As filed with the Securities and Exchange Commission on June 28, 1999
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 541512 75-1975147
(State or other (Primary North American (I.R.S. Employer
jurisdiction of Industry Classification Identification No.)
incorporation or System Number)
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.[ ]
<PAGE>
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
Common Stock,
$.10 par value 8,364,750 $2.20 $18,402,450 $5,116
(1) Includes 68,750 shares of Common Stock; up to 1,612,000 shares
of Common Stock issuable upon the exercise of warrants; and up to
6,684,000 shares of Common Stock issuable upon the conversion of
Convertible Securities.
(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 June 22, 1999.
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>
PROSPECTUS
UNIVIEW TECHNOLOGIES CORPORATION
10911 Petal Street
Dallas, Texas 75238
(214) 503-8880
Nasdaq Stock Market - UVEW
Securities offered by selling security holders:
68,750 shares of common stock, par value $.10 ("Common Stock");
1,612,000 shares of Common Stock issuable upon exercise of warrants; and
6,684,000 shares of Common Stock issuable upon conversion of convertible
securities.
Selling security holders will offer the Securities to the public at
a price related to the market price at the time of each sale. On June
22, 1999, the average of the high and low trading prices of the Common
Stock as reported by the Nasdaq Stock Market was $2.20 per share. The
Company will receive no proceeds from sales by the selling security
holders. The Company will only receive proceeds in the future if and
when any of the selling security holders exercise their warrants. The
selling security holders will receive net proceeds at the time of each
sale based on the sale price less brokers' commissions.
-----------------------------------
This investment involves a high degree of risk. You should purchase
shares only if you can afford a complete loss. See "Risk Factors"
beginning on page 2.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon
the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
_________________, 1999
<PAGE>
ABOUT THE COMPANY
uniView Technologies Corporation offers the expertise and innovative
tools necessary to create fully customized video-on-demand, interactive
applications, e-commerce, and other interactive broadband services.
Building on a foundation of convergence technology, and the understanding
of end user requirements, uniView has merged its Internet access
technologies and existing applications with the technologies of its
development partners to deliver the future of interactive networking
products and services. In 1997, uniView introduced its first
revolutionary set top box and, today, its Advanced Systems Group (ASG)
uses convergence devices and integration expertise to design custom
broadband networks for clients in multi-level marketing, hospitality,
medical facilities, utilities, banking, and telecommunications. In
addition to complete network system design, ASG also offers Web site
development, web site hosting, and full international Internet access,
while uniView's Product Group focuses on research, product development
and customer service. More information on uniView is available at
www.uniview.net.
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,
including statements contained in the following "Risk Factors" section,
are subject to risks and uncertainties that could cause actual results to
differ materially from those discussed. These forward-looking statements
speak only as of the date of this Prospectus. We expressly disclaim any
obligation or undertaking to release publicly any updates or change in
our expectations with regard thereto or any change in events, conditions
or circumstances on which any such statement may be based.
RISK FACTORS
You should consider the following factors, together with the other
information in this Prospectus, in evaluating an investment in the
Company.
RISKS RELATED TO COMPANY OPERATIONS
Limited Operating History; Absence of Profitable Operations in Recent
Periods
We have reported a net loss in each of our last five fiscal years
from a combination of various operating segments. In 1993, we purchased
Curtis Mathes Corporation ("CMC"), which specialized in manufacturing and
marketing consumer electronics products related to the home entertainment
industry. In 1996 we phased out CMC's operations and inventory. In 1997
we developed our uniViewr technologies for the convergence of the
Internet and television. Last year we acquired three computer-related
consulting companies, consolidated operations and moved to a different
business model focused on licensing our technologies and providing
computer-related consulting services. As you can see, our corporate
character and direction has changed in the recent past and we have a
limited operating history in our present form under our current business
model. We believe that we are positioned to be at the forefront of the
interactive broadband services industry, but we make no assurance that
the expected demand for our technologies and services under our current
business model will materialize or increase at the expected rate.
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Limited Cash Flow; Additional Financing Required
In recent years, we have not achieved a positive cash flow from
operations. We continue to rely on sales of common and preferred stock
and available credit arrangements to supplement our ongoing financial
needs. We believe that to fully realize the expected financial returns
on our current business model, we will have to join with one or more
major financial business partners which have the means to fund our
operations during this expansion phase. Until we become self-supporting
or until we link with a substantial financial business partner, we will
have to utilize additional equity or debt financing. We continually
evaluate opportunities with various investors to raise additional
capital. We have in the past raised all of the financing necessary to
fund ongoing operations. We make no assurance that such resources will
continue to be available to us or that they will be available upon
favorable terms. A lack of sufficient financial resources to fund
operations until our business plan begins to produce the expected returns
could have a material adverse effect on our business, operating results
and financial condition.
Dependence on Key Personnel
Our success depends to a significant extent on the performance and
continued service of our 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 we will be successful in
attracting and retaining such personnel. Specifically, we may experience
increased costs in order to attract and retain skilled employees. In
addition, employees may leave or compete against us. Our failure to
attract additional qualified employees or to retain the services of key
personnel could materially adversely affect our business, operating
results and financial condition.
RISKS RELATED TO THE COMPANY'S COMMON STOCK
Additional Shares for Sale
The shares being registered under this Prospectus may be sold after
registration in the public market. The shares are expected to have no
underwriters and will therefore not be subject to underwriter price
stabilization transactions. The possibility that a substantial number of
our securities may, in the near future, be sold in the public market
could adversely affect prevailing market prices for the Common Stock. A
depressed stock price could further impair our ability to raise
additional capital through the sale of equity securities. Such
impairment of our ability to raise necessary financing for ongoing
operations could have a material adverse effect on our business,
operating results and financial condition. See "Risk Factors -- Limited
Cash Flow; Additional Financing Required," on page 3.
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 we must
maintain, among other things, a minimum bid price of $1.00 per share.
Nasdaq previously notified us that our Common Stock price was not in
compliance with their minimum bid price requirement. Although our stock
price has now achieved the required level, Nasdaq continues to review our
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compliance history to determine whether we have complied with all
applicable Nasdaq criteria. We will be deemed in compliance only after
Nasdaq determines that we are currently in compliance and that we have
the ability to sustain long term compliance in the future with all
applicable Nasdaq maintenance criteria. We believe that we have
demonstrated to Nasdaq our ability to sustain long term compliance with
all applicable listing criteria, but we make no assurance that Nasdaq
will agree.
If Nasdaq determines that we are out of compliance or that we do not
have the ability to sustain long term compliance with their requirements,
our securities may be delisted from Nasdaq. Any trading of our
securities after that would have to be conducted in the non-Nasdaq over-
the-counter market. If that happens, an investor could find it more
difficult to sell our securities or to obtain accurate market quotations.
Also, if the securities are delisted and the trading price remains below
$5.00 per share, trading would be subject to certain other rules of the
Exchange Act. Such rules require additional disclosure by broker-dealers
in connection with any trades involving a stock defined as a "penny
stock." "Penny stock" is defined as any non-Nasdaq equity security that
has a market price of less than $5.00 per share, subject to certain
exceptions. Such rules require the delivery of a disclosure schedule
explaining the penny stock market and the risks associated with that
market before entering into any penny stock transaction. The rules also
impose various sales practice requirements on broker-dealers who sell
penny stocks to persons other than established customers and accredited
investors. 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
securities. This could severely limit the market liquidity of the
securities and the ability to sell the securities in the secondary
market.
Potential Dilution of Shareholders' Ownership Interests
As of June 23, 1999, we had issued (1) 14,851,270 shares of Common
Stock; (2) warrants and vested employee stock options that could be
exercised into 2,633,190 shares of Common Stock; (3) debentures that
could be converted into approximately 3,621,290 shares of Common Stock
and (4) preferred stock that could be converted into approximately
6,185,000 shares of Common Stock. If the holders of all outstanding
warrants, options, and convertible preferred stock exchanged their
holdings for Common Stock on that date, there would be approximately
27,290,750 shares of Common Stock outstanding. Such an event would
dilute an existing shareholder's ownership interest in the Company. (For
example, an existing 10% shareholder before such event would become a
5.44% shareholder after such event. All other existing shareholders
would experience similar dilution). Such an event would increase our net
tangible book value by the amount of the proceeds we received for issuing
Common Stock in exchange for the warrants and options (approximately
$7,106,815 or $0.26 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 such event. See "DESCRIPTION OF SECURITIES," on page 10.
<PAGE>
Preferred Stock's Preference over Common Stock
Our Preferred Stock has preferences over the Common Stock in payment
of dividends and in distributions to shareholders upon our dissolution.
During ongoing operations, these preferences mean very little. However,
if it became necessary to dissolve the Company and if any assets remain
after payment of creditors, we would have to distribute them first to our
Preferred Shareholders to pay the face amount and all accrued dividends
on their Preferred Stock. After that we could make distributions to
Common Shareholders. If dissolution occurred at the June 23, 1999 levels
of Common and Preferred Stock, a Common Shareholder could receive a
distribution which is approximately $1.46 per share less than it would
otherwise receive if there were no shares of Preferred Stock outstanding.
See "DESCRIPTION OF SECURITIES: Preferred Stock," on page 11.
RISKS RELATED TO OUR TECHNOLOGIES AND SERVICES
Changes in Technology and Industry Standards
We operate in a marketplace that changes rapidly. Changes in
industry standards, frequent innovations and changes in customer
preferences could render our technologies and services unmarketable if we
are slow to anticipate or adjust to these changes. We may have to
develop new technologies or modify our existing technologies and services
to keep pace with these changes. Pursuit of these technological advances
will require substantial expenditures, and we make no assurance that we
will succeed in adapting our technologies as rapidly or as successfully
as our competitors. Our competitors may have better financing and could
gain advantage by implementing new technologies and services more quickly
and at lower cost. Failure to adapt our technologies or to develop and
introduce new technologies and enhancements in a timely fashion could
have a material adverse effect on our business, operating results and
financial condition.
Dependence on the Internet
We expect to derive a significant portion of our future income from
our Internet-related technologies and Internet advertising revenues. Our
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, our business, operating
results and financial condition could be materially adversely affected.
Readiness for Year 2000
Our assessment of the nature and extent of our Year 2000 issues is
ongoing, but we have not yet completed our assessment. We intend to work
toward making our internal information technology Year 2000 ready. This
may include replacing or updating existing computer systems as needed.
Additionally, we plan to evaluate the Year 2000 readiness of our
consultants, vendors, suppliers, and major customers. Where we determine
that critical consultants, vendors, suppliers, or customers are not Year
2000 ready, we will monitor their progress and take appropriate actions.
We intend to develop appropriate contingency plans should certain
critical systems utilized by us or our significant affiliates fail as a
result of Year 2000 issues. We estimate our total cost of achieving Year
2000 compliance will be less than $50,000. We believe we are taking the
<PAGE>
necessary steps to resolve Year 2000 issues. Based on current progress
and future plans, we believe that Year 2000 issues will not significantly
affect our ability to deliver our technologies and services to our
customers on a timely basis. However, given the uncertain consequences
of failure to resolve significant Year 2000 issues, any one or more such
failures could have a material adverse effect on our business, operating
results and financial condition.
RISKS RELATED TO THE INDUSTRY
Highly Competitive Industry
We operate in an industry that is intensely and increasingly
competitive. It includes a large number of Internet-related companies
and computer consulting companies. A number of companies have announced
Internet-television convergence technologies similar to ours. Oracle has
promoted a low-cost Internet access technology in the form of a "network
computer" device. Sony and Phillips market an Internet-television
convergence device from WebTV Networks. NewCom promotes their Web Pal.
Navio has announced development of a similar device. Video game devices
such as the Sega Saturn, the Sony Playstation and the Nintendo 64 also
provide Internet access. Television manufacturers have announced plans
to introduce Internet access into their products or through set-top
boxes, using technologies supplied by others. Personal computer
manufacturers, such as Gateway 2000, are introducing 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. We also compete with various national
and local Internet service and content providers such as America Online,
the Microsoft Network, AT&T Corp., and MCI Communications Corporation.
Competition occurs principally in the areas of style, quality,
functionality, service, design, product features and price. Our
competitors may develop Internet access products and services that are
superior to ours. They may be priced competitively with ours. They may
achieve greater market acceptance than ours. Many of our competitors may
have greater financial, technical, marketing and/or personnel resources
than we do. This competitive environment could (1) limit the number of
customers that are willing to utilize our technologies and services, (2)
require price reductions and increased spending on technology
development, marketing, network capacity, and content procurement, and
(3) limit our ability to develop new technologies and services. Any of
the foregoing events could have a material adverse effect on our
business, financial condition and operating results.
In addition, some of our competitors may be acquired by, receive
investments from or enter into other commercial relationships with
larger, well-established and well-funded companies. We make no assurance
that we will have the resources required to continue to respond
effectively to these competitive pressures. See "Risk Factors -- Limited
Cash Flow; Additional Financing Required," on page 2.
Government Regulation; Legal Uncertainties; International Business Risks
The Federal Communications Commission ("FCC") provides mandatory
guidelines for the electronic emissions of licensed products containing
our technologies. Several federal and state government agencies,
legislative bodies and courts, including the FCC, the Federal Trade
Commission and the Internal Revenue Service further impact our
<PAGE>
technologies and services. 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. We cannot predict whether
such proposals will be adopted or whether they would be favorable or
unfavorable to the industry.
There are certain other significant risks inherent in doing business
on an international level, for example: (1) unexpected changes in
regulatory requirements, (2) uncertain political risks, (3) export
restrictions, (4) export controls relating to encryption technology such
as that utilized by the uniView technologies, (5) tariffs and other trade
barriers, (6) fluctuations in currency exchange rates, and (7)
potentially adverse tax consequences. Any one or all of the foregoing
could adversely impact our future planned international operations.
Limited Protection of Intellectual Property and Proprietary Rights; Risk
of Litigation
We regard our Internet-television convergence technologies
containing software-related components as proprietary. We rely primarily
on a combination of trademark, copyright and trade secret laws,
nondisclosure agreements, and other methods to protect these proprietary
rights. As the number of Internet-television convergence technologies in
the industry increases and the functionality of these technologies
overlap, infringement claims may also increase. Third parties may assert
infringement claims against us in the future with respect to current or
future technologies. As is common in the industry, from time to time we
receive notices from third parties claiming infringement of intellectual
property rights. We investigate these claims and respond as we deem
appropriate. Policing unauthorized use of our technologies is also
difficult and can be expected to be a recurring problem. We expect to
enter into transactions in countries where intellectual property laws may
not be well developed or are poorly enforced. Any claim or litigation,
with or without merit, could be costly and could result in a diversion of
our attention, which could have a material adverse effect on our
business, operating results and financial condition.
USE OF PROCEEDS
The Company will receive proceeds only when any of the selling
security holders exercise their warrants. If that occurs, any proceeds
received by the Company will be used for general corporate purposes
including operating and working capital requirements. Various uses of
the proceeds may include additional advertising, promotion, and further
development of the uniView technologies.
<PAGE>
SELLING SECURITY HOLDERS
The following table sets forth the total number of shares that were
beneficially owned by the selling security holders before the offering.
All of such shares are being offered for the account of the selling
security holders and after the offering the selling security holders will
each own no Common Stock of the Company. The table assumes that the
number of shares to be offered and sold constitute all of the shares of
Common Stock beneficially owned by the selling security holders.
Number of
Number of Shares
Shares Underlying
Relationship to Number of Underlying Convertible
Selling Security Holder the Company Shares Warrants Securities
SECURITIES ACQUIRED PURSUANT TO A SECURITIES PURCHASE AGREEMENT:
Brown Simpson Strategic
Growth Fund, Ltd. Private Investor N/A N/A 2,881,250
Brown Simpson Strategic
Growth Fund, L.P. Private Investor N/A N/A 1,618,750
Founders Equity
Group, Inc. Private Investor N/A N/A 760,000
Donald F. Moorehead Private Investor N/A N/A 220,000
George O. Moorehead Private Investor N/A N/A 220,000
Scotty D. Cook Private Investor N/A N/A 160,000
Thomson Kernaghan
& Co. Ltd. Private Investor N/A N/A 824,000
--- --- ---------
SUBTOTAL N/A N/A 6,684,000
COMMON STOCK AND WARRANTS ACQUIRED PURSUANT TO FOUNDER'S EQUITY AGREEMENT:
Founders Equity
Securities, Inc. Private Investor 68,750 24,000 N/A
Founders Equity
Group, Inc. Private Investor N/A 88,000 N/A
------ ------- ---
SUBTOTAL 68,750 112,000 N/A
WARRANTS ACQUIRED PURSUANT TO PAST TRANSACTIONS:
Nations Investment
Corp., Ltd. Private Investor N/A 1,000,000 N/A
Associates Funding
Group, Inc. Private Investor N/A 500,000 N/A
--- --------- ---
SUBTOTAL N/A 1,500,000 N/A
TOTAL 68,750 1,612,000 6,684,000
====== ========= =========
GRAND TOTAL 8,364,750
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PLAN OF DISTRIBUTION
We are registering the Securities on behalf of the selling security
holders, which includes donees and pledgees selling Securities received
from a named selling security holder after the date of this Prospectus.
We will pay all costs, expenses and fees in connection with the
registration of the Securities. The selling security holders will pay
brokerage commissions and similar selling expenses, if any, attributable
to the sales. Sales may be effected by selling security holders from
time to time in one or more types of transactions (which may include
block transactions) on Nasdaq, in the over-the-counter market, in
negotiated transactions, through put or call options transactions
relating to the Securities, through short sales of Securities, or a
combination of such methods of sale. Such sales will be made at market
prices prevailing at the time of sale, or at negotiated prices. Such
transactions may or may not involve brokers or dealers. The selling
security holders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities, nor is there an
underwriter or coordinated broker acting in connection with the proposed
sale of the Securities by the selling security holders.
The selling security holders may enter into hedging transactions
with broker-dealers or other financial institutions. In connection with
such transactions, broker-dealers or other financial institutions may
engage in short sales of the Securities or of securities convertible into
or exchangeable for the Securities in the course of hedging positions
they assume with selling security holders. The selling security holders
may also enter into options or other transactions with broker-dealers or
other financial institutions which require the delivery to such broker-
dealers or other financial institutions of Securities offered by this
Prospectus. In that event, such broker-dealer or other financial
institution may resell such Securities pursuant to this Prospectus (as
amended or supplemented to reflect such transaction).
The selling security holders may effect such transactions by selling
Securities directly to purchasers or to or through broker-dealers, which
may act as agents or principals. Such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from
selling security holders and/or the purchasers of Securities for whom
such broker-dealers may act as agents or to whom they sell as principal,
or both. Such compensation as to a particular broker-dealer might be in
excess of customary commissions.
The selling security holders and any broker-dealers that act in
connection with the sale of Securities might be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act.
Any commissions received by such broker-dealers and any profit on the
resale of the Securities sold by them while acting as principals might be
deemed to be underwriting discounts or commissions under the Securities
Act. The Company has agreed to indemnify each selling security holders
against certain liabilities, including liabilities arising under the
Securities Act. The selling security holders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions
involving sales of the Securities against certain liabilities, including
liabilities arising under the Securities Act.
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The selling security holders will be subject to the prospectus
delivery requirements of the Securities Act. We have informed the
selling security holders that the anti-manipulative provisions of
Regulation M promulgated under the Exchange Act may apply to their sales
in the market.
Selling security holders also may resell all or a portion of the
Securities in open market transactions in reliance upon Rule 144 under
the Securities Act, provided they meet the criteria and conform to the
requirements of such Rule.
Upon being notified by a selling security holder that any
material arrangement has been entered into with a broker-dealer for the
sale of Securities through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or
dealer, we will file a supplement to this Prospectus, if required,
pursuant to Rule 424(b) under the Securities Act. Such supplement will
disclose (i) the name of each such selling security holder and of the
participating broker-dealer(s), (ii) the number of Securities involved,
(iii) the initial price at which such Securities were sold, (iv) the
commissions paid or discounts or concessions allowed to such broker-
dealer(s), where applicable, (v) that such broker-dealer(s) did not
conduct any investigation to verify the information set out or
incorporated by reference in this Prospectus and (vi) other facts
material to the transactions. In addition, upon being notified by a
selling security holders that a donee or pledgee intends to sell more
than 500 Registrable Securities, we will file any required supplement to
this Prospectus.
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 14,851,270 shares were issued and outstanding as of June
23, 1999. 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 exercise of warrants 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.
<PAGE>
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 June 23, 1999, outstanding Preferred Stock consisted of:
(1) $140,000 face value of Series A Preferred Stock with an annual
dividend rate of 6%, and no right to convert into Common Stock.
(2) $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 shares of Common Stock at a minimum conversion price of $15.00 per
share.
(3) $1.1 million face value of Series 1999-C Preferred Stock with a
6% annual dividend rate and the right to convert such Preferred Stock
into 880,000 shares of Common Stock at a fixed conversion price of $1.25
per share.
(4) $18 million face value of Series 1999-D1 Preferred Stock with a
5% annual dividend rate and the right to convert such Preferred Stock
into 4.5 million shares of Common Stock at a fixed conversion price of
$4.00 per share. Beginning on September 10, 1999 the right to convert
Series 1999-D1 Preferred Stock vests at the cumulative rate of twenty-
five percent per each twenty-two (22) Trading Day period until all shares
of Series 1999-D1 Preferred Stock are convertible. Conversions are
further limited by the holdings of their owners, as each owner may not
hold more than 4.99% of the Company's outstanding common stock at any one
time without giving the Company advance notice that it intends to waive
this restriction.
(5) $2.4 million face value of Series 1999-E Preferred Stock with a
3% annual dividend rate and the right to convert such Preferred Stock
into 800,000 shares of Common Stock at a fixed conversion price of $3.00
per share. Beginning on June 23, 1999 the right to convert Series 1999-E
Preferred Stock vests at the cumulative rate of twenty-five percent per
month until all shares of Series 1999-E Preferred Stock are convertible.
Conversions are further limited by the holdings of their owners, as each
owner may not hold more than 4.9% of the Company's outstanding common
stock at any one time.
None of the Preferred Stock has any voting rights. It has
preference over the Common Stock as to dividends, and no dividends can be
declared or paid on Common Stock unless all dividends on Preferred Stock
have been declared and paid. Dividends on all Preferred Stock are
cumulative. No dividend may be declared or paid on shares of any series
of Preferred Stock unless they are paid on all series. In the event of
dissolution, liquidation or winding up of the Company, the holders of
each series of Preferred Stock would be entitled to receive the face
amount of the Preferred Stock plus all accumulated and unpaid dividends.
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. Upon notice from the board of directors to
the holders, all or any part of any series of outstanding Preferred Stock
may be called for redemption and redeemed.
<PAGE>
Warrants and Employee Stock Options
As of June 23, 1999, various investors held warrants and directors
and various employees held vested stock options which were exercisable
for a total of 2,633,190 shares of Common Stock. Directors and certain
key employees hold an additional 51,250 stock options, which vest at
various times over the next six (6) months. Exercise prices of all
warrants and stock options range from a high of $39.40 per share, to a
low of $.50 per share and expiration dates range from July 1999 through
July 2002.
Convertible Debentures
As of June 23, 1999, outstanding Convertible Debentures consisted
of:
(1) $741,290 principal balance of a 1997 Convertible Note with an
annual percentage rate of 18% and the right to convert such note into
approximately 741,290 shares of Common Stock at a fixed conversion price
of $1.00 per share.
