complied with such requirements.
7. Miscellaneous
(a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each Holder or
the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including
recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company and each Holder agree that
monetary damages would not provide adequate compensation for any losses
incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any
of its subsidiaries has, as of the date hereof, nor shall the Company or
any of its subsidiaries, on or after the date of this Agreement, enter
into any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. Except as disclosed in Schedule
2.1(u) of the Purchase Agreement, neither the Company nor any of its
subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person.
Without limiting the generality of the foregoing, without the written
consent of the Holders of a majority of the then outstanding Registrable
Securities, the Company shall not grant to any Person the right to
request the Company to register any securities of the Company under the
<PAGE>
Securities Act unless the rights so granted are subject in all respects
to the prior rights in full of the Holders set forth herein, and are not
otherwise in conflict or inconsistent with the provisions of this
Agreement.
(c) No Piggyback on Registrations. Neither the Company nor any
of its security holders (other than the Holders in such capacity pursuant
hereto or as disclosed in Schedule 2.l(u) of the Purchase Agreement) may
include securities of the Company in the Registration Statement other
than the Registrable Securities or as disclosed in Schedule 2. l(u) of
the Purchase Agreement, and the Company shall not after the date hereof
enter into any agreement providing such right to any of its
securityholders, unless the right so granted is subject in all respects
to the prior rights in full of the Holders set forth herein, and is not
otherwise in conflict or inconsistent with the provisions of this
Agreement.
(d) Piggy-Back Registrations. If at any time when there is not
an effective Registration Statement covering Underlying Shares for any
outstanding shares of Preferred Stock, the Company shall determine to
prepare and file with the Commission a registration statement relating to
an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or
Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee
benefit plans, the Company shall send to each holder of Registrable
Securities written notice of such determination and, if within ten (10)
days after receipt of such notice, any such holder shall so request in
writing, (which request shall specify the Registrable Securities intended
to be disposed of by the Purchasers), the Company will use reasonable
efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to
register by the holder, to the extent requisite to permit the disposition
of the Registrable Securities so to be registered, provided that if at
any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine
for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to such holder and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration
(but not from its obligation to pay expenses in accordance with Section 4
hereof), and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities being
registered pursuant to this Section 7(d) for the same period as the delay
in registering such other securities. The Company shall include in such
registration statement all or any part of such Registrable Securities
such holder requests to be registered; provided, however, that the
Company shall not be required to register any Registrable Securities
pursuant to this Section 7(d) that are eligible for sale pursuant to Rule
144(k) of the Securities Act. In the case of an underwritten public
offering, if the managing underwriter(s) or underwriter(s) should
reasonably object to the inclusion of the Registrable Securities in such
registration statement, then if the Company after consultation with the
Underwriter's Representative should reasonably determine that the
inclusion of such Registrable Securities, would materially adversely
<PAGE>
affect the offering contemplated in such registration statement, and
based on such determination recommends inclusion in such registration
statement of fewer or none of the Registrable Securities of the Holders,
then (x) the number of Registrable Securities of the Holders included in
such registration statement shall be reduced pro-rata among such Holders
(based upon the number of Registrable Securities requested to be included
in the registration), if the Company after consultation with the
underwriter(s) recommends the inclusion of fewer Registrable Securities,
or (y) none of the Registrable Securities of the Holders shall be
included in such registration statement, if the Company after
consultation with the underwriter(s) recommends the inclusion of none of
such Registrable Securities; provided, however, that if Securities are
being offered for the account of other persons or entities as well as the
Company, such reduction shall not represent a greater fraction of the
number of Registrable Securities intended to be offered by the Holders
than the fraction of similar reductions imposed on such other persons or
entities (other than the Company).
(e) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified
or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in writing
and signed by the Company and the Holders of at least two-thirds of the
then outstanding Registrable Securities; provided, however, that, for the
purposes of this sentence, Registrable Securities that are owned,
directly or indirectly, by the Company, or an Affiliate of the Company
are not deemed outstanding. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of at least a majority of the Registrable Securities to which
such waiver or consent relates; provided, however, that the provisions of
this sentence may not be amended, modified, or supplemented except in
accordance with the provisions of the immediately preceding sentence.
(f) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (i)
the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile telephone number specified in this Section
prior to 7:00 p.m. (New York City time) on a Business Day, (ii) the
Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone
number specified in the Purchase Agreement later than 7:00 p.m. (New York
City time) on any date and earlier than 11:59 p.m. (New York City time)
on such date, (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service, or (iv) upon
actual receipt by the party to whom such notice is required to be given
to each Holder at its address set forth under its name on Schedule 1
attached hereto or such other address as may be designated in writing
hereafter, in the same manner, by such Person. Copies of notices to any
Holder shall be sent to Akin, Gump, Strauss, Hauer & Feld, L.L.P., 1700
Pacific Avenue, Suite 4100, Dallas, Texas 75201, Attn: Diane B. Muse,
Esq., fax: (214) 969-4343.
(g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of
each of the parties and shall inure to the benefit of each Holder. The
Company may not assign its rights or obligations hereunder without the
<PAGE>
prior written consent of each Holder. Each Purchaser may assign its
rights hereunder in the manner and to the Persons as permitted under the
Purchase Agreement.
(h) Assignment of Registration Rights. The rights of each
Holder hereunder, including the right to have the Company register for
resale Registrable Securities in accordance with the terms of this
Agreement, shall be automatically assignable by each Holder to any
Affiliate of such Holder, any other Holder or Affiliate of any other
Holder and up to four other assignees of all or a portion of the shares
of Preferred Stock or the Registrable Securities if: (i) the Holder
agrees in writing with the transferee or assignee to assign such rights,
and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (ii) the Company is, within a
reasonable time after such transfer or assignment, furnished with written
notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are
being transferred or assigned, (iii) following such transfer or
assignment the further disposition of such securities by the transferee
or assignees is restricted under the Securities Act and applicable state
securities laws, (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this Section, the
transferee or assignee agrees in writing with the Company to be bound by
all of the provisions of this Agreement, and (v) such transfer shall have
been made in accordance with the applicable requirements of the Purchase
Agreement. The rights to assignment shall apply to the Holders (and to
subsequent) successors and assigns.
(i) Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to
be an original and, all of which taken together shall constitute one and
the same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.
(j) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of law.
(k) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(l) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
<PAGE>
(m) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(n) Shares Held by The Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held
by the Company or its Affiliates (other than any Holder or transferees or
successors or assigns thereof if such Holder is deemed to be an Affiliate
solely by reason of its holdings of such Registrable Securities) shall
not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.
IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
UNIVIEW TECHNOLOGIES CORPORATION
By:
Name:
Title:
PURCHASER:
By:
Name:
Title:
PURCHASER:
By:
Name:
Title:
Company
uniView Technologies Corporation
10911 Petal Street
Dallas, Texas 75238
Fax: __________________
Purchasers:
_____________________
_____________________
_____________________
Attn: _____________________
Fax: _____________________
Portion of Series 1998-A1 Purchase Price - $_____________________
Series 1998-A1 Shares - _____________________
_____________________
_____________________
_____________________
Attn: _____________________
Fax: _____________________
Portion of Series 1998-A1 Purchase Price - $_____________________
Series 1998-A1 Shares - _____________________