(2) $1.8 million combined principal balance of two 1999 Convertible
Debentures, both with a 6% annual percentage rate and the right to
convert such debentures into a total of 2.88 million shares of Common
Stock at a fixed conversion price of $.625 per share.
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 reports which have been incorporated herein by reference.
DOCUMENTS INCORPORATED BY REFERENCE
The Securities and Exchange Commission ("SEC") allows us to
"incorporate" into this Prospectus information from other documents we
file with the SEC. This means that we can disclose important information
to you by referring to those other documents. We are incorporating in
this Prospectus the documents listed below, except where the information
contained in those documents is different from the information contained
in this Prospectus.
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1998, dated September 18, 1998 (the "1998 10-K Report").
(2) The Company's Quarterly Report (Amended) on Form 10-Q/A for the
fiscal quarter ended September 30, 1998, dated November 24, 1998 (the
"September 1998 10-Q/A Report").
(3) The Company's Current Report (Amended) on Form 8-K/A as of June 12,
1998, filed on September 1, 1998 (the June 8-K/A Report").
(4) The Company's Current Report on Form 8-K as of December 1, 1998,
filed on December 4, 1998 (the December 8-K Report").
(5) The Company's Current Report on Form 8-K as of October 31, 1998,
filed on December 9, 1998 (the October 8-K Report").
(6) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 1998, dated February 16, 1999 (the "December 1998 10-Q
Report").
<PAGE>
(7) The Company's Proxy Statement dated April 15, 1999 (the "Proxy
Statement").
(8) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1999, dated May 13, 1999 (the "March 1999 10-Q Report").
We are also incorporating in this Prospectus all future documents we
may file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") prior to termination
of this offering, which will update and supersede the information you
read in this Prospectus. (If 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 SEC's
rules, deemed to be "filed" with the SEC or subject to the liabilities of
Section 18 of the Exchange Act).
We will provide at no cost to each person, including any beneficial
owner, to whom this Prospectus is delivered, a copy of any or all of the
information that has been incorporated by reference in this Prospectus
but not delivered with the Prospectus. You may make a written or oral
request for this information to: uniView Technologies Corporation, 10911
Petal Street, Dallas, Texas 75238, Attention: Investor Relations;
telephone number (214) 503-8880.
WHERE YOU CAN FIND MORE INFORMATION
The Company files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy any
Company filing at the SEC's Public Reference Room, 450 Fifth Street,
N.W., Washington, D.C. 20549. (You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-
0330). You may also obtain any Company filing electronically through the
EDGAR Database located at the SEC's Internet site (http://www.sec.gov).
You may view additional information about the Company at our Internet
site (http://www.uniView.net). (The information posted at our Internet
site is not incorporated into this Prospectus).
This Prospectus is part of a Registration Statement on Form S-3 that
we have filed with the SEC. The Registration Statement contains more
information than is included in this Prospectus. You may review the
complete registration statement in the manner set forth above.
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 21,250 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, 1998 and 1997, and for each of
the years in the three-year period ended June 30, 1998 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.
<PAGE>
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Company pursuant to the Company's Articles of
Incorporation or Bylaws, or otherwise, the Company has been informed that
in the opinion of the SEC such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
If a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company 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 Company 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 $5,116
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 $6,916
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.
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.)
<PAGE>
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 1999-C Preferred Stock terms and conditions.
4.6 Series 1999-D1 Preferred Stock terms and conditions.
4.7 Form of warrant issued in connection with Founder's Equity fee
agreement and Associates Funding Group, Inc.
4.8 Form of warrant issued in connection with Nations Investment Corp., Ltd.
4.9 Series 1999-E Preferred Stock terms and conditions.
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 Form of Stock Purchase Agreement for Series 1999-C Preferred Stock.
99.2 Form of Securities Purchase Agreement for Series 1999-D1 Preferred Stock.
99.3 Form of Registration Rights Agreement for holders of Series 1999-D1
Preferred Stock.
99.4 Form of Securities Purchase Agreement for 1999.2 Convertible
Debenture (filed as Exhibit "4.9" to the Company's Quarterly Report on
form 10-Q for the fiscal quarter ended December 31, 1998 and incorporated
herein by reference.)
99.5 Form of Securities Purchase Agreement for Series 1999-E 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;
<PAGE>
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
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.
<PAGE>
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 June
18, 1999.
UNIVIEW TECHNOLOGIES CORPORATION
By: /s/ PATRICK A. 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
Billy J. Robinson, 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.
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 and
Principal Financial and Accounting Officer
/s/ PATRICK A. CUSTER Chairman of the Board, June 28, 1999
Patrick A. Custer President, Chief Executive
Officer and Director
Additional Directors
/s/ BILLY J. ROBINSON Vice President, Secretary, June 28, 1999
Billy J. Robinson General Counsel and Director
/s/ EDWARD M. WARREN Director June 28, 1999
Edward M. Warren
/s/ BERNARD S. APPEL Director June 28, 1999
Bernard S. Appel
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit Number Description of Exhibit Page 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 1999-C Preferred Stock terms and conditions. 23
4.6* Series 1999-D1 Preferred Stock terms and conditions. 33
4.7* Form of warrant issued in connection with Founder's Equity fee
agreement and Associates Funding Group, Inc. 50
4.8* Form of warrant issued in connection with Nations Investment Corp.,
Ltd. 56
4.9* Series 1999-E Preferred Stock terms and conditions. 62
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.) 67
24* Powers of Attorney (included on the Signature Page of the
Registration Statement.) 21
99.1* Form of Stock Purchase Agreement for Series 1999-C Preferred
Stock. 69
99.2* Form of Securities Purchase Agreement for Series 1999-D1 Preferred
Stock. 81
99.3* Form of Registration Rights Agreement for holders of Series 1999-D1
Preferred Stock. 124
<PAGE>
99.4 Form of Securities Purchase Agreement for 1999.2 Convertible
Debenture (filed as Exhibit "4.9" to the Company's Quarterly Report
on form 10-Q for the fiscal quarter ended December 31, 1998 and
incorporated herein by reference.) N/A
99.5* Form of Securities Purchase Agreement for Series 1999-E Preferred
Stock. 149
_________________
* Filed herewith.
<PAGE>
CERTIFICATE OF DESIGNATION OF
6% CONVERTIBLE PREFERRED STOCK, SERIES 1999-C
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 1999-C (the "Series 1999-C Preferred Stock"), and
the number of shares so designated shall be 44 (which shall not be
subject to increase without the consent of the holders of the Series 1999-
C Preferred Stock ("Holder")). Each share of Series 1999-C 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 1999-C 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 1999-C Preferred Stock shall be entitled to
receive, and the Company shall pay, cumulative dividends at the rate per
share (as a percentage of the Stated Value per share) equal to 6% per
annum, payable in cash or shares of Common Stock (as defined in Section
7) at the option of the Company. Dividends on the Series 1999-C
Preferred Stock shall accrue daily commencing on May 14, 1999. Accrued
and unpaid dividends of the Series 1999-C Preferred Stock shall be paid
on each Conversion Date, as defined below. The Company shall provide the
Holders notice of its intention to pay dividends in cash or shares of
Common Stock. 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 the closing sale price of the
Common Stock on such Conversion 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 1999-C Preferred
Stock if 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.
Section 3. Voting Rights. Except as otherwise provided herein
and as otherwise required by law, the Series 1999-C Preferred Stock shall
have no voting rights.
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 1999-C 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 1999-C Preferred Stock shall be
<PAGE>
distributed among the holders of Series 1999-C Preferred Stock and the
holders of all securities ranking pari passu to the Series 1999-C
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. The Company shall mail written notice
of any such Liquidation, not less than 10 days prior to the payment date
stated therein, to each record holder of Series 1999-C Preferred Stock.
Section 5. Conversion.
(a) (i) Each share of Series 1999-C Preferred Stock shall be
convertible into shares of Common Stock (subject to reduction
pursuant to Section 5(a)(iii) and Section 5(a)(iv)) at the
Conversion Ratio (as defined in Section 7) at the option of the
Holder in whole or in part at any time beginning on August 14, 1999,
and thereafter. The Holders shall effect conversions by
surrendering the certificate or certificates representing the shares
of Series 1999-C 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 1999-C 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 (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(h). Subject to Section 5(a)(iii) hereof, each Holder
Conversion Notice, once given, shall be irrevocable. If the Holder
is converting less than all shares of Series 1999-C 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 1999-C 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.
(ii) On the third anniversary of the Original Issue Date, the
Company may redeem, pursuant to Section 6, or request the conversion
of, all of the then outstanding and unconverted shares of Series
1999-C Preferred Stock. Conversion shall be 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 is in compliance
with all of its obligations under this Certificate of Designation
and the Purchase Agreement. Each Company Conversion Notice shall
<PAGE>
specify the number of shares of Series 1999-C 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(h). 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." If the Company is
converting less than all shares of Series 1999-C 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
1999-C 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) such exchange deems this agreement to be
subject to its shareholder approval requirements, (C) 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 1999-C Preferred Stock, together with
any shares of Common Stock previously issued upon conversion of
Series 1999-C Preferred Stock and in respect of payment of dividends
hereunder, would exceed 19.9% of the number of shares of Common
Stock outstanding on the Original Issue Date (the "Issuable
Maximum"), and (D) the Company has not previously obtained
Shareholder Approval (as defined below), then the Company shall
issue to any Holder so requesting conversion of Series 1999-C
Preferred Stock its pro rata portion of the Issuable Maximum in the
same ratio that the number of shares of Series 1999-C Preferred
Stock held by any such Holder bears to all shares of Series 1999-C
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 Company shall, as promptly as possible, but in no event later
than 90 days after such Conversion Date, either, (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% of
all or a portion of the shares of Series 1999-C 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 at a meeting of the shareholders of the Company held in
accordance with the Company's Articles of Incorporation and by-laws,
<PAGE>
of the issuance by the Company of shares of Common Stock exceeding
the Issuable Maximum as a consequence of the conversion of Series
1999-C 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, if any, required pursuant to Nasdaq Marketplace
Rule 4310(c)(25)(H)(i)(d)(2) (or any successor or replacement
provision thereof). Notwithstanding anything in this Certificate of
Designation to the contrary, if such exchange deems this agreement
to be subject to its shareholder approval requirements, the parties
agree that the aggregate number of shares of Common Stock which may
be acquired by any Investor or all Investors upon conversion of any
or all of the shares of Series 1999-C Preferred Stock pursuant to
the terms set forth in this Certificate of Designation shall in no
event exceed the Issuable Maximum, and the voting interest of any
Investor or all Investors shall in no event exceed 19.9%, unless the
Company has obtained prior Shareholder Approval.
(b) Not later than five (5) Trading Days after certificates
evidencing shares of Series 1999-C Preferred Stock are either delivered
for conversion to the Company, or the holder of such Series 1999-C
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 "Delivery
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 1999-C 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
1999-C 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 Shares of Common Stock. 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.
(c) (i) The conversion price for each share of Series 1999-C
Preferred Stock (the "Conversion Price") in effect on any Conversion
Date shall be fixed at $1.25.
(ii) If the Company, at any time while any shares of Series
1999-C Preferred Stock are outstanding, (a) shall pay a stock
dividend or otherwise make a distribution or distributions on shares
of its Junior Securities 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 reclassification of shares
of Common Stock any shares of capital stock of the Company, the
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
<PAGE>
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) Whenever the Conversion Price is adjusted pursuant to
Section 5(c)(ii), the Company shall promptly mail to each holder of
Series 1999-C Preferred Stock, a notice setting forth the Conversion
Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.
(iv) 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 1999-C
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 1999-C 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 1999-C Preferred Stock could have been converted
immediately prior to such reclassification, consolidation, merger,
sale, transfer or share exchange would have been entitled.
(iv) If:
A. the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
B. the Company shall declare a special non-recurring
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
<PAGE>
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 1999-C Preferred
Stock, and shall cause to be mailed to the Holders of Series 1999-C
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
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. Subject to Section
5(a)(i), Holders are entitled to convert shares of Series 1999-C
Preferred Stock during the 20-day period commencing the date of such
notice to the effective date of the event triggering such notice.
(d) 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 1999-C Preferred Stock
and payment of dividends on Series 1999-C 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 1999-C
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 1999-C
Preferred Stock and payment of dividends hereunder.
(e) Upon a conversion hereunder the Company shall not be required
to issue stock certificates representing fractions of shares of Common
Stock, but the holder of a share of Series 1999-C Preferred Stock shall
be entitled to receive, in lieu of the final fraction of a share, one
whole share of Common Stock.
(f) The issuance of certificates for shares of Common Stock on
conversion of Series 1999-C 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.
(g) Shares of Series 1999-C Preferred Stock converted into Common
Stock shall be canceled and shall have the status of authorized but
unissued shares of undesignated stock.
(h) Any and all notices or other communications or deliveries to be
provided by the holders of the Series 1999-C Preferred Stock hereunder,
<PAGE>
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 1999-C Preferred Stock at the facsimile telephone
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.
Section 6. Redemptions.
(a) All outstanding and unconverted shares of Series 1999-C
Preferred Stock on the third anniversary of the Original Issue Date
shall, at the Company's option, either be converted pursuant to Section
5(a)(ii) or redeemed by the Company pursuant to this Section 6, from
funds legally available therefor at a redemption price equal to the sum
of (A) the aggregate of all accrued but unpaid dividends, plus (B) 133%
of the face value of Series 1999-C Preferred Stock then outstanding (the
"Redemption Price") (such price to be adjusted proportionately in the
event of any change in the Conversion Price or any change of the Series
1999-C Preferred Stock into a different number of Shares). Thereafter,
all shares of Series 1999-C Preferred Stock shall cease to be outstanding
and shall have the status of authorized but undesignated stock.
(b) Upon receiving a Conversion Notice, and from time to time, the
Company may redeem, in whole or in part, Series 1999-C Preferred Stock at
the Redemption Price.
(c) Thirty (30) days prior to any date stipulated by the Company
for the redemption of Series 1999-C Preferred Stock (the "Redemption
Date"), written notice (the "Redemption Notice") shall be mailed to each
holder of record on such notice date of the Series 1999-C Preferred
Stock. The Redemption Notice shall state (i) the Redemption Date of such
Shares (ii) the number of Series 1999-C Preferred Stock to be redeemed
from the holder to whom the Redemption Notice is addressed (iii)
instructions for surrender to the Company, in the manner and at the place
designated of a share certificate or share certificates representing the
number of shares of Series 1999-C Preferred Stock to be redeemed from
such holder and (iv) instructions as to how to specify to the Company the
number of shares of Series 1999-C Preferred Stock to be redeemed as
provided in this Section and the number of shares to be converted into
Common Stock.
(d) Upon receipt of the Redemption Notice, any Holder of Series
1999-C Preferred Stock shall have the right to convert into Common Stock
that number of shares of Series 1999-C Preferred Stock not called for
redemption in the Redemption Notice.
(e) On or before the Redemption Date in respect of any shares of
Series 1999-C Preferred Stock, each holder of such shares shall surrender
the required certificate or certificates representing such shares to the
Company, in the manner and at the place designated in the Redemption
Notice, and upon the Redemption Date, the Redemption Price for such
shares shall be made payable, in the manner provided in Section 6(f)
<PAGE>
hereof, to the order of the person whose name appears on such certificate
or certificates as the owner thereof, and each surrendered share
certificate shall be canceled and retired. If a share certificate is
surrendered and all the shares evidenced thereby are not being redeemed
(as described below), the Company shall cause the shares of Series 1999-C
Preferred Stock which are not being redeemed to be registered in the
names of the persons whose names appear as the owners on the respective
surrendered share certificates and deliver such certificate to such
person.
(f) On the Redemption Date in respect of any Series 1999-C
Preferred Stock or prior thereto, the Company shall deposit with the
Escrow Agent, as a trust fund, a sum equal to the aggregate Redemption
Price of all such shares called for redemption (less the aggregate
Redemption Price for those Series 1999-C Preferred Stock in respect of
which the Company has received notice from the Holder thereof of its
election to convert Series 1999-C Preferred Stock into Common Shares),
with irrevocable instructions and authority to the Escrow Agent to pay,
on or after the Redemption Date, the Redemption Price to the respective
holders upon the surrender of their share certificates. The deposit
shall constitute full payment for the shares to their holders, and from
and after the date of the deposit the redeemed shares shall be deemed to
be no longer outstanding, and holders thereof shall cease to be
shareholders with respect to such shares and shall have no rights with
respect thereto except the rights to receive from the Escrow Agent
payments of the Redemption Price of the shares, without interest, upon
surrender of their certificates thereof. Any funds so deposited and
unclaimed at the end of ninety (90) days following the Redemption Date
shall be released or repaid to the Company, after which the former
holders of shares called for redemption shall be entitled to receive
payment of the Redemption Price in respect of their shares only from the
Company.
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 1999-C Preferred Stock.
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"Original Issue Date" shall mean May 14, 1999, regardless of the
number of transfers of any particular shares of Series 1999-C Preferred
Stock and regardless of the number of certificates which may be issued to
evidence such Series 1999-C Preferred Stock.
<PAGE>
"Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.
"Purchase Agreement" means the Convertible Series 1999-C Preferred
Stock Purchase Agreement, dated as of the Original Issue Date, among the
Company and the original holders of the Series 1999-C Preferred Stock.
"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 conversion of shares of Series 1999-C 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
To the Holders:________________________________
________________________________
________________________________
Attn: ____________________________
or such other address as any of the above may have furnished to the other
parties in accordance herewith.
<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 1999-C
Preferred Stock)
The undersigned hereby elects to convert the number of shares of
Series 1999-C 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 1999-C
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 6% Series 1999-C Convertible Preferred Stock (the "Series 1999-C
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 1999-C
Preferred Stock to be Converted
_____________________________________
Number of shares of Common Stock to
be Issued
_____________________________________
Applicable Conversion Price
_____________________________________
Name of Holder
_____________________________________
Address of Holder
<PAGE>
EXHIBIT "A"
CERTIFICATE OF DESIGNATION OF
SERIES 1999-D1 5% CONVERTIBLE PREFERRED STOCK
OF UNIVIEW TECHNOLOGIES CORPORATION
Pursuant to Article 2.13 of the
Texas Business Corporation Act
1. Designation, Amount, Par Value, Liquidation Value and Rank. The
series of preferred stock shall be designated as 5% Convertible Preferred
Stock, Series 1999-D1 ("Preferred Stock"), and the number of shares so
designated shall be 720 (which shall not be subject to increase without
the consent of each of the Holders of the Preferred Stock ("Holders")).
Each share of Preferred Stock, $1.00 par value per share, shall have a
liquidation value of $25,000 per share (the "Liquidation Value").
The Preferred Stock shall rank senior to the Junior Securities
as to dividends, distributions and, upon liquidation, dissolution or
winding up. No class of equity securities of the Company shall be senior
to the Preferred Stock as to dividends, distributions and, upon
liquidation, dissolution or winding up. The Preferred Stock shall rank
pari passu with all other classes of preferred stock of the Company
issued and outstanding as of the Original Issue Date as to dividends,
distributions and, upon liquidation, dissolution or winding up.
2. Dividends.
(a) Holders of Preferred Stock shall be entitled to receive, out of
funds legally available therefor, and the Company shall pay, cumulative
dividends at the rate per share (as a percentage of the Liquidation Value
per share) equal to 5% per annum, in cash or shares of Common Stock at
the option of the Company. Dividends on the Preferred Stock shall be
calculated on the basis of a 360-day year, shall accrue daily commencing
on the Original Issue Date, 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. Dividends shall be paid on the
earlier of the date on which such Preferred Stock is converted or on the
Redemption Date (as defined in Section 9 hereof). Except as otherwise
provided herein, if at any time the Company pays less than the total
amount of dividends then accrued on account of such Preferred Stock, such
payment shall be distributed ratably among the Holders based upon the
number of shares held by each Holder. The Company shall provide the
Holders with written notice of its intention to pay dividends in cash or
shares of Common Stock. Such notice shall be delivered to the Holders
not less than three (3) Trading Days prior to the applicable dividend
payment date for so long as shares of Preferred Stock are outstanding.
If the Company fails to give such notice, such dividends shall be paid in
the shares of Common Stock. 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 quotient obtained by dividing (a) the
cash amount of such dividend payable to such Holder on such dividend
payment date by (b) the Average Per Share Market Value. As used herein,
the "Average Per Share Market Value" means the average of the Per Share
Market Value for the five Trading Days prior to such dividend payment
date.
<PAGE>
(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 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, 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 4.99% 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.
(c) So long as any Preferred Stock shall remain outstanding or
unconverted, except pursuant to existing agreements of the Company on the
date hereof, neither the Company nor any subsidiary thereof shall redeem,
purchase or otherwise acquire directly or indirectly any Junior
Securities, nor shall the Company directly or indirectly pay or declare
any dividend or make any distribution (other than a dividend or
distribution described herein) 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.
3. Voting Rights. Except as otherwise provided herein and as
otherwise required by law, the Preferred Stock shall have no voting
rights. However, so long as any shares of Preferred Stock are
outstanding, the Company shall not and shall cause its subsidiaries not
to, without the affirmative vote of the Holders of a majority of the
shares of the Preferred Stock then outstanding, (a) alter or change
adversely the absolute or relative powers, preferences or rights given to
the 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 or otherwise senior to the
Preferred Stock, except for any series of Preferred Stock issued and sold
in accordance with the Purchase Agreement, (d) amend its Certificate of
Incorporation, bylaws or other charter documents so as to affect
<PAGE>
adversely any rights of any Holders, (e) increase the authorized number
of shares of Preferred Stock or (f) enter into any agreement with respect
to the foregoing.
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 Preferred
Stock an amount equal to the Liquidation 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. If the assets of the Company shall be insufficient to pay in
full all amounts due to the Holders, then the entire assets to be
distributed to the Holders and the Holders of all securities ranking pari
passu to the 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, lease, transfer or
disposition of all or substantially all of the assets of the Company or
the consummation 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 Sections 7 and 8 hereof.
The Company shall mail written notice of any such Liquidation, not less
than 45 days prior to the payment date stated therein, to each Holder.
5. Mechanics of Conversion.
(a) Holder's Delivery Requirements. Each share of Preferred
Stock shall be convertible into shares of Common Stock at the Conversion
Ratio (as defined in Section 11) at the option of the Holder in whole or
in part at any time after that date which is three months from the
Original Issue Date, except that in no event shall any Holder be allowed
to convert more than twenty-five percent (25%) of the number of shares of
Preferred Stock issued on the Original Issue Date in any twenty-two (22)
Trading Day period without the prior written consent of the Company. The
Holders shall effect conversions by surrendering to the Company, during
usual business hours of the Company's office, a copy of the form of
conversion notice attached hereto as Exhibit A (the "Conversion Notice"),
accompanied, if required pursuant to this Section 5(a), by the
certificate or certificates representing the shares of Preferred Stock to
be converted. Each Conversion Notice shall specify the Holder, the number
of shares of 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 Conversion Notice by facsimile (the "Conversion
Date"). If no Conversion Date is specified in a Conversion Notice, the
Conversion Date shall be the date that the Conversion Notice is deemed
delivered pursuant to Section 12. Subject to Section 5(b) hereof, each
Conversion Notice, once given, shall be irrevocable. Upon conversion of
shares of Preferred Stock in accordance with the terms hereof, the Holder
shall not be required to physically surrender its certificate of
Preferred Stock to the Company unless the entire amount of shares of
Preferred Stock is so converted. The Holder and the Company shall
maintain records showing the number of shares of Preferred Stock
converted and the dates of such conversions or shall use such other
method, reasonably satisfactory to the Holder and the Company, so as not
to require physical surrender of the Preferred Stock certificate(s) upon
each such conversion. In the event of any dispute or discrepancy, such
records of the Company shall be controlling and determinative in the
<PAGE>
absence of manifest error. Notwithstanding the foregoing, if any portion
of shares of a Preferred Stock certificate is converted, the Holder may
not transfer the Preferred Stock certificate unless the Holder first
physically surrenders the certificate to the Company, whereupon the
Company shall promptly issue and deliver upon the order of the Holder a
new certificate of like tenor, registered as the Holder (upon payment by
the Holder of any applicable transfer taxes) may request, representing
the number of remaining unconverted shares of Preferred Stock. The
Holder and any assignee, by acceptance of the Preferred Stock,
acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of a portion of a Preferred Stock
certificate, the unpaid and unconverted shares of such Preferred Stock
certificate may be less than the amount stated on the face thereof.
Shares of Preferred Stock converted into Common Stock shall be cancelled
and shall have the status of authorized but unissued shares of
undesignated stock.
(b) Company's Response. Not later than two (2) Trading
Days after any Conversion Date, the Company will cause to be delivered 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
Preferred Stock, including accrued but unpaid dividends, (if the Company
has elected to pay dividends in Common Stock pursuant to Section 2
hereof), (ii) one or more certificates representing the number of shares
of Preferred Stock not converted (if required), and (iii) a bank check in
the amount of accrued and unpaid dividends (if the Company has elected to
pay accrued dividends in cash pursuant to Section 2 hereof). Upon
request of the Holder, in lieu of physical delivery of the shares of
Preferred Stock, provided the Company's transfer agent is participating
in The Depository Trust Company ("DTC") Fast Automated Securities
Transfer ("FAST") program, upon request of the Holder and in compliance
with the provisions hereof, the Company shall use its best efforts to
cause its transfer agent to electronically transmit any certificate or
certificates required to be delivered to the Holder under this Section 5
by crediting the account of the Holder's Prime Broker with DTC through
its Deposit Withdrawal Agent Commission system. The time period for
delivery described herein shall apply to the electronic transmittals
described herein. 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 second Trading Day after the Conversion
Date, the Holder shall be entitled at any time on or before its receipt
of such certificate or certificates thereafter to rescind such conversion
by written notice to the Company, in which event the Company shall
immediately return the certificates representing the shares of Preferred
Stock for which Common Stock was not delivered pursuant to such
conversion.
(c) Liquidation Damages; etc.
(i) If the Company fails to deliver to the Holder
such certificate or certificates pursuant to this Section 5,
including for purposes hereof, any shares of Common Stock to be
issued on the Conversion Date on account of accrued but unpaid
dividends hereunder, on or prior to the second Trading Day after the
Conversion Date (the "Delivery Date"), in addition to all other
<PAGE>
remedies that such Holder may pursue hereunder or under the Purchase
Agreement, the Company shall pay to such Holder in cash, as
liquidated damages and not as a penalty, $5,000 per day until such
certificates are delivered. If the Company fails to deliver to the
Holder such certificate or certificates pursuant to this Section 5
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
Preferred Stock then held by such Holder, as requested by such
Holder, and (ii) pay all accrued but unpaid dividends on account of
the Preferred Stock for which the Company shall have failed to issue
Common Stock certificates hereunder, in cash. If such Holder opts
to redeem any number of shares of Preferred Stock pursuant to this
Section 5(c)(i), then the Company shall immediately notify all other
Holders of such Holder's election to redeem and, at any other
Holders' option, which shall be exercised within two (2) business
days thereof, redeem, from funds legally available therefor at the
time of such redemption, such number of shares of Preferred Stock
then held by such other Holder, as requested by such Holder, which
redemption shall be simultaneous with other redemptions referred to
above. 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 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 Preferred Stock pursuant to this Section 5(c)(i)
and the Company fails for any reason to pay the redemption price
referenced above within seven days after such notice is deemed
delivered pursuant to Section 5(c)(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 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).
(ii) In addition to any other rights available to the
Holder, if the Company fails to deliver to the Holder such
certificate or certificates pursuant to Section 5(c)(i) by the
Delivery Date and after the Delivery Date the Holder purchases (in
an open market transaction or otherwise) shares of Common Stock to
deliver to the satisfaction of a sale by such Holder of the
Underlying Shares which the Holder anticipated receiving on the
Delivery Date upon such conversion (a "Buy-In"), then the Company
<PAGE>
shall pay in cash to the Holder (in addition to any remedies
available to or elected by the Holder) the amount by which (A) the
Holder's total purchase price (including brokerage commissions, if
any) for the shares of Common Stock purchased for a Buy-In exceeds
(B) the aggregate Conversion Price for the number of shares of
Common Stock in the Buy-In for which such conversion was not timely
honored. For example, if the Holder purchases shares of Common
Stock having a total purchase price of $11,000 to cover a Buy-In
with respect to an attempted conversion of $10,000 aggregate
Conversion Price for the number of shares of Common Stock in the Buy-
In, the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In.
(d) Conversion Price. The conversion price for each
share of Preferred Stock (the "Conversion Price") in effect on any
Conversion Date shall be $4.00, subject to adjustment from time to time
as provided herein.
(e) Restriction on Conversion by Either the Holder or the
Company. Notwithstanding anything herein to the contrary, in no event
shall any Holder or the Company have the right or be required to convert
shares of Preferred Stock if as a result of such conversion the aggregate
number of shares of Common Stock beneficially owned by such Holder and
its Affiliates would exceed 4.99% of the outstanding shares of the Common
Stock following such exercise. For purposes of this Section 5(e),
beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act. The provisions of this Section 5(e) may be waived
by a Holder as to itself (and solely as to itself) upon not less than 65
days prior written notice to the Company, and the provisions of this
Section 5(e) shall continue to apply until such 65th day (or later, if
stated in the notice of waiver).
6. Registration Requirements.
(a) Reservation of Underlying Shares. 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 the Preferred Stock and free from preemptive rights or
any other actual contingent purchase rights of persons other than the
Holders of Preferred Stock, not less than 100% of 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 of Section 7)
upon the conversion of all outstanding shares of Preferred Stock and
payment of dividends hereunder (without regard to any limitations on
conversion) (the "Reserved Amount"). 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.
(b) Registration Delay Payments. Notwithstanding the
foregoing, the provisions of Section 2(d) of the Registration Rights
Agreement are incorporated herein by reference.
7. Adjustment of Conversion Price. In addition to any adjustment
to the Conversion Price provided elsewhere in this Certificate of
Designation, the Conversion Price in effect at any time shall be subject
<PAGE>
to adjustment from time to time upon the happening of certain events, as
follows:
(a) Common Stock Dividends; Common Stock Splits; Reverse Stock
Splits. If the Company, at any time while the Preferred Stock 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 Conversion Price
shall be multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock (excluding treasury shares, if any)
outstanding before such event and the denominator of which shall be the
number of shares of Common Stock outstanding after such event. Any
adjustment made pursuant to this paragraph 7(a) shall become effective
immediately after the record date for the determination of stockholders
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.
(b) Rights; Warrants. If the Company, at any time while the
Preferred Stock is outstanding, shall issue rights or warrants to all of
the holders of its Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than three
dollars ($3.00) per share, the Conversion Price shall be multiplied by a
fraction, the denominator of which 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 the
numerator of which 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
the Conversion Price. 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 stockholders entitled to receive
such rights or warrants.
(c) Subscription Rights. If the Company, at any time while
the Preferred Stock is outstanding, shall distribute to all of the
holders of Common Stock evidence of its indebtedness or assets or rights
or warrants to subscribe for or purchase any security (excluding those
referred to in paragraphs 7(a) and (b) above), then in each such case the
Conversion Price at which the 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
stockholders entitled to receive such distribution by a fraction, the
denominator of which shall be the Per Share Market Value of Common Stock
determined as of the record date mentioned above, and the numerator of
which 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 (10%) 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 (an
"Appraiser") selected in good faith by the Holders of the Preferred
<PAGE>
Stock; and provided, further, that the Company, after receipt of the
determination by such Appraiser shall have the right to select in good
faith an additional Appraiser meeting the same qualifications, in which
case the fair market value shall be equal to the average of the
determinations by each such Appraiser. Such adjustment shall be made
whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
(d) Rounding. All calculations under this Section 7 shall be
made to the nearest cent or the nearest l/l00th of a share, as the case
may be.
(e) Notice of Adjustment. Whenever the Conversion Price is
adjusted pursuant to paragraphs 7(a), (b) or (c), the Company shall
promptly deliver to the Holders a notice setting forth the Conversion
Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment.
(f) Redemption Event. In case of (A) any reclassification of
the Common Stock, (B) any Change of Control Transaction, (C) any
compulsory share exchange pursuant to which the Common Stock is converted
into other securities, cash or property, (D) suspension from listing or
delisting of the Common Stock from the Nasdaq or any Subsequent Market on
which the Common Stock is listed for a period of five consecutive days,
(E) the Company's notice to any Holder, including by way of public
announcement, at any time, of its intention, for any reason, not to
comply with proper requests for the conversion of any shares of Preferred
Stock into shares of Common Stock or (F) a breach by the Company of any
representation, warranty, covenant or other term or condition of the
Purchase Agreement, the Registration Rights Agreement, this Certificate
of Designation or any other agreement, document, certificate or other
instrument delivered in connection with the transactions contemplated
thereby or hereby, except to the extent that such breach would not have a
Material Adverse Effect (as defined in Section 2.1(a) of the Purchase
Agreement) and except, in the case of a breach of a covenant which is
curable, only if such breach continues for a period of at least ten days
after the Company knows or reasonably should have known of the existence
of such breach (clauses (A) through (F) above are referred to as a
"Redemption Event"), in the case of (A), (B) and (C), the Holders shall
have the right thereafter to convert the shares of Preferred Stock for
shares of stock and other securities, cash and property receivable upon
or deemed to be held by holders of Common Stock following such Redemption
Event, and the Holders 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 shares of Preferred Stock could have been
converted immediately prior to such Redemption Event (without taking into
account any limitations or restrictions on the convertibility of the
Securities) would have been entitled; provided, however, that in the case
of a transaction specified in (B) in which holders of the Company's
Common Stock receive cash, the Holders shall have the right to convert
the shares of Preferred Stock for such number of shares of the surviving
company equal to the amount of cash into which the shares of Preferred
Stock are convertible divided by the fair market value of the shares of
the surviving company on the effective date of the merger; provided,
further, that on and after the date of any Redemption Event, the Holders
shall have the option to require the Company to redeem, from funds
legally available therefor at the time of such redemption, its shares of
Common Stock immediately theretofore acquirable and receivable upon the
conversion of such Holder's Preferred Stock at a price per share equal to
<PAGE>
the product of (i) the Average Per Share Market Value immediately
preceding (1) the effective date, the date of the closing, date of
occurrence or the date of the announcement, as the case may be, of the
Redemption Event 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
effective date, the date of the closing, date of occurrence or the date
of the announcement, as the case may be or, at the option of the Holder,
on the date of submission of a Redemption Notice. 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 9(b). In
the case of (A), (B) and (C), the terms of any such Redemption Event
shall include such terms so as to continue to give to the Holders the
right to receive the securities, cash or property set forth in this
Section 7(f) upon any conversion or redemption following such Redemption
Event. This provision shall similarly apply to successive Redemption
Events.
(g) Reclassification, Etc. 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 the 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 stockholders 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 the conversion of the Preferred Stock, and
shall cause to be mailed to the Holders at the address specified herein,
at least 15 calendar days prior to the applicable record or effective
date hereinafter specified, a notice (provided such notice shall not
include any material non-public information) stating (a) 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 (b) 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
<PAGE>
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.
Notwithstanding the foregoing, Holders shall be entitled to convert
shares of Preferred Stock during the 15-day period commencing the date of
such notice to the effective date of the event triggering such notice.
(h) Adjustment to Conversion Price. In order to prevent
dilution of the rights granted under this Certificate of Designation, the
Conversion Price will be further subject to adjustment from time to time
as provided in this Section 7(h):
(i) Adjustment of Conversion Price upon Issuance of
Common Stock. If at any time while the Preferred Stock is
outstanding the Company issues or sells, or is deemed to have issued
or sold, any shares of Common Stock (other than the Underlying
Shares or shares of Common Stock deemed to have been issued by the
Company in connection with an Approved Stock Plan or shares of
Common Stock issuable upon the exercise of any options or warrants
outstanding on the date hereof and listed in Schedule 2.1(c) of the
Purchase Agreement or shares of Common Stock issued or deemed to
have been issued as consideration for an acquisition by the Company
of a division, assets or business (or stock constituting any portion
thereof) from another person) for a consideration per share less
than $3.00 per share, then immediately after such issue or sale the
Conversion Price then in effect shall be reduced to an amount equal
to the consideration per share of Common Stock of such issuance or
sale. For purposes of determining the adjusted Conversion Price
under this Section 7(h)(i), the following shall be applicable:
(A) Issuance of Options. If at any time while the
Preferred Stock is outstanding the Company in any manner grants any
rights or options to subscribe for or to purchase Common Stock or
any stock or other securities convertible into or exchangeable for
Common Stock (other than the Underlying Shares or shares of Common
Stock deemed to have been issued by the Company in connection with
an Approved Stock Plan or shares of Common Stock issuable upon the
exercise of any options or warrants outstanding on the date hereof
and listed in Schedule 2.1(c) of the Purchase Agreement or shares of
Common Stock issued or deemed to have been issued as consideration
for an acquisition by the Company of a division, assets or business
(or stock constituting any portion thereof) from another Person)
(such rights or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called
"Convertible Securities") and the price per share for which Common
Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities is less than
$3.00 per share, then the Conversion Price shall be reduced to equal
the price per share for which Common Stock is issuable upon the
exercise of such Options or upon the conversion or exchange of such
Convertible Securities. No adjustment of the Conversion Price shall
be made upon the actual issuance of such Common Stock or of such
Convertible Securities upon the exercise of such Options or upon the
actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities.
(B) Issuance of Convertible Securities. If at any time
while the Preferred Stock is outstanding the Company in any manner
issues or sells any Convertible Securities (other than the
<PAGE>
Underlying Shares or shares of Common Stock deemed to have been
issued by the Company in connection with an Approved Stock Plan or
shares of Common Stock issuable upon the exercise of any options or
warrants outstanding on the date hereof and listed in Schedule
2.1(c) of the Purchase Agreement or shares of Common Stock issued or
deemed to have been issued as consideration for an acquisition
(including earn-out payments funded with Common Stock) by the
Company of a division, assets or business (or stock constituting any
portion thereof) from another Person) and the price per share for
which Common Stock is issuable upon such conversion or exchange is
less than $3.00 per share, then the Conversion Price shall be
reduced to an amount equal to the price per share for which the
Common Stock is issuable upon the conversion or exchange of such
Convertible Securities. No adjustment of the Conversion Price shall
be made upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.
(C) Change in Option Price or Rate of Conversion. If
there is a change at any time in (i) the purchase price provided for
in any Options, (ii) the additional consideration, if any, payable
upon the issue, conversion or exchange of any Convertible Securities
or (iii) the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock, then immediately
after such change in option price or rate of conversion the
Conversion Price in effect at the time of such change shall be
readjusted to the Conversion Price which would have been in effect
at such time had such Options or Convertible Securities still
outstanding provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold; provided that no adjustment
shall be made if such adjustment would result in an increase of the
Conversion Price then in effect.
(D) Effect on Conversion Price of Certain Events. For
purposes of determining the adjusted Conversion Price under this
Section 7(h)(i), the following shall be applicable:
(I) Calculation of Consideration Received. If any
Common Stock, Options or Convertible Securities are issued or sold
or deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount received by
the Company therefor. In case any Common Stock, Options or
Convertible Securities are issued or sold for a consideration other
than cash, the amount of the consideration other than cash received
by the Company will be the fair value of such consideration, except
where such consideration consists of securities, in which case the
amount of consideration received by the Company will be the Average
Per Share Market Value immediately preceding the date of receipt.
In case any Common Stock, Options or Convertible Securities are
issued to the owners of the non-surviving entity in connection with
any merger in which the Company is the surviving entity the amount
of consideration therefor will be deemed to be the fair value of
such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or
Convertible Securities, as the case may be. The fair value of any
consideration other than cash or securities will be determined
jointly by the Company and the Holders of a majority of the
aggregate number of shares of Preferred Stock then outstanding. If
such parties are unable to reach agreement within twenty (20) days
<PAGE>
after the occurrence of an event requiring valuation (the "Valuation
Event"), the fair value of such consideration will be determined
within four (4) days of the twentieth (20th) day following the
Valuation Event by an Appraiser selected in good faith by the
Company, and agreed upon in good faith by the registered owners of a
majority of the shares of Preferred Stock then outstanding. The
determination of such Appraiser shall be binding upon all parties
absent manifest error.
(II) Integrated Transactions. In case any Option is
issued in connection with the issue or sale of other securities of
the Company, together comprising one integrated transaction in which
no specific consideration is allocated to such Options by the
parties thereto, the Options will be deemed to have been issued for
an aggregate consideration of $.01.
(III) Treasury Shares. The number of shares of
Common Stock outstanding at any given time does not include shares
owned or held by or for the account of the Company, and the
disposition of any shares so owned or held will be considered an
issue or sale of Common Stock.
(IV) Record Date. If the Company takes a record of
the holders of Common Stock for the purpose of entitling them (1) to
receive a dividend or other distribution payable in Common Stock,
Options or in Convertible Securities or (2) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date will be deemed to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or sold upon
the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(V) Certain Events. If any event occurs of the type
contemplated by the provisions of Section 7(h)(i) (subject to the
exceptions stated therein) but not expressly provided for by such
provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with
equity features), then the Company's Board of Directors will make an
appropriate adjustment in the Conversion Price so as to protect the
rights of the Holders or assigns; provided, however, that no such
adjustment will increase the Conversion Price as otherwise
determined pursuant to this Section 7(h).
(i) Increase in Conversion Price. In no event shall any
provision in this Section 7 cause the Conversion Price to be greater than
the Conversion Price on the Original Issue Date.
8. Major Announcement. If the Company (i) makes a public
announcement that it intends to enter into a Change of Control
Transaction 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 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
<PAGE>
consummation of the proposed transaction or tender offer, exchange offer
or other transaction and the Abandonment Date (as defined below), be
equal to the lesser of (A) the Conversion Price in effect on the Trading
Day immediately preceding the Announcement Date for such Preferred Stock
and (B) the Conversion Price on such Conversion Date. "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,
in which case the Conversion Price shall revert back to the Conversion
Price in effect on the Trading Day immediately preceding the Announcement
Date.
9. Mandatory Redemption.
(a) All outstanding and unconverted shares of Preferred Stock
on June 10, 2002 (the "Redemption Date") shall be, at the Holders'
option, converted pursuant to Section 5 or redeemed by the Company
pursuant to this Section 9, from funds legally available therefor at a
price per share equal to the product of (i) the Average Per Share Market
Value immediately preceding (1) the Redemption 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
Redemption Date, plus any accrued but unpaid dividends on such shares.
Thereafter, all shares of Preferred Stock shall cease to be outstanding
and shall have the status of authorized but undesignated preferred stock.
The entire redemption price shall be paid in cash.
(b) If any portion of the applicable redemption price under
Section 9(a) shall not be paid by the Company within seven (7) 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 seven (7) calendar days after the date due, the
Holder of the 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 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 Conversion 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 (5)
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 (5) Trading Days from receipt of Holder's notice of such
election, return to the Holder all of the Unpaid Redemption Shares.
<PAGE>
10. Allocations of Reserved Amount. The Reserved Amount shall be
allocated pro rata among the Holders based on the number of shares of
Preferred Stock issued to each Holder. Each increase to the Reserved
Amount shall be allocated pro rata among the Holders based on the number
of shares of Preferred Stock held by each Holder at the time of the
increase in the Reserved Amount. In the event a Holder shall sell or
otherwise transfer any of such Holder's Preferred Stock, each transferee
shall be allocated a pro rata portion of such transferor's Reserved
Amount. Any portion of the Reserved Amount which remains allocated to
any person or entity which does not hold any Preferred Stock shall be
allocated to the remaining Holders, pro rata, based on the number of
shares of Preferred Stock then held by such Holders.
11. Definitions. For the purposes hereof, the following terms shall
have the following meanings:
"Approved Stock Plan" shall mean any contract, plan or agreement
which has been approved by the Board of Directors of the Company,
pursuant to which the Company's securities may be issued to any employee,
officer, director or consultant.
"Average Per Share Market Value" shall have the meaning set forth in
Section 2(a).
"Business Day" shall mean any day except Saturday, Sunday or 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.
"Change of Control Transaction" means the occurrence of any of (i)
an acquisition after the date hereof by an individual or legal entity or
"group" (as described in Section 13(d)(3) of the Exchange Act), of in
excess of 33% 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 a majority of those individuals who are members
of the board of directors on the date hereof, or their duly elected
successors who are directors immediately prior to such transaction, in
one or a series of related transactions, (iii) the merger of the Company
with or into another entity, (iv) the consolidation or sale of all or
substantially all of the assets of the Company in one or a series of
related transactions, or (v) 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), (iii), (iv) or (v).
"Closing Date" means the date of the closing of the purchase and
sale of the Preferred Stock.
"Commission" means the United States Securities and Exchange
Commission, or any successor to such agency.
"Common Stock" means the Company's common stock, $.10 par value per
share, and stock of any other class into which such shares may hereafter
have been reclassified or changed.
"Conversion Price" shall have the meaning set forth in Section 5(d).
"Conversion Ratio" means, at any time, a fraction, the numerator of
which is the Liquidation Value and the denominator of which is the
Conversion Price at such time.
<PAGE>
"Junior Securities" means the Common Stock and all other equity
securities of the Company which are junior in rights and liquidation
preference to the 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 Preferred Stock regardless of the number of transfers
of any particular shares of Preferred Stock and regardless of the number
of certificates which may be issued to evidence such 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 (as reported
by Bloomberg Information Services, Inc., or any successor reporting
service) on Nasdaq or, if the Common Stock is not then quoted on Nasdaq,
any Subsequent Market 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 then listed on Nasdaq or any Subsequent
Market, the closing bid price for a share of Common Stock in the over-the-
counter market, as reported by 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 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 Preferred
Stock; provided, however, that the Company, after receipt of the
determination by such Appraiser, shall have the right to select in good
faith 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.
"Purchase Agreement" means the Securities Purchase Agreement, dated
as of the Original Issue Date, among the Company and the original Holders
of the 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
Nasdaq or, if the Common Stock is not then designated on Nasdaq, on such
Subsequent Market on which the Common Stock is then listed or quoted, or
(b) if the Common Stock is not listed on Nasdaq or a Subsequent Market, 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 Business Day.
<PAGE>
"Underlying Shares" means the number of shares of Common Stock into
which the shares of Preferred Stock are convertible in accordance with
the terms hereof and the Purchase Agreement.
12. Notices. Except as otherwise provided in the event of
conversion of shares of Preferred Stock, all notices or other
communications required 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 received by 8:00 p.m. EST where such notice
is to be received), or the first business day following such delivery (if
received after 8:00 p.m. EST 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; 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 Corp.
10911 Petal Street
Dallas, TX 75238
Attn: Mr. Pat Custer, Chairman/CEO/President
With Copies to: uniView Technologies Corp.
10911 Petal Street
Dallas, TX 75238
Attn: Mr. Billy J. Robinson, General Counsel
To the Holders: ________________________________
________________________________
________________________________
Attn: ____________________________
Phone: __________________________
Fax: ____________________________
with copies to: ________________________________
________________________________
________________________________
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.
13. Lost or Stolen Certificates. Upon receipt by the Company of
evidence reasonably satisfactory to the Company (including any bond the
Company's transfer agent requires the Holders to post) of the loss,
theft, destruction or mutilation of any stock certificates representing
Preferred Stock, and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary
form and, in the case of mutilation, upon surrender and cancellation of
such Series C Stock certificate(s), the Company shall execute and deliver
new preferred stock certificate(s) of like tenor and date; provided,
however, the Company shall not be obligated to re-issue preferred stock
certificates if the Holder contemporaneously requests the Company to
convert such Preferred Stock into Common Stock.
<PAGE>
14. Remedies Characterized; Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Certificate of
Designation shall be cumulative and in addition to all other remedies
available under this Certificate of Designation, at law or in equity
(including a decree of specific performance and/or other injunctive
relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing
herein shall limit a Holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designation. The Company covenants to each Holder of Preferred Stock
that there shall be no characterization concerning this instrument other
than as expressly provided herein. The Company further covenants that it
will not take any action which might materially and adversely affect the
rights of the Holders of Preferred Stock. Amounts set forth or provided
for herein with respect to payments, conversion and the like (and the
computation thereof) shall be the amounts to be received by the Holder
thereof and shall not, except as expressly provided herein, be subject to
any other obligation of the Company (or the performance thereof). The
Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Holders of the Preferred Stock and
that the remedy at law in the event of any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach or
threatened breach, the Holders of the Preferred Stock shall be entitled,
in addition to all other available remedies, to an injunction restraining
any breach, without the necessity of showing economic loss and without
any bond or other security being required.
15. Specific Shall Not Limit General; Construction. No specific
provision contained in this Certificate of Designation shall limit or
modify any more general provision contained herein. This Certificate of
Designation shall be deemed to be jointly drafted by the Company and all
Purchasers (as defined in this Purchase Agreement) and shall not be
construed against any person as the drafter hereof.
16. Failure or Indulgence Not Waiver. No failure or delay on the
part of a Holder of Preferred Stock in the exercise of any power, right
or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or
privilege.
17. Fractional Shares. 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 Preferred Stock
shall be entitled to receive, in lieu of the final fraction of a share,
one whole share of Common Stock.
18. Payment of Tax Upon Issue of Transfer. The
issuance of certificates for shares of the Common Stock upon conversion
of the Preferred Shares 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, provided that the
Company shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of the Holders so
converted and the Company shall not be required to issue or deliver such
<PAGE>
certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax
has been paid.
19. Shares Owned by Company Deemed Not Outstanding. In determining
whether the holders of the outstanding shares of Preferred Stock have
concurred in any direction, consent or waiver under this Certificate of
Designation, shares of Preferred Stock which are owned by the Company or
any other obligor on the warrants or by any person directly or indirectly
controlling or controlled by or under direct or indirect common control
with the Company or any other obligor on such shares shall be disregarded
and deemed not to be outstanding for the purpose of any such
determination; provided that any Preferred Stock owned by the Purchasers
(as defined in the Purchase Agreement) shall be deemed outstanding for
purposes of making such a determination. Preferred Stock so owned which
have been pledged in good faith may be regarded as outstanding if the
pledgee establishes to the satisfaction of the Company the pledgee's
right so to act with respect to such warrants and that the pledgee is not
the Company or any other obligor upon the securities or any person
directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any other obligor on the
preferred stock.
20. Compliance with Governmental Requirements. The Company
covenants that if any shares of Common Stock required to be reserved for
purposes of conversion of Preferred Stock hereunder require registration
with or approval of any governmental authority under any Federal or state
law, or any national securities exchange, before such shares may be
issued upon conversion, the Company will use its best efforts to cause
such shares to be duly registered or approved, as the case may be.
21. Modification of Certificate of Designation. This Certificate
of Designation may be modified without prior notice to any Holder upon
the written consent of the Company and the Holders of more than 75% of
the shares of Preferred Stock then outstanding. The Holders of more than
75% of the shares of Preferred Stock then outstanding may waive
compliance by the Company with any provision of this Certificate of
Designation without prior notice to any Holder. However, without the
consent of each Holder affected, an amendment, supplement or waiver may
not (1) reduce the number of shares of Preferred Stock whose Holders must
consent to an amendment, supplement or waiver, or (2) make any shares of
Preferred Stock payable in money or property other than as stated in the
Certificate of Designation.
22. Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction hereof.
<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 1999-D1
Preferred Stock)
The undersigned hereby elects to convert the number of shares of
Series 1999-D1 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 1999-D1
Preferred Stock to be Converted
_____________________________________
Number of shares of Common Stock to
be Issued
_____________________________________
Applicable Conversion Price
_____________________________________
Signature
_____________________________________
Name
_____________________________________
Address
<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.
____________, 1999 Warrant No. _______________
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 $.10 Common
Stock of the Company (the "Shares"), as adjusted pursuant to the
provisions of this Warrant.
2. Exercise Price. The exercise price for the Shares shall be
______________ ($_____) 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
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
<PAGE>
that the transaction shall not result in a violation of state
or federal securities laws."
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.
<PAGE>
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
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,
<PAGE>
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,
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
<PAGE>
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").
(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
<PAGE>
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. 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.
____________, 1999 Warrant No. _____________
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 One Million (1,000,000) shares of par value $.10 Common Stock
(the "Shares"), as adjusted pursuant to the provisions of this Warrant.
2. Exercise Price. The exercise price for the Shares shall be
__________ ($________) per share. Such price shall be subject to
adjustment pursuant to Section 6 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. Registration Rights. The Company shall be required, at the
Company's expense, to effect the registration of the number of shares of
Common Stock underlying the Warrant issuable to Holder upon exercise of
the Warrants. The Company and the Holder 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 within forty-five (45) days from the
date of exercise of the Warrant 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
<PAGE>
of (i) the sale by the Holder of all Underlying Shares registered or (ii)
one year after the effective date of such registration statement.
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.
<PAGE>
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
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,
<PAGE>
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,
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 Holder and the Company. 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:
Billy J. Robinson, Vice President
<PAGE>
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").
(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
<PAGE>
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)
<PAGE>
Exhibit "A"
UNIVIEW TECHNOLOGIES CORPORATION
(the "Corporation")
CERTIFICATE OF DESIGNATION
FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS ATTACHING TO THE SERIES 1999-E CLASS A
PREFERENCE SHARES
WHEREAS:
A. The Corporation's share capital includes 1,000,000 Preference Shares
par value, $1.00 per share which Preference Shares may be issued in
one or more series with the directors of the Corporation (the
"Board") being entitled by resolution to fix the number of shares in
each series and to designate the rights, privileges, restrictions
and conditions attaching to the share of each series; and
B. It is in the best interests of the Corporation for the Board to
create a series of Class A Preference Shares;
NOW, THEREFORE, BE IT RESOLVED, THAT:
The series of the Class A Preference Shares (the "Series 1999-E
Class A Shares") of the Corporation shall consist of 96 shares and
no more and shall be designated as the Series 1999-E Class A
Preference Shares and in addition to the preferences, rights,
privileges, restrictions and conditions attaching to all the Class A
Preference Shares as a class, the rights, privileges, restrictions
and conditions attaching to the Series 1999-E Class A Shares shall
be as follows:
Part 1 - Pre-emptive Rights.
1.1 The Series 1999-E Class A Shares shall not give their holders any
pre-emptive rights to acquire any other securities issued by the
Corporation at any time in the future.
Part 2 - Liquidation Rights.
2.1 If the Corporation shall be voluntarily or involuntarily liquidated,
dissolved or wound up, at any times when any Series 1999-E Class A Shares
shall be outstanding, the holders of the then outstanding Series 1999-E
Class A Shares shall have a preference in distribution of the
Corporation's property available for distribution to the holders of the
Common Shares equal to $25,000.00 consideration per Series 1999-E Class A
Share; provided, however, that the amalgamation of the Corporation with
any Corporation or corporations, the sale or transfer by the Corporation
of all or substantially all of its property, or any reduction of the
authorized or issued capital of the Corporation of any class, whether now
or hereafter authorized, shall be deemed to be a liquidation of the
Corporation within the meaning of any of the provisions of this Part 2.
2.2 All amounts to be paid as preferential distributions to the holders
of Series 1999-E Class A Shares as provided in this Part 2 shall be paid
or set apart for payment before the payment or setting apart for payment
of any amount for, or the distribution of any of the Corporation's
<PAGE>
property to the holders of Common Shares, whether now or hereafter
authorized, in connection with such liquidation, dissolution or winding
up.
Part 3 - Dividends.
3.1 Holders of record of Series 1999-E Class A Shares shall be entitled
to receive dividends on their Series 1999-E Class A Shares at the annual
coupon rate of three percent (3%), payable in cash or shares of Common
Stock at the option of the Company. Accrued and unpaid dividends of the
Series 1999-E Class A Shares shall be paid on each Conversion Date or
Redemption Date, as defined below. The Company shall provide the Holders
notice of its intention to pay dividends in cash or shares of Common
Stock. 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 the Conversion Price.
Part 4 - Conversion.
4.1 Any holder of Series 1999-E Class A Preferred Stock (an "Eligible
Holder") may at any time, provided it has not theretofore received a
notice of redemption from the Company, convert any whole number of shares
of Series 1999-E Class A Preferred Stock in accordance with this Part.
For the purposes of conversion, the Series 1999-E Class A Preferred Stock
shall be valued at $25,000 per share ("Stated Value"), and, if converted,
the Series 1999-E 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 Stated Value of the
shares of Series 1999-E Class A Preferred Stock being so converted by the
"Conversion Price." For purposes of this Part, the "Conversion Price"
means $3.00 per share. The number of Conversion Shares so determined
shall be rounded to the nearest whole number of shares.
4.2 The conversion right provided by the above section may be exercised
only by an Eligible Holder of Series 1999-E Class A Preferred Stock, in
whole or in part, by the surrender of the share certificate or share
certificates representing the Series 1999-E 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 Stated Value of
the Series 1999-E Class A Preferred Stock so surrendered, if any, by (2)
the Conversion Price. Each Series 1999-E 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 1999-E
Class A Preferred Stock granted herein (i) share certificates
representing the Common Stock purchased by virtue of such exercise 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 1999-E 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 1999-E
Class A Preferred Stock has been fully converted, a new share certificate
representing the Series 1999-E 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.
<PAGE>
Any Eligible Holder may exercise its right to convert the Series 1999-E
Class A Preferred Stock by telecopying an executed and completed Notice of
Conversion to the Corporation, and within 72 hours thereafter, delivering
the original Notice of Conversion and the certificate representing the
Series 1999-E 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
1999-E Class A Preferred Stock (together with the certificates
representing the Series 1999-E 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 1999-E Class A Preferred Stock certificate being so
converted in accordance with this paragraph.
4.3 All Common Shares which may be issued upon conversion of Series 1999-
E 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 1999-E 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 1999-E 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 1999-E Class A Shares shall be proportionately increased.
4.4 Notwithstanding the provisions hereof, in no event shall the holder
be entitled to convert any Series 1999-E 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.
4.5 No Series 1999-E Class A Shares which have been converted into
Common Shares shall be reissued by the Corporation; provided, however,
that each such share, after being retired and canceled, shall be restored
to the status of an authorized but unissued Class A Preference Share
without designation as to series and may thereafter be issued as a Class
A Preference Share not designated as Series 1999-E Class A Share.
4.6 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) such exchange
deems this agreement to be subject to its shareholder approval
requirements, (C) 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 1999-E Class A
<PAGE>
Shares, together with any shares of Common Stock previously issued upon
conversion of Series 1999-E Class A Shares and in respect of payment of
dividends hereunder, would exceed 19.9% of the number of shares of Common
Stock outstanding on the Original Issue Date (the "Issuable Maximum"),
and (D) the Company has not previously obtained Shareholder Approval (as
defined below), then the Company shall issue to any Holder so requesting
conversion of Series 1999-E Class A Shares its pro rata portion of the
Issuable Maximum in the same ratio that the number of shares of Series
1999-E Class A Shares held by any such Holder bears to all shares of
Series 1999-E Class A Shares 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
Company shall, as promptly as possible, but in no event later than 90
days after such Conversion Date, either, (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, 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 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 1999-E
Class A Shares 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, if
any, required pursuant to Nasdaq Marketplace Rule 4310(c)(25)(H)(i)(d)(2)
(or any successor or replacement provision thereof). Notwithstanding
anything in this Certificate of Designation to the contrary, if such
exchange deems this agreement to be subject to its shareholder approval
requirements, the parties agree that the aggregate number of shares of
Common Stock which may be acquired by any Investor or all Investors upon
conversion of any or all of the shares of Series 1999-E Class A Shares
pursuant to the terms set forth in this Certificate of Designation shall
in no event exceed the Issuable Maximum, and the voting interest of any
Investor or all Investors shall in no event exceed 19.9%, unless the
Company has obtained prior Shareholder Approval.
Part 5 - Redemption.
5.1 At any time, and from time to time, provided it has not theretofore
received a notice of conversion from an Eligible Holder, the Corporation
may, at its sole option, but shall not be obligated to, redeem, in whole
or in part, the then outstanding Series 1999-E Class A Shares at a price
per share of 100% of its face value (the "Redemption Price") (initial
aggregate value of $2,400,000) (such price to be adjusted proportionately
in the event of any change in the Conversion Price or any change of
the Series 1999-E Class A Shares into a different number of Shares).
5.2 Five (5) days prior to any date stipulated by the Corporation for
the redemption of Series 1999-E Class A Shares (the "Redemption Date"),
written notice (the "Redemption Notice") shall be mailed to each holder
of record on such notice date of the Series 1999-E Class A Shares. The
Redemption Notice shall state (I) the Redemption Date of such Shares (ii)
the number of Series 1999-E Class A Shares to be redeemed from the holder
to whom the Redemption Notice is addressed (iii) instructions for
surrender to the Corporation, in the manner and at the place designated
of a share certificate or share certificates representing the number of
<PAGE>
Series 1999-E Class Shares to be redeemed from such holder and (iv)
instructions as to how to specify to the Corporation the number of Series
1999-E Class A Shares to be redeemed as provided in this Part and the
number of shares to be converted into Common Shares.
5.3 Upon receipt of the Redemption Notice, any Eligible Holder (as
defined in Section 5.2 hereof) shall have the right to convert into
Common Shares that number of Series 1999-E Class A Shares not called for
redemption in the Redemption Notice.
5.4 On or before the Redemption Date in respect of any Series 1999-E
Class A Shares, each holder of such shares shall surrender the required
certificate or certificates representing such shares to the Corporation,
in the manner and at the place designated in the Redemption Notice, and
upon the Redemption Date, the Redemption Price for such shares shall be
made payable, in the manner provided in Section 5.5 hereof, to the order
of the person whose name appears on such certificate or certificates as
the owner thereof, and each surrendered share certificate shall be
canceled and retired. If a share certificate is surrendered and all the
shares evidenced thereby are not being redeemed (as described below), the
Corporation shall cause the Series 1999-E Class A Shares which are not
being redeemed to be registered in the names of the persons whose names
appear as the owners on the respective surrendered share certificates and
deliver such certificate to such person.
5.5 On the Redemption Date in respect of any Series 1999-E Class A
Shares or prior thereto, the Corporation shall deposit with the Escrow
Agent, as a trust fund, a sum equal to the aggregate Redemption Price of
all such shares called for redemption (less the aggregate Redemption
Price for those Series 1999-E Class A Shares in respect of which the
Corporation has received notice from the Eligible Holder thereof of its
election to convert Series 1999-E Class A Shares into Common Shares),
with irrevocable instructions and authority to the Escrow Agent to pay,
on or after the Redemption Date, the Redemption Price to the respective
holders upon the surrender of their share certificates. The deposit
shall constitute full payment for the shares to their holders, and from
and after the date of the deposit the redeemed shares shall be deemed to
be no longer outstanding, and holders thereof shall cease to be
shareholders with respect to such shares and shall have no rights with
respect thereto except the rights to receive from the Escrow Agent
payments of the Redemption Price of the shares, without interest, upon
surrender of their certificates thereof. Any funds so deposited and
unclaimed at the end of ninety (90) days following the Redemption Date
shall be released or repaid to the Corporation, after which the former
holders of shares called for redemption shall be entitled to receive
payment of the Redemption Price in respect of their shares only from the
Corporation.
Part 6 - Amendment.
6.1 In addition to any requirement for a series vote pursuant to the
General Corporation Laws in respect of any amendment to the rights,
privileges, restrictions and conditions attaching to the Series 1999-E
Class A Shares, the rights, privileges, restrictions and conditions
attaching to the Series 1999-E Class A Shares may be amended only if the
Corporation has obtained the affirmative vote at a duly called and held
meeting of a majority of the Series 1999-E Class A Shares or written
consent by the holders of a majority of the Series 1999-E Class A Shares
then outstanding.
<PAGE>
June 28, 1999
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 8,364,750 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 September 14, 1998 appearing in the Annual Report on Form 10-K of
uniView Technologies Corporation as of June 30, 1998 and 1997 and for
each of the years in the three-year period ended June 30, 1998 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
June 18, 1999
<PAGE>
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
Between
UNIVIEW TECHNOLOGIES CORPORATION,
FOUNDERS EQUITY GROUP, INC.,
DONALD F. MOOREHEAD
and
GEORGE O. MOOREHEAD
Dated as of May 14, 1999
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CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement"),
dated as of May 14, 1999, between uniView Technologies Corporation, a
Texas corporation (the "Company"), Founders Equity Group, Inc.,
("Founders"), Donald F. Moorehead, and George O. Moorehead. Founders,
Donald F. Moorehead and George O. Moorehead are each 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 6% Series 1999-C Convertible Preferred Stock, par value $1.00
per share (the "Series 1999-C Preferred").
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 44 shares of
Series 1999-C Preferred (the "Series 1999-C Shares").
(b) The Series 1999-C Preferred shall have the respective rights,
preferences and privileges set forth and incorporated into a Certificate
of Designation (the "Series 1999-C Designation") to be approved by the
Purchasers and the Company's Board of Directors and filed by the Company
with the Secretary of State of Texas.
For purposes of this Agreement, "Conversion Price," "Original Issue
Date," "Conversion Date" and "Trading Day" and shall have the meanings
set forth in the Series 1999-C Designation.
1.2 Purchase Price. The purchase price per Share shall be
$25,000.
1.3 Closing.
(i) The closing of the purchase and sale of the Series 1999-C
Shares (the "Series 1999-C Closing") shall take place on May 14, 1999.
The date of the Series 1999-C Closing is hereinafter referred to as the
"Series 1999-C Closing Date." At the Series 1999-C Closing, the Company
shall sell and issue to the Purchasers, and the Purchasers shall,
severally and not jointly, purchase from the Company, forty-four (44)
Series 1999-C Shares for an aggregate purchase price of $1,100,000 (the
"Series 1999-C Purchase Price").
(ii) At the Series 1999-C Closing, (a) immediately after
receipt of the Purchase Price therefor, the Company shall deliver to each
Purchaser stock certificates representing the Series 1999-C 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 1999-C Closing by the
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Company pursuant to this Agreement, dated the date hereof, by and between
the Company and the Purchasers, and (b) each Purchaser shall deliver to
the Company (i) the portion of the Series 1999-C 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 1999-C Closing
Date, and (ii) all documents, instruments and writings required to have
been delivered at or prior to the Series 1999-C 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.
(b) Authorization; Enforcement. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.
(c) 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 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 and the Certificate of Designation with respect to the number
of Shares issued and outstanding at the Closing Date. The shares of
Common Stock issuable upon conversion of the Shares, which may be issued
as payment of dividends on the Shares are collectively referred to herein
as the "Underlying Shares." When issued in accordance with the
Certificate of Designation, the Underlying Shares will be duly
authorized, validly issued, fully paid and nonassessable, free and clear
of all Liens.
(d) No Conflicts. The execution and delivery of this agreement and
the performance of the obligations imposed hereunder will not result in a
violation of any order, decree or judgment of any court or governmental
agency having jurisdiction over Company or Company's properties, will not
conflict with, constitute a default under, or result in the breach of,
any contract agreement or other instrument to which the Company is a
party or is otherwise bound and no consent, authorization or order of, or
filing or registration with, any court or governmental agency is required
for the execution, delivery and performance of this agreement.
(e) Consents and Approvals. The Company is not 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
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the execution, delivery and performance by the Company of this Agreement,
other than (i) the approval of the Company's Board of Directors and the
filing of the Certificate of Designation with respect to the Preferred
Stock with the Secretary of State of Texas, (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 this 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.
(f) Litigation; Proceedings. Except as specifically set forth in
the SEC Documents (as defined below), 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 this Agreement or
the Preferred Stock or (ii) could reasonably be expected to, individually
or in the aggregate, have a Material Adverse Effect.
(g) 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").
(h) 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")
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. Since the date of the financial statements included
in the Company's last filed Quarterly Report on Form 10-Q, 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.
(i) 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.
(j) 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.
(k) Certain Fees. 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,
except as otherwise agreed in writing. 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
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Section 2.1(k) that may be due in connection with the transactions
contemplated by this Agreement.
(l) 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 SEC Documents 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
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.
(m) Rights of Participation. 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.
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 an individual or 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 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. This 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, 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.
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(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 access to
the SEC Documents.
(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
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.
(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
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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
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 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.
3.4 Listing and Reservation of Underlying Shares.
(a) The Company shall, if the Company's Common Stock is then listed
on the Nasdaq Stock Market, (i) within a reasonable time after the
Closing Date 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 the Underlying Shares,
(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.
(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 Certificate 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). Shares of Common Stock reserved for issuance upon the
conversion of the Shares shall be allocated pro rata to each of the
Purchasers in accordance with the amount of Shares issued and delivered
to such Purchaser at Closing, as applicable.
3.5 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 or any
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applicable Certificate of Designation 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 10th 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.
3.6 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 Certificate of
Designation.
3.7 Restrictions on Transactions. Purchasers shall not convert any
shares of 1999-C Preferred Stock and shall not sell any shares of the
Company's Common Stock until August 14, 1999.
3.8 Registration Rights.
(a) Piggyback Registration. If, at any time during the six (6)
month period following the Closing Date, the Company shall file a
registration statement with the SEC, the Company shall give Purchasers
prior notice of the filing of such registration statement. If requested
by Purchasers in writing within five (5) business days after receipt of
any such notice, the Company shall register all or, at each Purchaser's
option, any portion of the Underlying Shares, concurrently with the
registration of such other securities, all to the extent requisite to
permit the public offering and sale of the Underlying Shares through the
facilities of the Nasdaq Stock Market, and will use its best reasonable
efforts through its officers, directors, auditors, and counsel to cause
such registration statement to become effective as promptly as
practicable. Notwithstanding the foregoing, if the Company believes in
good faith that the distribution of all or a portion of the Underlying
Shares requested to be included in the registration concurrently with the
securities being registered by the Company would materially adversely
affect the distribution of such securities by the Company for its own
account or pursuant to previous commitments made to other investors, then
Purchaser shall delay the offering and sale of the Underlying Shares (or
the portions thereof so designated) for such period.
(b) Demand Registration. If, at any time after the six (6) month
period following the Closing Date, the Company shall receive a written
request from each Purchaser to register the sale of all or part of such
Underlying Shares, the Company shall, as promptly as practicable prepare
and file with the Commission a registration statement sufficient to
permit the public offering and sale of the Underlying Shares through the
facilities of the Nasdaq Stock Market, and will use its best reasonable
efforts through its officers, directors, auditors, and counsel to cause
such registration statement to become effective as promptly as
practicable. The registration statement filed by the Company pursuant to
this section may include securities sold by the Company or on behalf of
persons other than Purchaser.
ARTICLE IV
CONDITIONS
4.1 (a) Conditions Precedent to the Obligation of the Company to
Sell the Series 1999-C Shares. The obligation of the Company to sell the
Series 1999-C Shares hereunder is subject to the satisfaction or waiver
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by the Company, at or before the Series 1999-C 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 1999-C 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 1999-C 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.
(b) Conditions Precedent to the Obligation of the Purchasers to
Purchase the Series 1999-C Shares. The obligation of each Purchaser
hereunder to acquire and pay for the Series 1999-C Shares is subject to
the satisfaction or waiver by such Purchaser, at or before the Series
1999-C 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 shall be true and correct in all material respects as of the
date when made and as of the Series 1999-C Closing Date as though made on
and as of such date;
(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 1999-C 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; and
(iv) Required Approvals. All Required Approvals shall have
been obtained;
ARTICLE V
MISCELLANEOUS
5.1 Fees and Expenses. 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.
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5.2 Entire Agreement; Amendments. This Agreement, together with
the Exhibits and Schedules hereto, if any, and the Certificate of
Designation 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.
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, 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.
5.7 No Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted
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successors and assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
5.8 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State
of Texas 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 Dallas, Texas, 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 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, except as may be required by
law.
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 this Agreement. 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
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waive in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.
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 and the transactions contemplated hereby, (ii)
it is not relying on any advice or representation of the other party in
connection with entering into this Agreement or such transactions (other
than the representations made in this Agreement), (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 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
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.
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
FOUNDERS EQUITY GROUP, INC.
By:
Name:
Title:
DONALD F. MOOREHEAD
GEORGE O. MOOREHEAD
<PAGE>
Schedule 1
Company:
uniView Technologies Corporation
10911 Petal Street
Dallas, Texas 75238
Attn: Patrick A. Custer
Purchasers:
Founders Equity Group, Inc.
2602 McKinney Ave., Suite 220
Dallas, TX 75204
Series 1999-C Purchase Price - $550,000
Series 1999-C Shares - 22
Donald F. Moorehead
2602 McKinney Ave., Suite 220
Dallas, TX 75204
Series 1999-C Purchase Price - $275,000
Series 1999-C Shares - 11
George O. Moorehead
2602 McKinney Ave., Suite 220
Dallas, TX 75204
Series 1999-C Purchase Price - $275,000
Series 1999-C Shares - 11
<PAGE>
SECURITIES PURCHASE AGREEMENT
Among
UNIVIEW TECHNOLOGIES CORP.
and
THE PURCHASERS LISTED ON SCHEDULE I
Dated as of June 10, 1999
<PAGE>
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated
as of June 10, 1999, among uniView Technologies Corp., a Texas
corporation (the "Company"), and the various purchasers identified and
listed on Schedule I hereto (each referred to herein as a "Purchaser"
and, collectively, the "Purchasers.")
INSERT RIDER RE: PRIOR TRANSACTIONS
WHEREAS, the Company and the Purchasers are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by Rule 506 under Regulation D as promulgated by
the United States Securities and Exchange Commission (the "Commission")
under Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act");
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, 720 shares of the
Company's Series 1999-D1 5% Convertible Preferred Stock, par value $1.00
per share, stated value $25,000 per share (the "Tranche A Preferred
Stock")
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, up to 1,000 shares of
the Company's Series 1999-D2 5% Convertible Preferred Stock, par value
$1.00 per share, stated value $25,000 per share (the "Tranche B Preferred
Stock" and, together with the Tranche A Preferred Stock, the "Security"
or "Securities"); and
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement in the form of Exhibit A attached hereto
(the "Registration Rights Agreement") pursuant to which the Company has
agreed to provide certain registration rights under the Securities Act
and the rules and regulations promulgated thereunder, and applicable
state securities laws.
NOW THEREFORE, in consideration of the promises and mutual
covenants and agreements hereinafter, the Company and the Purchasers
hereby agree as follows:
ARTICLE I.
PURCHASE AND SALE OF THE SECURITIES
1.1 Purchase and Sale.
a. Subject to the terms and conditions set forth herein, the
Company shall issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, shall purchase from the Company:
(i) On the Tranche A Closing Date (as defined below), an
aggregate of 720 shares of Tranche A Preferred Stock and,
in consideration thereof, the Purchasers shall deliver to
the Company the following:
<PAGE>
i. 1,000,000 Series "B" Warrants of the Company, each having
a strike price of $1.00 per share, and collectively having an
aggregate value of $2,437,500;
ii. 100,000 Series "A" Warrants of the Company, each having
a strike price of $3.00 per share, and collectively having an
aggregate value of $43,750;
iii. 84 shares of the Company's Series 1999-B Preferred Stock,
each having a strike price of $.625, and collectively having
an aggregate value of $11,550,000; and
iv. $3,968,750 in cash.
(ii) On the Tranche B Closing Date (as defined below), an
aggregate of 1,000 shares of Tranche B Preferred Stock,
for an aggregate purchase price of $25,000,000 (or such
lesser number of shares, for such lesser purchase price
in proportion thereto, if the Purchaser's desire to
purchase less than 1,000 shares of Tranche B Preferred Stock).
b. Each Purchaser shall purchase the principal amount of
Securities as set forth for such Purchaser on Schedule I.
c. The Securities shall have the respective rights, preferences and
privileges set forth in the Certificate of Designation (the "Certificate
of Designation"), the form of which is attached hereto as Exhibit B,
which shall be approved by the Purchasers and the Company's Board of
Directors and filed on or prior to the Closing by the Company with the
Secretary of State of Texas. The Tranche B Preferred Stock shall be
identical to the Tranche A Preferred Stock and shall rank pari passu with
the Tranche A Preferred Stock with regard to dividends, liquidation,
voting rights and any other preferential rights designated therein,
except that the conversion price of the Tranche B Preferred Stock shall
be $7.00 per share.
1.2 The Closings.
a. The Tranche A Closing. The closing of the purchase and sale of
the Tranche A Preferred Stock (the "Tranche A Closing") shall take place at
the offices of Akin, Gump, Strauss, Hauer & Feld, L.L.P., 590 Madison
Avenue, New York, New York 10022, or by transmission by facsimile and
overnight courier, 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 "Tranche A Closing
Date"). At the Tranche A Closing:
(i) Each Purchaser shall deliver, as directed by the Company,
(a) its portion of the purchase price as set forth next to its name on
Schedule I in United States dollars in immediately available funds to an
account or accounts designated in writing by the Company and (b) the warrants
and shares of preferred stock held by such Purchaser and set forth in Section
1.1(a)(i) hereof;
(ii) The Company shall deliver to each Purchaser the certificates
representing the number of Securities purchased by such Purchaser as set
forth on Schedule I hereto;
<PAGE>
(iii) The Company shall pay to Brown Simpson Asset Management, LLC
("Brown Simpson") a commitment fee of $45,000 in United States dollars in
immediately available funds to an account designated in writing by Brown
Simpson, of which $15,000 shall have been delivered to Brown Simpson upon
the signing of the term sheet and $30,000 of which shall be delivered at
the Tranche A Closing; and
(iv) The parties shall execute and deliver each of the documents referred
to in Section 4.1 hereof.
b. The Tranche B Closing - Purchasers' Option. Subject to the
terms and conditions set forth in Section 4.2 and elsewhere in this Agreement,
the Purchasers shall have the right, beginning on that date which is
three (3) months from the Tranche A Closing Date, for a period of two
years from such date, to deliver a written notice to the Company (a
"Tranche B Notice") requiring the Company to issue and sell, at the
Purchaser's option, any or all of the shares of Tranche B Preferred
Stock. The closing of the purchase and sale of the Tranche B Preferred
Stock shall take place in the same manner as the Tranche A Closing,
within three (3) business days of the date after delivery of the Tranche
B Notice (the "Tranche B Closing Date"); provided, however, that in no
event shall the Tranche B Closing take place unless and until (i) the
conditions listed in Section 4.2 have been satisfied or waived by the
appropriate party and (ii) the Per Share Market Value (as defined in the
Certificate of Designation) is above $10.00 per share for at least twenty
(20) out of thirty (30) consecutive Trading Days (as defined in the
Certificate of Designation); provided further that, notwithstanding the
provisions of Section 4.2 hereof, upon the occurrence of a Change of
Control (as defined herein) the Purchasers right pursuant to this Section
1.1(b) shall become immediately exercisable if the Per Share Market Value
is above $7.00 per share. At the Tranche B Closing:
(i) Each Purchaser shall deliver to the Company the aggregate
amount of $25,000,000 (or, if such Purchasers desire to purchase less than
1,000 shares of Tranche B Preferred Stock, such aggregate amount which is
proportionate to the number of shares of Tranche B Preferred Stock
purchased by such Purchasers);
(ii) The Company shall deliver to each Purchaser the certificates
representing the number of Securities purchased by such Purchaser;
(iii) The Company shall pay to Brown Simpson a commitment fee of
$45,000 in United States dollars in immediately available funds to an
account designated in writing by Brown Simpson; and
(iv) The parties shall execute and deliver each of the documents referred
to in Section 4.2 hereof.
c. The Tranche B Closing - Company's Option. Subject to the terms
and conditions set forth in Section 4.2 and elsewhere in this Agreement, the
Company shall have the right, beginning on that date which is three (3)
months from the Tranche A Closing Date, for a period of two years from
such date, to deliver a written notice to the Purchasers (a "Tranche B
Company Notice") requiring the Purchasers to purchase any or all of the
shares of Tranche B Preferred Stock. The closing of the purchase and
sale of the shares of the Tranche B Preferred Stock shall take place in
the same manner as the Tranche A Closing, within three (3) business days
of the date after delivery of the Tranche B Company Notice (the "Tranche
B Closing Date"); provided, however, that in no event shall the Tranche B
<PAGE>
Closing take place unless and until (i) the conditions listed in Section
4.2 have been satisfied or waived by the appropriate party and (ii) the
Per Share Market Value (as defined in the Certificate of Designation) is
above $15.00 per share for at least twenty (20) out of thirty (30)
consecutive Trading Days (as defined in the Certificate of Designation).
At the Tranche B Closing:
(i) Each Purchaser shall deliver to the Company the aggregate amount of
$25,000,000 (or, if such Purchasers are purchasing less than 1,000 shares
of Tranche B Preferred Stock, such aggregate amount which is
proportionate to the number of shares of Tranche B Preferred Stock
purchased by such Purchasers);
(ii) The Company shall deliver to each Purchaser the certificates
representing the number of Securities purchased by such Purchaser;
(iii) The Company shall pay to Brown Simpson a commitment fee of
$45,000 in United States dollars in immediately available funds to an
account designated in writing by Brown Simpson; and
(iv) The parties shall execute and deliver each of the documents referred
to in Section 4.2 hereof.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company. The
Company hereby makes the following representations and warranties to each
of 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. Except as set forth on Schedule 2.1(a), the
Company has no subsidiaries (collectively, the "Subsidiaries"). Each of
the Subsidiaries (which for purposes of this Agreement means any entity
in which the Company, directly or indirectly, owns the majority of such
entity's capital stock or holds an equivalent equity or similar interest)
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 as
a foreign corporation 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 any of this Agreement
or the Transaction Documents (as defined in Section 2.1(b)) or any of the
transactions contemplated hereby or thereby, (y) have or result in a
material adverse effect on the results of operations, assets, prospects,
or financial condition of the Company and its Subsidiaries, taken as a
whole or (z) 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").
<PAGE>
b. Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by this Agreement, the Certificate of Designation, and the
Registration Rights Agreement (collectively, the "Transaction
Documents"), and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of this Agreement and 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 corporate action and no further action is required by the
Company, its Board of Directors or its stockholders. Each of this
Agreement and 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 any material violation of any of the
provisions of its respective articles or certificates of incorporation,
bylaws or other charter documents such that any right of a holder of the
Securities would be affected. Prior to each of the Tranche A Closing
Date and the Tranche B Closing Date, as applicable, the Certificate of
Designation has been filed with the Secretary of State of Texas and will
be in full force and effect, enforceable against the Company in
accordance with the terms thereof, 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.
c. Capitalization. As of the date hereof, the authorized capital stock
of the Company is as set forth in Schedule 2.1(c). All of such
outstanding shares of capital stock have been, or upon issuance will be,
validly authorized and issued, fully paid and nonassessable and were
issued in accordance with the registration or qualification provisions of
the Securities Act, or pursuant to valid exemptions therefrom. Except as
disclosed in Schedule 2.1(c), (i) no shares of the Company's capital
stock are subject to preemptive rights or any other similar rights or any
liens or encumbrances suffered or permitted by the Company, 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 Transaction Document, (ii) there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible
into or exchangeable for, or giving any Person (as defined below) any
right to subscribe for or acquire, any shares of capital stock of the
Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital
stock of the Company or any of its Subsidiaries or options, warrants,
scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, (iii)
there are no outstanding debt securities, (iv) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the
Securities Act (except the Registration Rights Agreement), (v) there are
no outstanding securities of the Company or any of its Subsidiaries which
<PAGE>
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any
of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries, (vi) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the shares of Common Stock as described in
this Agreement, (vii) the Company does not have any stock appreciation
rights or "phantom stock" plans or agreements or any similar plan or
agreement and (viii) except as specifically disclosed in the SEC
Documents (as defined in Section 2.1(k) hereof), no Person (as defined
below) 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. "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. Authorization and Validity; Issuance of Shares. The shares of
Common Stock issuable upon conversion of the Securities (the "Underlying
Shares") are and will continue until issuance to be duly authorized and
reserved for issuance and the shares of Common Stock issued upon
conversion of the Securities (the "Conversion Shares") will be validly
issued, fully paid and non-assessable, free and clear of all liens,
encumbrances and Company rights of first refusal, other than liens and
encumbrances created by the Purchasers (collectively, "Liens") and will
not be subject to any preemptive or similar rights.
e. No Conflicts. The execution, delivery and performance of this
Agreement and each of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby (including the issuance of the Underlying Shares) do not and will
not (i) conflict with or violate any provision of the Company's
Certificate of Incorporation, as amended and as in effect on the date
hereof (the "Certificate of Incorporation"), the Company's Bylaws, as in
effect on the date hereof (the "Bylaws") or other organizational
documents of the Company or any of the Subsidiaries, (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, patent, patent license or instrument (evidencing a Company or
Subsidiary debt or otherwise) to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary
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 or any
Subsidiary is subject (including Federal and state securities laws and
regulations and the rules and regulations of the principal market or
exchange on which the Common Stock is traded or listed) applicable to the
Company or any of its Subsidiaries, or by which any material property or
asset of the Company or any Subsidiary is bound or affected.
f. Consents and Approvals. Except as specifically set forth on
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,
<PAGE>
state, local or other governmental authority, regulatory or self
regulatory agency, or other Person in connection with the execution,
delivery and performance by the Company of this Agreement or the
Transaction Documents, other than (i) the filing of a registration
statement (the "Registration Statement') with the Commission, which shall
be filed in accordance with and in the time periods set forth in the
Registration Rights Agreement, (ii) the application(s) or any letter(s)
acceptable to the Nasdaq Stock Market ("Nasdaq") for the listing of the
Underlying Shares with Nasdaq (and with any other national securities
exchange or market on which the Common Stock is then listed), (iii) any
filings, notices or registrations under applicable state securities laws
and (iv) the approval of the Company's Board of Directors and the filings
of the Certificate of Designation with the Secretary of State of Texas,
which filing and approval shall be effected on or prior to the Tranche A
Closing Date or the Tranche B Closing Date, as applicable (together with
the consents, waivers, authorizations, orders, notices and filings
referred to on Schedule 2.1(f), the "Required Approvals").
g. Litigation; Proceedings. Except as specifically set forth on
Schedule 2.1(g), 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 this Agreement or the Transaction
Documents 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 (i)
is in default under or in violation of any indenture, loan or other
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, (ii) is in
violation of any order of any court, arbitrator or governmental body
applicable to it, (iii) is in violation of any statute, rule or
regulation of any governmental authority to which it is subject or (iv)
is in default under or in violation of its Certificate of Incorporation,
Bylaws or other organizational documents, respectively. The business of
the Company and its Subsidiaries is not being conducted, and shall not be
conducted, in violation of any law, ordinance, rule or regulation of any
governmental entity, except where such violations have not resulted or
would not reasonably result, individually or in the aggregate, in a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries
is in breach of any agreement where such breach, individually or in the
aggregate, would have a Material Adverse Effect
i. Disclosure; Absence of Certain Changes. None of this Agreement, the
Schedules to this Agreement, the Transaction Documents, the SEC Documents
(as defined in the Section 2.1(k)) or any other written or formally
presented information, report, financial statement, exhibit, schedule or
document furnished by or on behalf of the Company in connection with the
negotiation of the transactions contemplated hereby contained, contains,
or will contain at the time it was or is so furnished any untrue
statement of a material fact or omitted, omits or will omit at such time
to state any material fact necessary in order to make the statements made
herein and therein, in light of the circumstances under which they were
made, not misleading. Except as disclosed on Schedule 2.1(i) or in SEC
Documents filed on EDGAR at least five business days prior to the date
hereof, since December 31, 1998, there has been no material adverse
<PAGE>
change and no material adverse development in the business, properties,
operations, financial condition, liabilities or results of operations or,
insofar as can reasonably be foreseen, prospects of the Company or the
Subsidiaries. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings. No event, liability, development or
circumstance has occurred or exists, or is contemplated to occur, with
respect to the Company or its Subsidiaries or their respective
businesses, properties, operations or financial condition or, insofar as
can reasonably be foreseen, prospects, that would be required to be
disclosed by the Company under applicable securities laws on a
registration statement (including by way of incorporation by reference)
filed with the Commission, on the date this representation is made or
deemed to be made, relating to an issuance and sale by the Company of its
Common Stock and which has not been publicly disclosed.
j. Private Offering. The Company and all Persons acting on its behalf
have not made, directly or indirectly, and will not make, offers or sales
of any securities or solicited any offers to buy any security under
circumstances that would require registration of the Securities, the
Conversion Shares or the Underlying Shares or the issuance of such
securities under the Securities Act. The offer, sale and issuance of the
Securities and the Conversion Shares to the Purchasers will not be
integrated with any other offer, sale and issuance of the Company's
securities (past, current, or future) under the Securities Act or any
regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated or for purposes of
any stockholder approval provision applicable to the Company or its
securities. Subject to the accuracy and completeness of the
representations and warranties of the respective Purchasers contained in
Section 2.2 hereof, the offer, sale and issuance by the Company to the
Purchasers of the Securities and the Underlying Shares is exempt from the
registration requirements of the Securities Act.
k. SEC Documents; Financial Statements. The Common Stock of the
Company is registered pursuant to Section 12(g) of the Exchange Act. The
Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Commission pursuant to the
reporting requirements of the Exchange Act, including pursuant to Section
13, 14 or 15(d) thereof (the foregoing materials and all exhibits
included therein and financial statements and schedules thereto and
documents (other than exhibits to such documents) incorporated by
reference therein being collectively referred to herein as the "SEC
Documents"), 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 agreements to which the Company or
any Subsidiary is a party or to which the property or assets of the
Company or any Subsidiary are subject and which are required to be filed
as exhibits to the SEC Documents have been filed as exhibits to the SEC
Documents as required and neither the Company nor any Subsidiary is in
<PAGE>
breach of any such agreement. As of their respective dates, the
financial statements of the Company included in the SEC Documents comply
as to form in all material respects with applicable accounting
requirements and the published 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 United States 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,
immaterial year-end audit adjustments. No other information provided by
or on behalf of the Company to the Purchasers which is not included in
the SEC Documents, including, without limitation, information referred to
in Section 2.1(i) of this Agreement, contains any untrue statement of a
material fact or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstance under which
they are or were made, not misleading. Neither the Company nor any of
its Subsidiaries or any of their officers, directors, employees or agents
have provided the Purchasers with any material, nonpublic information.
The Company acknowledges that the Purchasers will be trading in the
securities of the Company in reliance on the foregoing representation and
warranty.
l. 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.
m. Broker's Fees. Except for the fees payable by the Company to Brown
Simpson Asset Management pursuant to Section 6.6 hereof, no fees or
commissions or similar payments with respect to the transactions
contemplated by this Agreement or the Transaction Documents have been
paid or will be payable by the Company to any broker, financial advisor,
finder, investment banker, or bank, other than as set forth in Schedule
2.1(m). 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(m) that may be due in
connection with the transactions contemplated by this Agreement and the
Transaction Documents.
n. Form S-3 Eligibility. The Company is, and at the Tranche A Closing
Date and the Tranche B Closing Date will be, eligible to register
securities (including the Underlying Shares) for resale with the
Commission under Form S-3 (or any successor form) promulgated under the
Securities Act.
o. Listing and Maintenance Requirements Compliance. The principal
market on which the Common Stock is currently traded is Nasdaq. Except
as disclosed on Schedule 2.1(o), the Company has not in the three years
preceding the date hereof received notice (written or oral) from Nasdaq
(or 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 the listing or
maintenance requirements of such market or exchange. Except as disclosed
on Schedule 2.1(o), the Company is not in default under or in violation
of any of the listing requirements of Nasdaq as in affect on the date
hereof and is not aware of any facts which would reasonably lead to
<PAGE>
delisting or suspension of the Common Stock by Nasdaq. Notwithstanding
the foregoing, the Purchasers agree to waive any penalties and remedies
for breach of this Section 2.1(o) should delisting occur for reasons
solely related to the Company's Series Q Preferred Stock. The Company
covenants to provide the Purchasers promptly, but in no event later than
two (2) business days after the mailing or receipt thereof, with copies
of all Nasdaq and Commission correspondence relating to the Series Q
Preferred Stock. After giving effect to the transactions contemplated by
this Agreement and the Transaction Documents, the Company is and will be
in compliance with all such maintenance requirements.
p. Intellectual Property Rights. The Company and each of its
Subsidiaries own or possess adequate rights or licenses to use all
trademarks, trademark applications, trade names and service marks,
whether or not registered, and all patents, patent applications,
copyrights, inventions, licenses, approvals, governmental authorizations,
trade secrets and intellectual property rights (collectively,
"Intellectual Property Rights") which are necessary for use in connection
with their respective businesses as now conducted and as described in the
SEC Documents. Except as set forth on Schedule 2.1(p), none of the
Company's Intellectual Property Rights have expired or terminated, or are
expected to expire or terminate within two years from the date of this
Agreement. Neither the Company nor any of its Subsidiaries has infringed
or is infringing on any of the Intellectual Property Rights of any Person
and, except as set forth on Schedule 2.1(p), there is no claim, action or
proceeding which has been made or brought against, or to the Company's
knowledge, is being made, brought or threatened against, the Company or
its Subsidiaries regarding the infringement of any of the Intellectual
Property Rights, and the Company and its Subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing,
except where any of the foregoing would not have a Material Adverse
Effect. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of
their intellectual properties.
q. Employee Relations. Neither the Company nor any of its Subsidiaries
is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened.
Neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement, and the Company and its Subsidiaries
believe that relations with their employees are good. Except as set
forth on Schedule 2.1(q), since December 1, 1998 no executive officer (as
defined in Rule 501(f) under the Securities Act) has notified the Company
that such officer intends to leave the Company or otherwise terminate
such officer's employment with the Company.
r. Registration Rights; Rights of Participation. Except as described
on Schedule 2.1(r) hereto, (i) 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 (ii) no Person, including, but not limited to, current or
former stockholders 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 Transaction Document.
<PAGE>
s. Title. Except as disclosed on Schedule 2.1(s), the Company and each
of its 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 that do not materially adversely
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 the
Subsidiaries. Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting
and, to the Company's best knowledge, 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 the
Subsidiaries.
t. Permits. The Company and each of its Subsidiaries possess all
certificates, authorizations, licenses, easements, consents, approvals,
orders and permits necessary to own, lease and operate their respective
properties and to conduct their respective businesses as currently
conducted except where the failure to possess such permits would not,
individually or in the aggregate, have a Material Adverse Effect
("Material Permits"), and there is no proceeding pending, or, to the
knowledge of the Company, threatened relating to the revocation,
modification, suspension or cancellation of any Material Permit. Neither
the Company nor any of the Subsidiaries is in conflict with or default or
violation of any Material Permit.
u. Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverages as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business, at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or
operations of the Company and its Subsidiaries, taken as a whole.
v. Internal Accounting Controls. The Company and each of the
Subsidiaries maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with United States generally accepted accounting
principles and to maintain asset accountability, (iii) access to assets
is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
w. Tax Status; Firpta. Except as set forth on Schedule 2.1(w), the
Company and each of its Subsidiaries has made or filed all federal and
state income and all other tax returns, reports and declarations required
by any jurisdiction to which it is subject (unless and only to the extent
that the Company and each of its Subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined
to be due on such returns, reports and declarations, except those being
<PAGE>
contested in good faith (which are set forth on Schedule 2.1(w) hereof),
and has set aside on it books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any
such claim. The Company is not a "United States real property holding
corporation" within the meaning of Section 847(c)(2) of the Internal
Revenue Code of 1986, as amended.
x. Transactions With Affiliates. Except as set forth on Schedule
2.1(x), and other than the grant of stock options and warrants disclosed
on Schedule 2.1(c), none of the officers, directors, or employees of the
Company is presently a party to any transaction with the Company or any
of its Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental
of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of
the Company, any corporation, partnership, trust or entity in which any
officer, director, or any such employee has a substantial interest or is
an officer, director, trustee or partner.
y. Application to Takeover Protection. The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination or other
similar anti-takeover provision under the Certificate of Incorporation,
Bylaws or the laws of the State of Texas which is or could become
applicable to the Purchasers or the Transaction Documents as a result of
the transactions contemplated by this Agreement or the Transaction
Documents. None of the transactions contemplated by this Agreement or
the Transaction Documents, including the conversion of the Securities,
will trigger any poison pill provisions of any of the Company's
stockholders' rights or similar agreements.
z. Environmental Laws. Except as set forth on Schedule 2.1(z), the
Company and its Subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms
and conditions of any such permits, licenses or other approvals except
where the failure of any of the foregoing would not result in a Material
Adverse Effect.
aa. Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any of its Subsidiaries has, in the
course of its actions for, or on behalf of, the Company used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity; made any direct
or indirect unlawful payment to any foreign or domestic government
official or employee form corporate funds; violated or is in violation of
any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
<PAGE>
bb. Solicitation Materials; Certain Information. The Company has not
(i) distributed any offering materials in connection with the offering
and sale of the Securities, other than the SEC Documents, the Schedules
to this Agreement, any amendments and supplements thereto and the
materials listed on Schedule 2.1(bb), or (ii) solicited any offer to buy
or sell the Securities by means of any form of general solicitation or
advertising. Neither the Company, nor any of its Affiliates, nor any
Person acting on its or their behalf, has engaged or will engage in any
form of general solicitation or general advertising (within the meaning
of Regulation D under the Securities Act) in connection with the offer or
sale of the Securities. The Company acknowledges that the Purchasers
will be trading in the securities of the Company in reliance on the
foregoing representation and warranty.
cc. Acknowledgement of Dilution. The Company understands and
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Conversion Shares upon conversion of the Securities. The
Company further acknowledges that its obligation to issue the Conversion
Shares upon conversion of the Securities in accordance with this
Agreement and the Certificate of Designation is absolute and
unconditional regardless of the dilutive effect that such issuance may
have on the ownership interests of other stockholders of the Company.
dd. Acknowledgement Regarding Purchasers' Purchase of Securities. The
Company acknowledges and agrees that the Purchasers are acting solely in
the capacity of arm's length purchasers with respect to this Agreement
and the transactions contemplated hereby. The Company further
acknowledges that no Purchaser is acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to
this Agreement and the transactions contemplated hereby and any statement
made by any Purchaser or any of their respective representatives or
agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely
incidental to the Purchasers' purchase of the securities. The Company
further represents to each Purchaser that the Company's decision to enter
into this Agreement has been based solely on the independent evaluation
of the transactions contemplated hereunder by the Company and its
representatives.
ee. Solvency. The Company (both before and after giving effect to the
transactions contemplated by this Agreement) is solvent (i.e., its assets
have a fair market value in excess of the amount required to pay its
probable liabilities on its existing debts as they become absolute and
matured) and currently the Company has no information that would lead it
to reasonably conclude that the Company would not have the ability to,
nor does it intend to take any action that would impair its ability to,
pay its debts from time to time incurred in connection therewith as such
debts mature. The Company does not anticipate or know of any basis upon
which its auditors might issue a qualified opinion in respect of its
current fiscal year.
ff. Other Agreements. The Company has not, directly or indirectly, made
any agreements with any Purchasers relating to the terms and conditions
of the transactions contemplated by the Transaction Documents except as
set forth in the Transaction Documents.
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:
<PAGE>
a. Organization; Authority. Such Purchaser is a corporation or a
limited duration company 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 Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The purchase by such Purchaser of the Securities 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 Securities for
its own account and not with a present view to or for distributing or
reselling the Securities or the Conversion Shares or any part thereof or
interest therein in violation of the Securities Act; provided, however,
that by making the representations herein, such Purchaser does not agree
to hold any of the Securities or the Conversion Shares for any minimum or
other specific term and reserves the right to dispose of the Securities
at any time in accordance with or pursuant to a registration statement or
an exemption under the Securities Act.
c. Purchaser Status. At the time such Purchaser was offered the
Securities and at the Tranche A Closing Date and Tranche B Closing Date,
(i) it was and will be an "accredited investor" as defined in Rule 501
under the Securities Act and (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 Securities and the Conversion Shares.
d. Reliance. Such Purchaser understands and acknowledges that (i) the
Securities are being offered and sold to such 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
or other applicable federal and state securities laws and (ii) the
availability of such exemptions depends in part on, and the Company will
rely upon the accuracy and truthfulness of, the representations set forth
in this Section 2.2 and such Purchaser hereby consents to such reliance.
e. Information. Such Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of
the Securities which have been requested by such Purchaser or its
advisors. Such Purchaser and its advisors, if any, have been afforded
the opportunity to ask questions of the Company. Neither such inquiries
nor any other due diligence investigation conducted by such Purchaser or
any of its advisors or representatives shall modify, amend or affect
Purchaser's right to rely on the Company's representations and warranties
contained in Section 2.1 above or representations and warranties of the
Company contained in any other Transaction Document. Such Purchaser
understands that its investment in the Securities involves a significant
degree of risk.
<PAGE>
f. Governmental Review. Such Purchaser understands that no United
States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the
Securities.
g. Residency. Such Purchaser is a resident of the jurisdiction set
forth immediately below such Purchaser's name on Schedule II hereto.
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
3.1 Transfer Restrictions.
a. If any Purchaser should decide to dispose of the Securities or the
Conversion Shares held by it, such Purchaser understands and agrees that
it may do so only (i) pursuant to an effective registration statement
under the Securities Act, (ii) to the Company or (iii) pursuant to an
available exemption from the registration requirements of the Securities
Act or Rule 144 promulgated under the Securities Act ("Rule 144"). The
Company shall announce any material non-public information that it
legally is required to announce on or prior to the Effectiveness Date (as
defined in the Registration Rights Agreement) of the Registration
Statement filed pursuant to the Registration Rights Agreement and shall
not enter into any subsequent non-disclosure agreements that would
prevent it from announcing any such information that otherwise legally
could have been announced on or prior to the Effectiveness Date, unless
confidential treatment for such information is granted by the Commission.
In connection with any transfer of any Securities or Conversion Shares
other than pursuant to an effective registration statement, Rule 144(k)
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 customary for opinions of
counsel in comparable transactions, to the effect that such transfer does
not require registration of such transferred securities under the
Securities Act; provided, however, that if the Securities or Conversion
Shares may be sold pursuant to Rule 144(k), no written opinion of counsel
shall be required from the Purchaser if such Purchaser provides
reasonable assurances that such security can be sold pursuant to Rule
144(k). Notwithstanding the foregoing, the Company hereby consents to
and agrees to register any transfer by any Purchaser to an Affiliate of
such Purchaser, provided that the 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 agree in writing to be bound
by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement and the Transaction Documents. If a Purchaser
provides the Company with an opinion of counsel, the form and substance
of which opinion shall be customary for opinions of counsel in comparable
transactions, to the effect that a public sale, assignment or transfer of
the Securities and the Conversion Shares may be made without registration
under the Securities Act or the Purchaser provides the Company with
reasonable assurances that the Securities and the Conversion Shares can
be sold pursuant to Rule 144(k) without any restriction as to the number
of securities acquired as of a particular date that can then be
<PAGE>
immediately sold, the Company shall permit the transfer, and, in the case
of the Conversion Shares, promptly instruct its transfer agent to issue
one or more certificates in such name and in such denominations as
specified by such Purchaser and without any restrictive legend.
Notwithstanding the foregoing or anything else contained herein to the
contrary, the securities may be pledged as collateral in connection with
a bona fide margin account or other lending arrangement.
b. Each Purchaser agrees to the imprinting, so long as is required by
this Section 3.1(b), of the following legend on the Securities and the
Conversion 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.
Neither the Securities nor the Conversion Shares shall contain
the legend set forth above (or any other legend) (i) at any time while a
registration statement is effective under the Securities Act covering
such security, (ii) if in the written opinion of counsel to the Company
experienced in the area of United States securities laws (the form and
substance of which opinion shall be customary for opinions of counsel in
comparable transactions), such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations
and pronouncements issued by the staff of the Commission) or (iii) if
such Securities or Conversion Shares may be sold pursuant to Rule 144(k).
The Company agrees that it will provide each Purchaser, upon request,
with a certificate or certificates representing Securities or Conversion
Shares, free from such legend at such time as such legend is no longer
required hereunder. If such certificate or certificates had previously
been issued with such a legend or any other legend, the Company shall,
upon request, receive such certificate or certificates free of any
legend.
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 on transfer set forth in Section 3.1.
3.3 Furnishing of Information. As long as any Purchaser owns the
Securities or the Conversion Shares, the Company will cause the Common
Stock to continue at all times to be registered under Section 12(g) of
the Exchange Act, will 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,
14 or 15(d) of the Exchange Act and promptly furnish, but in no event
later than two (2) business days after the filing thereof with the
Commission, the Purchasers with true and complete copies of all such
filings, and will not take any action or file any document (whether or
not permitted by the Exchange Act or the rules thereunder) to terminate
or suspend such reporting and filing obligations. As long as any
Purchaser owns the Securities or the Conversion 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
<PAGE>
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 the Securities or the Conversion
Shares may reasonably request, all to the extent required from time to
time to enable such Person to sell the Securities or the Conversion
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), and that it will, as promptly as possible, but in no event later
than three (3) Business Days after the date of receipt or mailing, as the
case may be, provide the Holders true and complete copies of all
correspondence from and to the Commission relating to the Registration
Statement. 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 (i) qualify the Conversion Shares under the
securities or "blue sky" laws of such jurisdictions as the Purchasers may
request (or to obtain an exemption from such qualification), (ii) shall
provide evidence of any such action so taken to each Purchaser on or
prior to the Closing Date and (iii) shall continue such qualification at
all times through the resale of all Conversion Shares, but in any event
not past the fourth anniversary of the Tranche A 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 Securities or the Conversion Shares in a manner
that would require the registration under the Securities Act of the sale
of the Securities or the Conversion Shares to any Purchaser or cause the
offering of such securities to be integrated with any other offering of
securities by the Company for the purpose of any stockholder approval
provision applicable to the Company or its securities.
3.6 Listing and Reservation of Conversion Shares.
a. The Company shall (i) not later than three (3) business days after
the Tranche A Closing Date and Tranche B Closing Date, as applicable,
prepare and file with Nasdaq (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 Nasdaq
covering and listing a number of shares of Common Stock which is at least
equal to 100% of the maximum number of Underlying Shares then issuable,
assuming that the payment of all future dividends on such 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 on
Nasdaq (as well as on any other national securities exchange or market on
which the Common Stock is then listed) as soon as possible thereafter,
(iii) maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all such Underlying Shares, and (iv) provide to
the Purchasers evidence of such listing. Neither the Company nor any of
its Subsidiaries shall take any action which may result in the delisting
or suspension of the Common Stock on Nasdaq. The Company shall promptly
<PAGE>
provide to each Purchaser copies of any notices it receives from Nasdaq
regarding the continued eligibility of the Common Stock for listing on
such automated quotation system, so long as such notice does not include
material, nonpublic information. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section
3.6(a).
b. The Company at all times shall reserve a sufficient number of
shares of its authorized but unissued Common Stock to provide for 100% of
the full conversion of the outstanding Securities (including the payment
of all dividends thereon). Shares of Common Stock reserved for issuance
upon conversion of the Securities shall be allocated pro rata to each of
the Purchasers in accordance with the amount of Securities issued and
delivered to such Purchaser at the applicable Closing Date. If at any
time the number of shares of Common Stock authorized and reserved for
issuance is insufficient to cover 100% of the number of Conversion Shares
issuable upon conversion of the Securities (based on the Conversion Price
(as defined in the Certificate of Designation) in effect from time to
time) without regard to any limitation on conversions or exercises, the
Company will promptly take all corporate action necessary to authorize
and reserve 100% of such shares pursuant to Section 3(b) of the
Registration Rights Agreement, including, without limitation, calling a
special meeting of stockholders to authorize additional shares to meet
the Company's obligations under this Section 3.6(b), in the case of an
insufficient number of authorized shares, and using its best efforts to
obtain stockholder approval of an increase in such authorized number of
shares.
3.7 Notice of Breaches.
a. The Company and each Purchaser shall give prompt written notice to
the other of any breach by it of any representation, warranty or other
agreement contained in this Agreement or in the Transaction Documents, as
well as any events or occurrences arising after the date hereof and prior
to the applicable 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 the
applicable Closing Date provided such notice will not constitute material
non-public information. However, no disclosure by either party pursuant
to this Section 3.7 shall be deemed to cure any breach of any
representation, warranty or other agreement contained herein or in the
Transaction Documents.
b. Notwithstanding the generality of Section 3.7(a), the Company shall
promptly notify, provided such notification will not constitute material
non-public information, each Purchaser of any notice or claim (written or
oral) that it receives from any lender of the Company or any Subsidiary
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 or any Subsidiary, and the Company shall promptly furnish by
facsimile to the Purchasers 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 this Agreement or the Transaction
Documents shall not be imputed to, and shall have no effect upon, any
other Purchaser or affect the Company's obligations under this Agreement
or any Transaction Document to any non-defaulting Purchaser.
<PAGE>
3.8 Form D. The Company agrees to file a Form D with respect to the
Securities as required by Rule 506 under Regulation D and to provide a
copy thereof to each Purchaser promptly after such filing.
3.9 Future Financings.
a. Except for (i) issuance of the Underlying Shares; (ii) shares of
Common Stock deemed to have been issued by the Company in connection with
any plan which has been approved by the Board of Directors of the Company
prior to the date hereof, pursuant to which the Company's securities may
be issued to any employee, officer, director or consultant of the
Company; (iii) shares of Common Stock issuable upon the exercise of any
options or warrants outstanding on the date hereof and listed in Schedule
2.1(c) hereto; or (iv) shares of Common Stock issued or deemed to have
been issued as consideration for an acquisition by the Company of a
division, assets or business (or stock constituting any portion thereof)
from another Person, if the Company agrees to issue shares of Common
Stock or other securities convertible into or exchangeable or exercisable
for Common Stock (the "New Security") while any Securities are
outstanding at (a) an effective price per share which is less or may be
less (including, without limitation, any security which is convertible
into or exchangeable or exercisable for Common Stock at a price which may
change with the market price of the Common Stock) than the Conversion
Price (as defined in the Certificate of Designation) of the Securities as
of the date thereof or (b) an effective price per share greater than the
Conversion Price but less than the Average Per Share Market Value (as
defined in the Certificate of Designation) on the date of such issuance
or sale (either of (a) or (b) a "Future Financing"), the Company shall
provide to the Purchasers by 5:00 p.m. (New York time) on or before the
third (3rd) Trading Day (as defined below) after the decision to issue
the New Security has been made, written notice of the Future Financing
containing in reasonable detail (i) the proposed terms of the Future
Financing, (ii) the amount of the proceeds that will be raised and (iii)
the Person with whom such Future Financing shall be effected, and
attached to which shall be a term sheet or similar document relating
thereto (the "Future Financing Notice"). Upon receiving the Future
Financing Notice, each Purchaser shall have the pro rata right (based on
the principal amount of the Securities held by such Purchaser relative to
the aggregate principal amount of Securities outstanding) to purchase, on
the same terms as the Future Financing, an amount of New Securities
having a purchase price which shall not exceed the sum of the then
outstanding principal amount of, and any dividends owing on, such
Purchaser's Securities (valued at the greater of the Conversion Price or
the Average Per Share Market Price (as such terms are defined in the
Certificate of Designation) on the date of the Future Financing Notice).
In the event a Purchaser desires to exercise the right granted under this
Section 3.9, such Purchaser must notify the Company on or prior to the
fifth (5th) Trading Day after such Purchaser has received the Future
Financing Notice. In the event the terms and conditions of a proposed
Future Financing are amended in any respect after delivery of the Future
Financing Notice but prior to the closing of the proposed Future
Financing to which such Future Financing Notice relates, the Company
shall deliver a new notice to each Purchaser describing the amended terms
and conditions of the proposed Future Financing and each Purchaser
thereafter shall have an option during the five (5) Trading Days period
following delivery of such new notice to purchase its pro rata share
(based on the Purchaser's percentage of the principal amount of the
outstanding Securities such Purchaser owns) of the New Securities being
offered on the same terms as contemplated by such proposed Future
<PAGE>
Financing, as amended. The foregoing sentence shall apply to successive
amendments to the terms and conditions of any proposed Future Financing.
In the event one or more Purchasers elects not to exercise its rights
granted hereby, the Company shall permit those Purchasers electing to
exercise the right granted under this Section 3.9 to purchase, on a pro
rata basis equal to its percentage ownership of the then outstanding
principal amount of the Securities, the sum of the number of shares of
Common Stock that the other Purchaser(s) were eligible to purchase, if
they had exercised their right hereunder. Those Purchasers desiring to
purchase additional shares of Common Stock must notify the Company of
their intention to do so within five (5) Trading Days after the Company
has informed the Purchasers of their right to purchase additional shares
of Common Stock. Within five (5) Trading Days of the termination of the
final notice period, the transactions contemplated by this Section 3.9
shall close, subject to the completion of mutually satisfactory
documentation, and the Company shall tender to each Purchaser
certificates representing the New Securities that it agreed to purchase
and the Purchasers shall make payment for the entire purchase price in
immediately available funds at the closing of such sale. "Trading Day"
shall mean a day on which the Nasdaq (or in the event the Common Stock is
not traded on Nasdaq, such other securities market on which the Common
Stock is listed) is open for trading.
3.10 Use of Proceeds. The Company shall use the proceeds from the sale
of the Securities for general corporate purposes.
3.11 Transactions with Affiliates. So long as any Securities are
outstanding the Company shall not, and shall cause each of its
Subsidiaries not to, enter into, amend, modify or supplement, or permit
any Subsidiary to enter into, amend, modify or supplement, any agreement,
transaction, commitment or arrangement with any of its or any
Subsidiary's officers, directors or persons who were officers or
directors at any time during the previous two years, stockholders who
beneficially own 5% or more of the Common Stock, or Affiliates or any
individual related by blood, marriage or adoption to any such individual
or with any entity in which any such entity or individual owns a 5% or
more beneficial interest (each a "Related Party"), except for (a)
customary employment arrangements and benefit programs on reasonable
terms, (b) any agreement, transaction, commitment or arrangement on an
arms-length basis on terms no less favorable than terms which would have
been obtainable from a Person other than such Related Party or (c) any
agreement, transaction, commitment or arrangement which is approved by a
majority of the disinterested directors of the Company. For purposes
hereof, any director who is also an officer of the Company or any
Subsidiary of the Company shall not be a disinterested director with
respect to any such agreement, transaction, commitment or arrangement.
"Affiliate" for purposes of this section only means, with respect to any
person or entity, another person or entity that, directly or indirectly,
(i) has a 5% or more equity interest in that person or entity, (ii) has
5% or more common ownership with that person or entity, (iii) controls
that person or entity or (iv) shares common control with that person or
entity. "Control" or "Controls" for purposes of this section means that
a person or entity has the power, direct or indirect, to conduct or
govern the policies of another person or entity.
3.12 Transfer Agent Instructions. At the Closing the Company shall issue
irrevocable instructions to its transfer agent (and shall issue to any
subsequent transfer agent as required), to issue certificates, registered
in the name of each such Purchaser or its respective nominee(s), for the
<PAGE>
Conversion Shares in such amounts as specified from time to time by each
Purchaser to the Company in a form acceptable to such Purchasers (the
"Irrevocable Transfer Agent Instructions"). So long as required pursuant
to Section 3.1(b), all such certificates shall bear the restrictive
legend specified in Section 3.1(b) of this Agreement. The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 3.12, and stop transfer
instructions to give effect to Section 3.1 hereof (in the case of the
Conversion Shares, prior to registration of the Conversion Shares under
the Securities Act) will be given by the Company to its transfer agent
and that the Securities and the Conversion Shares shall otherwise be
freely transferable on the books and records of the Company as and to the
extent provided in this Agreement and the Transaction Documents. If a
Purchaser provides the Company with an opinion of counsel, the form and
substance of which opinion shall be customary for opinions of counsel in
comparable transactions, to the effect that a public sale, assignment or
transfer of the Securities and the Conversion Shares may be made without
registration under the Securities Act or the Purchaser provides the
Company with reasonable assurances that the Conversion Shares can be sold
pursuant to Rule 144(k) without any restriction as to the number of
securities acquired as of a particular date that can then be immediately
sold, the Company shall permit the transfer, and, in the case of the
Conversion Shares, promptly instruct its transfer agent to issue one or
more certificates in such name and in such denominations as specified by
such Purchaser and without any restrictive legend. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Purchasers by violating the intent and purpose of
the transactions contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under
this Section 3.12 will be inadequate and agrees, in the event of a beach
or threatened breach by the Company of the provisions of this Section
3.12, that the Purchasers shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being
required.
3.13 Press Release; Filing of Form 8-K. Subject to the provisions of
Section 6.10 hereof, prior to the opening of Nasdaq on June 14, 1999, the
Company shall file a press release in form and substance acceptable to
the Purchasers. On or before the 3rd business day following the
applicable Closing Date, the Company shall file a Form 8-K with the
Commission describing the terms of the transaction contemplated by this
Agreement and the Transaction Documents in the form required by the
Exchange Act.
3.14 Financial Information. The Company agrees to send the following to
each Purchaser prior to and during the Effectiveness Period (as defined
in the Registration Rights Agreement): (i) within three (3) business
days after the filing thereof with the Commission, a copy of its Annual
Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current
Reports on Form 8-K and any registration statements or amendments (other
than on Form S-8) filed pursuant to the Securities Act, (ii) on the same
day as the release thereof, facsimile copies of all press releases issued
by the Company or any of its Subsidiaries, and (iii) copies of any
notices and other information made available or given to the stockholders
of the Company generally, contemporaneously with the making available or
giving thereof to the stockholders.
<PAGE>
3.15 Ordinary Course Brokerage and Trading. Subject to compliance with
all applicable securities laws and Nasdaq regulations, no Purchaser shall
be prohibited from engaging in its ordinary course brokerage and trading
activities in respect of the Company's Common Stock; provided that the
personnel engaged in such activities have not been involved with the
transactions contemplated hereby and have not been provided with
confidential information with respect to the Company.
3.16 Best Efforts. Each of the parties hereto shall use its best efforts
to satisfy each of the conditions to be satisfied by it as provided in
Article IV of this Agreement.
3.17 Corporate Existence. Until such time as all of the Purchasers
provide the Company with written notice that they do not beneficially own
any Securities, the Company shall maintain its corporate existence and
shall not sell all or substantially all of the Company's assets, except
in the event of a merger or consolidation or sale of all or substantially
all of the Company's assets, where the surviving or successor entity in
such transaction (i) assumes the Company's obligations hereunder and
under the agreements and instruments entered into in connection herewith
and (ii) is a publicly traded corporation whose common stock is listed
for trading on the Nasdaq, the New York Stock Exchange or the American
Stock Exchange.
3.18 No Violation of Applicable Law. Notwithstanding any provision of
this Agreement to the contrary, if the redemption of Securities 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 Business Corporation Law of
the State of Texas, such redemption shall be effected as soon as it is
permitted under such law; provided, however, that from the fifth (5th)
day after such redemption notice until such redemption price is paid in
full, interest on any such unpaid amount shall accrue and be payable at
the rate of 15% per annum in accordance with the applicable Certificate
of Designation.
3.19 Seniority; Exclusivity. No class of equity securities of the
Company will be senior to the Securities in right of dividends or other
payment, whether upon liquidation, dissolution or otherwise. The Company
shall not issue and sell any Securities, other than to the Purchasers
pursuant to this Agreement, without the prior written consent of each of
the Purchasers.
3.20 Conversion Obligations of the Company. The Company covenants to
convert the Securities and to deliver the Underlying Shares in accordance
with terms, conditions and time periods set forth in the respective
Certificate of Designation.
3.21 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,
and except as shown on Schedule 2.1(r), the Company shall not, for a
period of not less than 90 Trading Days after the date that the
Registration Statement is declared effective by the Commission, without
the prior written consent of two-thirds of the Purchasers, (i) issue or
sell any of its or any of its Affiliates' equity or equity-equivalent
securities unless such issuance or sale is equal to or at a premium to
the Per Share Market Price (as defined in the Registration Rights
Agreement) on the date such issuance or sale, (ii) register for resale
<PAGE>
any securities of the Company or (iii) have a registration statement
declared effective covering an issuance by the Company of any of its
securities. Any days that any Purchaser is unable to sell Underlying
Shares under a registration statement shall be added to such 90 Trading
Day period for the purposes of (i), (ii) and (iii) above.
ARTICLE IV.
CONDITIONS
4.1 Tranche A Closing Conditions.
a. Conditions Precedent to the Obligation of the Company to Sell the
Tranche A Preferred Stock. The obligation of the Company to sell the
Securities hereunder is subject to the satisfaction or waiver (with prior
written notice to each Purchaser) by the Company, at or before the
Tranche A Closing Date, of each of the following conditions:
(i) Accuracy of the Purchasers' Representations and Warranties. The
representations and warranties of each Purchaser in this Agreement shall
be true and correct in all material respects as of the date when made
(except for representations and warranties that speak as of a specific
date) and as of the Tranche A Closing 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 Tranche A
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 Transaction Documents.
b. Conditions Precedent to the Obligation of the Purchasers to Purchase
the Tranche A Preferred Stock. The obligation of each Purchaser
hereunder to acquire and pay for the Securities is subject to the
satisfaction or waiver (with prior written notice to the Company and each
other Purchaser) by such Purchaser, at or before the Tranche A 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
shall be true and correct in all respects as of the date when made and as
of the Tranche A Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date);
(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 Tranche A
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
<PAGE>
transactions contemplated by this Agreement and the Transaction
Documents;
(iv) No Suspensions of Trading in Common Stock. The trading in the
Common Stock shall not have been suspended by the Commission or on Nasdaq
(except for any suspension of trading of limited duration solely to
permit dissemination of material information regarding the Company);
(v) Listing of Common Stock. The Common Stock shall be listed for
trading on Nasdaq;
(vi) Required Approvals. All Required Approvals shall have been obtained
and copies thereof delivered to such Purchaser other than those relating
solely to the Tranche B Preferred Stock;
(vii) Shares of Common Stock. The Company shall have duly reserved
the number of Underlying Shares required by this Agreement and the
Transaction Documents to be reserved for issuance upon conversion of the
Securities;
(viii) Change of Control. No Change of Control shall have occurred
between the date hereof and the Closing Date. "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 13d-5(b)(1)
promulgated under the Exchange Act), other than the Purchasers or any of
their Affiliates, of in excess of 33% 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, (iv) the consolidation or sale of all or
substantially all of the assets of the Company in one or a series of
related transactions, or (v) 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) , (iii), (iv) or (v);
(ix) Transfer Agent Instructions. The Irrevocable Transfer Agent
Instructions, in a form acceptable to the Purchasers, shall have been
delivered to and acknowledged in writing by the Company's transfer agent
with a copy forwarded to each Purchaser; and
(x) Resolutions. The Board of Directors of the Company shall have
adopted resolutions consistent with Section 2.1(b) and in a form
reasonably acceptable to each Purchaser (the "Resolutions").
c. Documents and Certificates. At the Tranche A Closing, the Company
shall have delivered to the Purchasers the following in form and
substance reasonably satisfactory to the Purchasers:
(i) Opinion. An opinion of the Company's legal counsel in the form
attached hereto as Exhibit C dated as of the Tranche A Closing Date;
(ii) Security. A Security(ies) representing the principal amount of
Securities purchased by such Purchaser as set forth next to such
Purchaser's name on Schedule I, registered in the name of such Purchaser,
each in form satisfactory to the Purchaser;
(iii) Registration Rights. The Company shall have executed and
delivered the Registration Rights Agreement;
<PAGE>
(iv) Officer's Certificate. An Officer's Certificate dated the Tranche A
Closing Date and signed by an executive officer of the Company confirming
the accuracy of the Company's representations, warranties and covenants
as of the Closing Date and confirming the compliance by the Company with
the conditions precedent set forth in this Section 4.1 as of the Tranche
A Closing Date;
(v) Secretary's Certificate. Within ten (10) Business Days of the
Closing, a Secretary's Certificate dated the Tranche A Closing Date and
signed by the Secretary or Assistant Secretary of the Company certifying
(A) that attached thereto is a true and complete copy of the Certificate
of Incorporation of the Company, as in effect on the Tranche A Closing
Date, (B) that attached thereto is a true and complete copy of the By-
laws of the Company, as in effect on the Closing Date and (C) that
attached thereto is a true and complete copy of the Resolutions duly
adopted by the Board of Directors of the Company authorizing the
execution, delivery and performance of this Agreement and of the
Transaction Documents, and that such Resolutions have not been modified,
rescinded or revoked;
(vi) Certificates of Incorporation. Within ten (10) Business Days of the
Closing, the Company shall deliver to each of the Purchasers a copy of a
certificate evidencing the incorporation and good standing of the Company
and each Subsidiary, in such corporation's state of incorporation issued
by the Secretary of State of such state of incorporation as of a date
within ten days of the Closing Date. The Company shall have delivered to
each of the Purchasers a copy of its Certificate of Incorporation as
certified by the Secretary of State of the State of Texas within ten days
of the Tranche A Closing Date;
(vii) Certificates of Designation. The Certificate of Designation
covering the Tranche A Preferred Stock 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;
(viii) Transfer Agent Letter. The Company shall have delivered to
each Purchaser a letter from the Company's transfer agent certifying the
number of shares of Common Stock outstanding as of a date within five
days of the Closing Date;
(ix) Lockup Letters. Each of the directors and executive officers of the
Company shall have delivered to the Purchasers a letter in the form of
Exhibit D hereto pursuant to which he or she agrees not to offer or sell
shares of Common Stock he or she beneficially owns during any time period
when any Purchaser is unable to freely offer for sale or to sell any
Underlying shares pursuant to an effective registration statement; and
(x) Other Documents. The Company shall have delivered to each Purchaser
such other documents relating to the transactions contemplated by the
Transaction Documents as the Purchasers or its counsel may reasonably
request.
4.2 Tranche B Closing Conditions.
a. Conditions Precedent to the Obligation of the Company to Sell the
Tranche B Preferred Stock. The obligation of the Company to sell the
Tranche B Preferred Stock hereunder is subject to the satisfaction or
<PAGE>
waiver (with prior written notice to each Purchaser) by the Company, at
or before the Tranche B Closing, of each of the following conditions:
(i) Accuracy of the Purchasers' Representations and Warranties. The
representations and warranties of each Purchaser in this Agreement shall
be true and correct in all material respects as of the date when made and
as of the Tranche B Closing Date (except for representations and
warranties that speak as of a specific 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 Tranche B
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 and the Transaction
Documents.
b. Conditions Precedent to the Obligation of the Purchasers to Purchase
the Tranche B Preferred Stock. The obligation of each Purchaser
hereunder to acquire and pay for the Tranche B Preferred Stock is subject
to the satisfaction or waiver by each Purchaser, at or before the Tranche
B Closing, of each of the following conditions:
(i) Tranche A. The Tranche A Closing shall have occurred;
(ii) 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 respects
as of the date when made and as of the Tranche B Closing Date (except for
representations and warranties that speak as of a specific date);
(iii) Performance by the Company. The Company shall have performed,
satisfied and complied in all respects with all covenants, agreements and
conditions required by this Agreement and the Transfer Documents to be
performed, satisfied or complied with by the Company at or prior to the
Tranche B Closing Date;
(iv) 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 and the Transfer Documents;
(v) Registration Statement for Tranche A Preferred Stock. The
Registration Statement covering the Underlying Shares of the Tranche A
Preferred Stock shall have been declared effective under the Securities
Act by the Commission, and on the Tranche B Closing such 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) business days prior to such
Closing Date and no stop order shall be pending or threatened as at such
Closing Date;
<PAGE>
(vi) 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 shall have
occurred which is not disclosed on any Schedule hereto or otherwise in
writing to each of the Purchasers;
(vii) 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;
(viii) Management. There shall have been no substantial changes in
the position or responsibilities of the Chief Executive Officer and the
Chief Financial Officer of the Company;
(ix) No Suspensions of Trading in Common Stock. The trading in the Common
Stock shall not have been suspended by the Commission or on Nasdaq
(except for any suspension of trading of limited duration solely to
permit dissemination of material information regarding the Company);
(x) Listing of Common Stock. The Underlying Shares shall be listed for
trading on Nasdaq, or other exchange acceptable to Purchasers, on the
Tranche B Closing Date;
(xi) Required Approvals. All Required Approvals shall have been obtained;
(xii) Shares of Common Stock. The Company shall have duly reserved
the number of Underlying Shares required by this Agreement to be reserved
for issuance upon the conversion of the Tranche B Preferred Stock.;
(xiii) Certificate of Designation. The Company shall have filed with
the Secretary of State of the State of Texas the Certificate of
Designation with respect to the Tranche B Preferred Stock;
(xiv) Performance of Conversion/Exercise Obligations. The Company
shall have delivered Underlying Shares upon conversion of the Tranche A
Preferred Stock and otherwise performed its obligations in accordance
with the terms, conditions and timing requirements of the Certificate of
Designation and the other Transaction Documents;
(xv) Change of Control. No Change of Control in the Company shall have
occurred; and
(xvi) Transfer Agent Instructions. The Irrevocable Transfer Agent
Instructions, in a form acceptable to the Purchasers, shall have been
delivered to and acknowledged in writing by the Company's transfer agent
with a copy forwarded to each Purchaser.
c. Documents and Certificates. At the Tranche B Closing, the Company
shall have delivered to the Purchasers, the following in form and
substance reasonably satisfactory to the Purchasers:
(i) Opinion. An opinion of the Company's legal counsel, in substantially
the form attached hereto as Exhibit D dated as of the Tranche
B Closing Date;
(ii) Securities. A Security(ies) representing the principal amount of
Securities purchased by such Purchaser as set forth next to such
<PAGE>
Purchaser's name on Schedule I, registered in the name of such Purchaser,
each in form satisfactory to the Purchaser;
(iii) Officer's Certificate. The Company shall deliver to the
Purchasers an Officer's Certificate dated the Tranche B Closing Date and
signed by an executive officer of the Company confirming the accuracy of
the Company's representations, warranties and covenants as of the Tranche
B Closing Date and confirming the compliance by the Company with the
conditions precedent set forth in this Section 4.2(b) as of the Tranche B
Closing Date; and
(iv) Secretary's Certificate. A Secretary's Certificate dated the
Tranche B Closing Date and signed by the Secretary or Assistant Secretary
of the Company certifying (A) that attached thereto is a true and
complete copy of the Certificate of Incorporation of the Company, as in
effect on the Tranche B Closing Date, (B) that attached thereto is a true
and complete copy of the bylaws of the Company, as in effect on the
Tranche B Closing Date and (C) that attached thereto is a true and
complete copy of the resolutions duly adopted by the Board of Directors
of the Company authorizing the execution, delivery and performance of the
Agreement and the Transaction Documents and that such resolutions have
not been modified, rescinded or revoked;
ARTICLE V.
INDEMNIFICATION
5.1 Indemnification. Except to the extent that matters which could be
covered by this Section 5 are covered by Section 5 of the Registration
Rights Agreement, in consideration of the Purchasers execution and
delivery of this Agreement and the Transaction Documents and acquiring
the Securities and the Conversion Shares thereunder and in addition to
all of the Company's other obligations under this Agreement and the
Transaction Documents, the Company shall defend, protect, indemnify and
hold harmless each Purchaser, its past and present Affiliates and their
successors and assigns (in accordance with the provisions of Section 6.5
hereof), each other holder of the Underlying Shares and all of their
stockholders, officers, directors, employees and direct or indirect
investors and any of the foregoing Person's agents or other
representatives (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all actions,
causes of action, suits, claims, losses, proceedings, costs (as
incurred), penalties, fees (including legal fees and expenses),
liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for
which indemnification hereunder is sought), and including interest,
penalties and attorneys' fees and disbursements (the "Indemnified
Liabilities"), incurred by any Indemnitee as a result of, or arising out
of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in this Agreement or in
the Transaction Documents, or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in this Agreement or the
Transaction Documents, or any other certificate, instrument or document
contemplated hereby or thereby, or (c) any cause of action, suit or claim
brought or made, other than by the Company, against such Indemnitee and
arising out of or resulting from (i) the execution, delivery, performance
or enforcement of this Agreement or the Transaction Documents, (ii) any
transaction financed or to be financed in whole or in part, directly or
<PAGE>
indirectly, with the proceeds of the issuance of the Securities or (iii)
solely the status of such Purchasers or holder of the Securities or the
Conversion Shares as an investor in the Company. The indemnification
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 the Purchasers and
partners, directors, agents, employees and controlling Persons (if any),
as the case may be, of the Purchasers 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, the Purchasers and any
such Affiliate and any such Person. The Company also agrees that neither
the Purchasers nor 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 this Agreement or
any 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
or the Transaction Documents. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
ARTICLE VI.
MISCELLANEOUS
6.1 Entire Agreement. This Agreement, together with the Exhibits and
Schedules hereto and the Transaction Documents 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.
6.2 Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered (i) upon receipt,
when delivered personally; (ii) upon receipt, when sent by facsimile,
provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party (if received by 7:00 p.m.
EST where such notice is received) or the first business day following
such delivery (if received after 7:00 p.m. EST where such notice is
received); or (iii) one business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to
the party to receive the same. The addresses and facsimile numbers for
such communications shall be:
If to the Company:
UniView Technologies Corp.
10911 Petal Street
Dallas, TX 75238
Attention: Pat Custer
With a copy to:
UniView Technologies Corp.
10911 Petal Street
Dallas, TX 75238
Attention: Billy J. Robinson, General Counsel
<PAGE>
If to the Transfer Agent:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Attention: Barry Rosenthal
If to Brown Simpson Strategic Growth Fund, Ltd. to:
________________________________
________________________________
________________________________
Attn: ____________________________
Phone: __________________________
Fax: ____________________________
If to Brown Simpson Strategic Growth Fund, L.P. to:
________________________________
________________________________
________________________________
Attn: ____________________________
Phone: __________________________
Fax: ____________________________
With a copy, in the case of Notice to Brown Simpson Strategic
Growth Fund, Ltd. or Brown Simpson Strategic Growth Fund, L.P. to:
________________________________
________________________________
________________________________
Attn: ____________________________
Phone: __________________________
Fax: ____________________________
Each party shall provide written notice to the other party of any change
in address or facsimile number in accordance with the provisions hereof.
6.3 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 each of 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 Securities 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.
6.4 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.
6.5 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
<PAGE>
Purchasers. The Purchasers may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Company,
provided, that any assignees must make the representations and warranties
set forth in Section 2.2 and otherwise comply with the terms of this
Agreement otherwise applicable to its assignor. This provision shall not
limit a Purchaser's right to transfer securities in accordance with all
of the terms of this Agreement or the Transaction Documents.
6.6 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.
6.7 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. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
6.8 Survival. The representations and warranties of the Company and the
Purchasers contained in Sections 2.1 and 2.2, the agreements and
covenants set forth in Section 3, and the indemnification provisions set
forth in Section 5, shall survive the Closing and any conversion of the
Securities regardless of any investigation made by or on behalf of the
such Purchaser or by or on behalf of the Company, except that, in the
case of representations and warranties such survival shall be limited to
the period of six (6) years following the Closing Date on which they were
made or deemed to have been made (other than with respect to any claim by
a third party against the party to this Agreement who seeks to assert a
claim based on such representations and warranties). This section shall
have no effect on the survival of the indemnification provisions of the
Registration Rights Agreement.
6.9 Counterparts. 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.
6.10 Publicity. The Company and the Purchasers 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
<PAGE>
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. The Purchasers and their affiliated
companies shall, without further cost, have the right to use in its
advertising, marketing or other similar materials, the Company's logo and
trademarks and all or parts of the Company's press releases that focus on
the Transaction forming the subject matter of this Agreement or which
make reference to the Transaction. The Purchasers understand that this
grant by the Company only waives objections that the Company might have
to the use of such materials by the Purchasers and in no way constitutes
a representation by the Company that references in such materials to the
activities of third-parties have been cleared or constitute a fair use.
6.11 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 affected 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.
6.12 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 this Agreement or the Transaction Documents without the
showing of economic loss and without any bond or other security being
required. 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 agree to waive in any
action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
6.13 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 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.
6.14 Payment Set Aside. To the extent that the Company makes a payment
or payments to the Purchasers hereunder or pursuant to the Transaction
Documents or the Purchasers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other Person under any law
<PAGE>
(including, without limitation, any bankruptcy law, state or federal law,
common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or setoff had not
occurred.
6.15 Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
6.16 Fees and Expenses. Except as set forth in the Registration Rights
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; provided, however,
that the Company shall pay to Brown Simpson Asset Management $45,000, of
which $15,000 shall have been paid upon execution of the term sheet and
$30,000 of which shall be paid upon execution of this Agreement. The
Company shall pay all stamp and other taxes and duties levied in
connection with the issuance of the Conversion Shares pursuant hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
persons as of the date first indicated above.
UNIVIEW TECHNOLOGIES CORP.
By:
Name: Patrick A. Custer
Title: President
BROWN SIMPSON STRATEGIC
GROWTH FUND, LTD.
By: Brown Simpson Asset Management, LLC
By:
Name:
Title:
BROWN SIMPSON STRATEGIC
GROWTH FUND, L.P.
By: Brown Simpson Capital, LLC
its general partner
By:
Name:
Title:
<PAGE>
Schedule I
Name of Purchaser Purchase Price of Number of Securities
Securities
Brown Simpson $11,525,000 461
Strategic Growth
Fund, Ltd.
Brown Simpson $6,475,000 259
Strategic Growth
Fund, L.P.
Schedule II
Name of Purchaser Address
Brown Simpson Strategic Growth 152 West 57th Street, 40th
Fund, Ltd. Floor
New York, New York 10019
Residence: Grand Cayman,
Cayman Islands
Brown Simpson Strategic Growth 152 West 57th Street, 40th
Fund, L.P. Floor
New York, New York 10019
Residence: New York, New York
Exhibit A
[Form of Certificate of Designation]
Exhibit B
[Registration Rights Agreement]
Exhibit C
[Company's Legal Opinion]
Exhibit D
[Form of Lockup Letter]
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of June 10, 1999, among uniView Technologies
Corporation, a Texas corporation (the "Company"), and the parties who
have executed this Agreement and whose names appear on Schedule I hereto
(each party listed on Schedule I hereto is sometimes individually
referred to herein as a "Purchaser" and all such parties are sometimes
collectively referred to herein as the "Purchasers").
This Agreement is made pursuant to the Securities 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" has meaning set forth in Section 3(o) hereof.
"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 "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 mean the Closing Date as defined 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 the earlier of (i) the 120th day
following the Closing Date, or (ii) the (5th) fifth day after the Company
has received notice (written or oral) from the Commission that the
Commission Staff will not be reviewing the Registration Statement or has
no further comments on the Registration Statement.
"Effectiveness Period" has the meaning set forth in Section
2(a) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE>
"Event" has the meaning set forth in Section 2(d) hereof.
"Filing Date" means as soon as practicable but in no event
later than the 15th day following the Closing Date.
"Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities.
"Indemnified Party" has the meaning set forth in Section 5(c)
hereof.
"Indemnifying Party" has the meaning set forth in Section 5(c)
hereof.
"Initial Registration Statement" has the meaning set forth in
Section 2(a) hereof.
"Losses" has the meaning set forth in Section 5(a) hereof.
"Nasdaq" means the National Association of Securities Dealers
Automated Quotation System.
"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.
"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 the shares of Common Stock
issued or issuable upon (i) conversion of or with respect to the
Securities, (ii) payment of interest or any other payments in respect of
the Securities and (iii) any shares of the Company's capital stock issued
with respect to (i) or (ii) as a result of any stock split, stock
dividend, recapitalization, exchange or similar event or otherwise.
"Registration Delay Payment" has the meaning set forth in
Section 2(d) hereof.
"Registration Statement" means the Initial Registration
Statement and any additional registration statements contemplated by
Sections 2(a), 2(b) and 7(d), 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.
<PAGE>
"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" means the Company's Series 1999-D1 5% Convertible
Preferred Stock issuable pursuant to the Purchase Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means one special counsel to the Holders.
"Trading Day" means a day on which the Nasdaq (or in the event
the Common Stock is not traded on Nasdaq, such other securities market on
which the Common Stock is listed) is open for trading.
"Underlying Shares" means the shares of Common Stock issuable
upon conversion of the Securities.
"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. Registration Requirements
(a) On or prior to the Filing Date, the Company shall prepare
and file with the Commission a Registration Statement (the "Initial
Registration Statement") which shall cover all Registrable Securities for
an offering to be made on a continuous basis pursuant to a "Shelf"
registration statement under Rule 415. The Initial Registration
Statement shall be on Form S-3 or any successor form (except 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, subject to the
reasonable consent of the original Holders of the Registrable
Securities). Except as shown on Schedule 2.1(r) to the Purchase
Agreement, Company shall (i) not permit any securities other than the
Registrable Securities to be included in the Initial Registration
Statement and (ii) use its best efforts to cause the Initial Registration
Statement to be declared effective under the Securities Act as promptly
as possible after the filing thereof, but in any event on or prior to the
Effectiveness Date, and to keep such Initial Registration Statement
continuously effective under the Securities Act until the date which is
four years after the date that such Initial Registration Statement is
declared effective by the Commission or such earlier date when all
Registrable Securities covered by such Initial Registration Statement
have been sold or may be sold without volume restrictions pursuant to
Rule 144 as determined by counsel to the Company pursuant to a written
<PAGE>
opinion letter, addressed to the Holders and the Company's transfer agent
to such effect (the "Effectiveness Period"). The number of shares of
Common Stock initially included in the Initial Registration Statement
shall be no less than 100% the sum of the number of Securities that are
then issuable upon conversion of the Securities (based on the Conversion
Price (as defined in the Securities) as would then be in effect at such
time), without regard to any limitation on the Investor's ability to
convert the Securities.
(b) In addition to the Initial Registration Statement, if the
Holders of a majority of the Registrable Securities covered by a
Registration Statement so elect on or after December 15, 1999, and pay
all expenses therefor, an offering of Registrable Securities pursuant to
such Registration Statement may be effected on no more than two (2)
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. No Holder may
participate in 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.
(d) If (i) the Initial Registration Statement covering all the
applicable Registrable Securities and required to be filed by the Company
pursuant to this Agreement is not (A) filed with the Commission on or
before the Filing Date or (B) declared effective by the Commission on or
before the applicable Effectiveness Date, (ii) on any day after the
Registration Statement has been declared effective by the Commission (A)
sales of all the Registrable Securities required to be included on a
Registration Statement cannot be made pursuant to the Registration
Statement (including, without limitation, because of a failure to keep
the Registration Statement effective, to disclose such information as is
necessary for sales to be made pursuant to the Registration Statement, or
to register sufficient shares of Common Stock) or (B) the Common Stock is
not listed or included for quotation on the Nasdaq, the New York Stock
Exchange ("NYSE") or the American Stock Exchange (the "AMEX") after being
so listed or included for quotation or (iii) the Company shall otherwise
fail to file a Registration Statement required by Section 2(a) hereof,
(each such event specified in (i), (ii) and (iii) above, an "Event"),
then, as partial relief for the damages to any Holder by reason of any
such delay in or reduction of its ability to sell the Registrable
Securities (which remedy shall not be exclusive of any other remedies
available at law or in equity): (y) the Company shall pay to each Holder
an amount in cash (a "Registration Delay Payment") equal to two percent
(2%) of the product of (I) the number of Securities held by such Holder
and (II) $25,000, multiplied by the sum of: (i) the number of months
<PAGE>
(prorated for partial months) after the end of the Effectiveness Date and
prior to the date the Registration Statement is declared effective by the
Commission, provided, however, that there shall be excluded from such
period any delays which are solely attributable to changes required by
the Purchasers in the Registration Statement with respect to information
relating to the Purchasers, or to the failure of the Purchasers to
conduct their review of the Registration Statement pursuant to Section
3(a), (ii) the number of months (prorated for partial months) that sales
cannot be made pursuant to the Registration Statement after the
Registration Statement has been declared effective (including, without
limitation, when sales cannot be made by reason of the Company's failure
to properly supplement or amend the Prospectus in accordance with the
terms of this Agreement, or otherwise, but excluding when such sales
cannot be made solely by reason of any act or omission solely
attributable to the Purchasers) and (iii) the number of months (prorated
for partial months) that the Common Stock is not listed or included for
quotation on the Nasdaq, NYSE or AMEX or that trading thereon is halted
after the Registration Statement has been declared effective; and (z) the
Conversion Price (as defined in the Certificate of Designation) of the
Securities shall be decreased 2% on the date of such Event and shall be
decreased an additional 2% as of each monthly anniversary of the date of
such Event. The Company shall pay any required Registration Delay
Payment to each Holder in cash on the last Business Day of each month
during which an Event has occurred and is continuing. In the event the
Company fails to make a Registration Delay Payment in a timely manner,
such Registration Delay Payment shall bear interest at the rate of 2.0%
per month (prorated for partial months) until paid in full.
(e) The Company represents and warrants that it meets the
registrant eligibility and transaction requirements for the use of Form S-
3 (for primary and secondary offerings) for the registration of the sale
of Registrable Securities by the Purchasers and any other Holders and the
Company shall file all reports required to be filed by the Company with
the Commission in a timely manner so as to maintain such eligibility for
the use of Form S-3.
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 the
Filing Date a Registration Statement on Form S-3 or its successor form
(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 (which shall include a Plan of
Distribution substantially in the form of Exhibit A annexed hereto,
unless in connection with an Underwritten Offering) 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 to be covered by such Registration Statement) (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 three (3) 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
<PAGE>
(including documents incorporated by reference), which documents will be
subject to the review of such Holders, their Special Counsel and such
managing underwriters, and (ii) 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, and will not request acceleration of such Registration
Statement without prior notice to such counsel. The sections of such
Registration Statement covering information with respect to the Holders,
the Holder's beneficial ownership of securities of the Company or the
Holders intended method of disposition of Registrable Securities shall
conform to the information provided to the Company by each of the
Holders.
(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
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
practicable, but in no event later than fifteen (15) Business Days, to
any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and as promptly as
possible, but in no event later than three (3) Business Days, 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 methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or
in such Prospectus as so supplemented. In the event the number of shares
available under a Registration Statement filed pursuant to this Agreement
is insufficient to cover 100% of the Registrable Securities issued or
issuable upon conversion of the Securities, the Company shall amend the
Registration Statement, or file a new Registration Statement (on the
short form available therefore, if applicable), or both, so as to cover
100% of the Registrable Securities, in each case, as soon as practicable,
but in any event within twenty (20) Business Days after the necessity
therefor arises (based on the Conversion Price of the Securities and
other relevant factors on which the Company reasonably elects to rely).
The Company shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable
following the filing thereof. The provisions of Section 2(d) above shall
be applicable with respect to such obligation, with the applicable period
running from the day after the date on which the Company reasonably first
determines (or reasonably should have determined) the need therefor.
(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
<PAGE>
prior to such filing and, in the case of (i)(C) below, not later than the
first Business Day after effectiveness) 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.
(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
<PAGE>
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 and the Purchase Agreement, 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 (2) 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.
(k) Cause all Registrable Securities relating to such
Registration Statement to be listed on Nasdaq 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.
<PAGE>
(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, or in the
case of non-Underwritten Offerings, if reasonably requested by the
selling Holders (and at the expense of such selling Holders), obtain and
deliver copies thereof to such selling Holders, 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, and, in the case of non-Underwritten
Offerings, at such time as the selling Holders may reasonably request
(and at the expense of such selling Holders), 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 required, 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 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 5 (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,
underwriter, attorney or accountant in connection with the Registration
Statement; provided, however, that if any information is determined in
<PAGE>
good faith by the Company in writing to be of a confidential nature at
the time of delivery of such information, then prior to delivery of such
information, the Company and the Holders shall enter into a
confidentiality agreement reasonably acceptable to the Company and the
Holders providing that such information shall be kept confidential,
unless (i) disclosure of such information is required by court or
administrative order or is necessary to respond to inquiries of
regulatory authorities (provided, however, that the Company shall be
given notice of any such pending disclosure so that the Company may seek
a protective order); (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
securityholders 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.
The Company shall hold in confidence and not make any
disclosure of information concerning a Holder provided to the Company
unless (i) disclosure of such information is necessary to comply with
federal or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other order from a court or governmental body
of competent jurisdiction, or (iv) such information has been made
generally available to the public other than by disclosure in violation
of this or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning a Holder is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such Holder prior to making
such disclosure, and allow the Holder, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
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
<PAGE>
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
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.
Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended shares of Common Stock to a
transferee of a Holder in accordance with the terms of the Securities
Purchase Agreement in connection with any sale of Registrable Securities
with respect to which an Holder has entered into a contract for sale
prior to the Holder's receipt of a notice from the Company of the
happening 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) and for which the Holder has not
yet settled.
(p) The Company agrees to respond fully and completely to any
and all comments on a Registration Statement received from the Commission
staff as promptly as possible but, for non-Underwritten Offerings, in no
event later than ten (10) Business Days of the receipt of such comments,
regardless of whether such comments are in oral or written form.
(q) Within two (2) Business Days after a Registration
Statement which covers applicable Registrable Securities is ordered
effective by the Commission, the Company shall deliver, and shall cause
legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Holders whose Registrable
Securities are included in such Registration Statement) confirmation that
such Registration Statement has been declared effective by the Commission
in the form attached hereto as Exhibit B.
4. Registration Expenses
Except for fees and expenses associated with an Underwritten
Offering, which shall be borne by the Holders, all fees and expenses
incident to the performance of or compliance with this Agreement by the
Company shall be borne by the Company, whether or not the Registration
<PAGE>
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 Nasdaq 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, (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 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, and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as
required hereunder.
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 joint or several losses,
claims, damages, liabilities, costs (including, without limitation, costs
of preparation and attorneys' fees) and expenses (collectively, together
with actions, proceedings or inquiries by any regulatory or self-
regulatory organization, whether commenced or threatened, "Losses"), as
incurred, arising out of or relating to (i) 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
<PAGE>
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 and in conformity with 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 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
(provided that the Company amended any disclosure with respect to the
method of distribution upon written notice from the Holders that such
section of the Prospectus should be revised in any way) or (ii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the
offer or sale of Registrable Securities. The Company shall not, however,
be liable for any Losses to any Holder with respect to any untrue or
alleged untrue statement of material fact or omission or alleged omission
of material fact if such statement or omission was made in a preliminary
Prospectus and such Holder did not receive a copy of the final Prospectus
(or any amendment or supplement thereto) at or prior to the confirmation
of the sale of the Registrable Securities in any case where such delivery
is required by the Securities Act and the untrue or alleged untrue
statement of material fact or omission or alleged omission of material
fact contained in such preliminary Prospectus was corrected in the final
Prospectus (or any amendment or supplement thereto), unless the failure
to deliver such final Prospectus (as amended or supplemented) was a
result of noncompliance by the Company with Section 3(g) of this
Agreement. 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;
provided, however, that the indemnity agreement contained in this Section
5(b) shall not apply to amounts paid in settlement of any Losses if such
settlement is effected without the prior written consent of such Holder.
In no event shall the liability of any selling Holder hereunder be
<PAGE>
greater in amount than the dollar amount of the net proceeds received by
such Holder upon the sale of the Registrable Securities giving rise to
such indemnification obligation.
(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, however, 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
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 ten (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).
<PAGE>
(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 court of competent jurisdiction 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. In no event shall any selling Holder be
required to contribute an amount under this Section 5(d) in excess of the
net proceeds received by such Holder upon sale of the Registrable
Securities pursuant to the Registration Statement giving rise to such
contribution obligation.
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.
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 Registrable Securities, 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
Registrable Securities, 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
<PAGE>
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(r) 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.
This Agreement, together with the Purchase Agreement, 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.
(c) No Piggyback on Registrations. Except as disclosed on
Schedule 2.1(r) of the Purchase Agreement, neither the Company nor any of
its securityholders (other than the Holders in such capacity pursuant
hereto) may include securities of the Company in the Registration
Statements 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 subordinated in all respects to the 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. Except as provided herein if,
at any time when there is not an effective Registration Statement
covering the Registrable Securities, 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
<PAGE>
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
affect the offering contemplated in such registration statement, and
based on such determination recommends inclusion in such registration
statement of fewer Registrable Securities then proposed to be sold by 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) 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). Notwithstanding the foregoing, the Company shall not file any
registration statement under the Securities Act (other than on Form S-4
or Form S-8) relating to the offer and sale of any equity securities of
the Company, or offer or sell any equity securities of the Company in a
transaction exempt from registration pursuant to Regulation S under the
Securities Act, until such time as the Initial Registration Statement has
been effective for a period of sixty (60) Trading Days, which period
shall be tolled if the effectiveness of the Initial Registration
Statement is suspended for any reason whatsoever.
<PAGE>
(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 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 received by 8:00 p.m. EST where such notice
is to be received), or the first Business Day following such delivery (if
received after 8:00 p.m. EST 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 are (i) if to the Company to uniView Technologies
Corporation, 10911 Petal Street, Dallas, Texas 75238, Attn: Pat Custer,
fax no. (214) 503-8585, with copies to uniView Technologies Corporation,
10911 Petal Street, Dallas, Texas 75238, Attn: Billy J. Robinson, General
Counsel, fax no. (214) 503-8523 and (ii) if to any Purchaser to the
address set forth on Schedule I hereto with copies to those specified on
the signature pages hereto and to Akin, Gump, Strauss, Hauer & Feld,
L.L.P., 590 Madison Avenue, New York, New York 10022, Attn: James Kaye,
Esq., fax no. (212) 872-1002 or such other address as may be designated
in writing hereafter, in the same manner, by such Person.
(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
prior written consent of each Holder. Each Holder may assign its rights
hereunder in the manner and to the Persons as permitted under the
Purchase Agreement. In addition, 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 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
<PAGE>
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.
(h) 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 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 were the original thereof.
(i) Governing Law. The corporate laws of the State of Texas
shall govern all issues concerning the relative rights of the Company and
the Purchasers as its stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of 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.
Each party hereby irrevocably submits to the exclusive 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.
(j) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(k) 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.
(l) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(m) 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
<PAGE>
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: Patrick A. Custer
Title: President
BROWN SIMPSON STRATEGIC GROWTH FUND, LTD.
By: Brown Simpson Asset Management, LLC
By:
Name:
Title:
BROWN SIMPSON STRATEGIC GROWTH FUND, L.P.
By: Brown Simpson Capital, LLC
its general partner
By:
Name:
Title:
SCHEDULE I
Company
uniView Technologies Corporation
10911 Petal Street
Dallas, Texas 75238
Attn: Pat Custer
Purchasers:
Brown Simpson Strategic Growth Fund, L.P.
152 West 57th Street, 40th Floor
New York, New York 10019
Brown Simpson Strategic Growth Fund, Ltd.
152 West 57th Street, 40th Floor
New York, New York 10019
<PAGE>
EXHIBIT A
PLAN OF DISTRIBUTION
The Company is registering the Registrable Securities on behalf of
the Holder. As used herein, the term Holder means the holder of the
Registrable Securities and includes donees and pledgees selling
Registrable Securities received from a named Holder after the date of
this Prospectus. All costs, expenses and fees in connection with the
registration of the Registrable Securities offered hereby will be borne
by the Company. Brokerage commissions and similar selling expenses, if
any, attributable to the sale of Registrable Securities will be borne by
the Holders. Sales of Registrable Securities may be effected by Holders
from time to time in one or more types of transactions (which may include
block transactions) on Nasdaq, in the over-the-counter market, in
negotiated transactions, through put or call options transactions
relating to the Registrable Securities, through short sales of
Registrable Securities, or a combination of such methods of sale, at
market prices prevailing at the time of sale, or at negotiated prices.
Such transactions may or may not involve brokers or dealers. The Holders
have advised the Company that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers
regarding the sale of their securities, nor is there an underwriter or
coordinated broker acting in connection with the proposed sale of
Registrable Securities by the Holders.
The Holders may enter into hedging transactions with broker-dealers
or other financial institutions. In connection with such transactions,
broker-dealers or other financial institutions may engage in short sales
of the Registrable Securities or of securities convertible into or
exchangeable for the Registrable Securities in the course of hedging
positions they assume with Holders. The Holders may also enter into
options or other transactions with broker-dealers or other financial
institutions which require the delivery to such broker-dealers or other
financial institutions of Registrable Securities offered by this
Prospectus, which Registrable Securities such broker-dealer or other
financial institution may resell pursuant to this Prospectus (as amended
or supplemented to reflect such transaction).
The Holders may effect such transactions by selling Registrable
Securities directly to purchasers or to or through broker-dealers, which
may act as agents or principals. Such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from
Holders and/or the purchasers of Registrable Securities for whom such
broker-dealers may act as agents or to whom they sell as principal, or
both (which compensation as to a particular broker-dealer might be in
excess of customary commissions).
The Holders and any broker-dealers that act in connection with the
sale of Registrable Securities might be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, and any
commissions received by such broker-dealers and any profit on the resale
of the Registrable Securities sold by them while acting as principals
might be deemed to be underwriting discounts or commissions under the
Securities Act. The Company has agreed to indemnify each Holder against
certain liabilities, including liabilities arising under the Securities
Act. The Holders may agree to indemnify any agent, dealer or broker-
<PAGE>
dealer that participates in transactions involving sales of the
Registrable Securities against certain liabilities, including liabilities
arising under the Securities Act.
The Holders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act.
The Holders will be subject to the prospectus delivery requirements
of the Securities Act. The Company has informed the Holders that the
anti-manipulative provisions of Regulation M promulgated under the
Exchange Act may apply to their sales in the market.
Holders also may resell all or a portion of the Registrable
Securities in open market transactions in reliance upon Rule 144 under
the Securities Act, provided they meet the criteria and conform to the
requirements of such Rule.
Upon the Company being notified by a Holder that any material
arrangement has been entered into with a broker-dealer for the sale of
Registrable Securities through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or
dealer, a supplement to this Prospectus will be filed, if required,
pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name
of each such Holder and of the participating broker-dealer(s), (ii) the
number of Registrable Securities involved, (iii) the initial price at
which such Registrable Securities were sold, (iv) the commissions paid or
discounts or concessions allowed to such broker-dealer(s), where
applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by
reference in this Prospectus and (vi) other facts material to the
transactions. In addition, upon the Company being notified by a Holder
that a donee or pledgee intends to sell more than 500 Registrable
Securities, a supplement to this Prospectus will be filed.
EXHIBIT B
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
Attn.:
Re: uniView Technologies Corporation
Ladies and Gentlemen:
We are counsel to uniView Technologies Corporation, a Texas
corporation (the "Company"), and have represented the Company in
connection with that certain Securities Purchase Agreement (the "Purchase
Agreement") entered into by and among the Company and the buyers named
therein (collectively, the "Holders") pursuant to which the Company
issued to the Holders its Series 1999-D1 5% Convertible Preferred Stock
(the "Securities") convertible into shares of the Company's common stock,
par value $.10 per share (the "Common Stock"), the Company also has
entered into a Registration Rights Agreement with the Holders (the
"Registration Rights Agreement") pursuant to which the Company agreed,
among other things, to register the Registrable Securities (as defined in
the Registration Rights Agreement), including the shares of Common Stock
issuable upon conversion of the Securities, under the Securities Act of
1933, as amended (the "1933 Act"). In connection with the Company's
<PAGE>
obligations under the Registration Rights Agreement, on _______________,
1999, the Company filed a Registration Statement on Form S-3 (File No.
333-_____________) (the "Registration Statement") with the Securities and
Exchange Commission (the "SEC") relating to the Registrable Securities
which names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at
[ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we
have no knowledge, after telephonic inquiry of a member of the SEC's
staff, that any stop order suspending its effectiveness has been issued
or that any proceedings for that purpose are pending before, or
threatened by, the SEC and the Registrable Securities are available for
resale under the 1933 Act pursuant to the Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
cc: [LIST NAMES OF HOLDERS]
<PAGE>
THE SECURITIES OFFERED HEREIN ARE SUBJECT TO
SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY
SECURITIES PURCHASE 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 1999-E, 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 1999-E, Class A Preferred Stock (the "Shares")) at a face
value 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 Securities Purchase Agreement (the "Agreement"), the Purchaser is
delivering to the Company the full amount of the consideration,
consisting of an aggregate total of 32 shares of Series Q Class A
Preferred Stock, which shall be canceled, 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
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 1999-E 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
<PAGE>
Federal and State securities laws and that the Company is relying
upon the truth and accuracy of the representations, warranties,
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,
<PAGE>
nor the delivery by the Company, nor the performance by the Company
of its obligations under, this Agreement or, the Class A Preferred
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.
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, the Company will issue 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 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.
<PAGE>
6. Any holder of Series 1999-E Class A Preferred Stock (an
"Eligible Holder") may at any time, provided it has not theretofore
received a notice of redemption from the Company, convert any whole
number of shares of Series 1999-E Class A Preferred Stock in accordance
with this Part. For the purposes of conversion, the Series 1999-E Class
A Preferred Stock shall be valued at $25,000 per share ("Value"), and, if
converted, the Series 1999-E 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 1999-E Class A Preferred Stock being so converted by
the "Conversion Price." For purposes of this Part, the "Conversion
Price" means $3.00 per share. 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 1999-E Class A Preferred
Stock, in whole or in part, by the surrender of the share certificate or
share certificates representing the Series 1999-E 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 1999-E Class A Preferred Stock so surrendered, if any, by (2)
the Conversion Price. Each Series 1999-E 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 1999-E
Class A Preferred Stock granted herein (i) share certificates
representing the Common Stock purchased by virtue of such exercise 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 1999-E 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 1999-E
Class A Preferred Stock has been fully converted, a new share certificate
representing the Series 1999-E 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 1999-E Class
A Preferred Stock by telecopying an executed and completed Notice of
Conversion to the Corporation, and within 72 hours thereafter, delivering
the original Notice of Conversion and the certificate representing the
Series 1999-E 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
1999-E Class A Preferred Stock (together with the certificates
representing the Series 1999-E 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 1999-E 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 1999-E 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 1999-E Class
<PAGE>
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 1999-E 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 1999-E 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 1999-E 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 the number of the Underlying
Shares issuable on the "Closing Date" (June 23, 1999) 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
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.
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.
<PAGE>
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.
11. The Company and Purchasers hereby release and forever discharge
the other of all claims and obligations of any nature whatsoever, known
or unknown, present or future, that they have or may have against the
other, arising out of or in any way connected with Series Q Class A
Preferred Stock or in any way connected with any business relationships
between the parties.
12. 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.
13. 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.
14. 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."
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of June 23, 1999.
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: $____________________ (of an aggregate total
of $2,400,000).
AGREED AND ACCEPTED:
UNIVIEW TECHNOLOGIES CORPORATION
By:______________________________
Patrick A. Custer
President and CEO
