EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT ("Agreement") is entered into as of
April 14, 1999, by and between Westell Technologies, Inc., a Delaware
corporation (the "Company"), with headquarters located at 750 N. Commons Drive,
Aurora, Illinois 60504, and the purchasers (each a "Purchaser" and together the
"Purchasers") set forth on the execution pages hereof, with regard to the
following:
RECITALS
A. The Company and Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act").
B. Purchasers desire to purchase, and the Company desires to issue and
sell, upon the terms and conditions stated in this Agreement, (i) an amount of
the Company's 6% Subordinated Convertible Debentures (the "Debentures") in the
form of Exhibit A which is convertible into shares of the Company's Class A
Common Stock, par value $0.01 per share (the "Class A Common Stock" and, when
taken together with all other classes and series of the Company's common stock,
the "Common Stock"), (ii) warrants in the form of Exhibit B (each a "Warrant"
and, when taken together with all of the warrants issued hereunder, the
"Warrants") entitling the holder thereof to purchase the number of shares (the
"Warrant Shares") of Class A Common Stock as set forth below. The Debentures and
the PIK Debentures (as defined in the Debenture) are collectively referred to
herein as the "Convertible Securities". The shares of Class A Common Stock
issuable upon conversion of or otherwise pursuant to the Convertible Securities
are referred to herein as the "Conversion Shares." The Convertible Securities,
the Warrants, the Cap Debentures (as defined in the Debenture), the Conversion
Shares and the Warrant Shares are collectively referred to herein as the
"Securities".
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
in the form attached hereto as Exhibit C (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act, the rules and regulations promulgated thereunder and
applicable state securities laws.
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and Purchasers hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES; SECURITY
1.1 Purchase of Debentures and Warrants. The purchase price (the
"Purchase Price") to be paid by each Purchaser for the Debenture and Warrant
being purchased by such Purchaser and the allocation of the Purchase Price as
between such Debenture and Warrant shall be as set forth on each Purchaser's
signature page.
On the date of the Closing (as defined herein), subject to the terms
and the satisfaction (or waiver) of the conditions set forth in Articles VI and
VII, and notwithstanding any election by the Company, the Company shall issue
and sell to each Purchaser, and each Purchaser shall purchase from the Company
(i) a Debenture in principal amount equal to the Purchase Price set forth below
such Purchaser's name on the signature pages hereof and (ii) a Warrant entitling
the holder thereof to purchase the number of Warrant Shares set forth below such
Purchaser's name on the signature pages hereto. The aggregate purchase price for
the Securities purchased at the Closing shall be twenty million dollars
($20,000,000).
1.2 Form of Payment. At the Closing, each Purchaser shall pay the
Purchase Price for the Purchased Securities being purchased by such Purchaser by
wire transfer to the Company, in accordance with the Company's written wiring
instructions, against delivery of duly executed Debentures and Warrants, and the
Company shall deliver to each Purchaser such executed Debentures and Warrants
against delivery of such Purchase Price from each Purchaser. The obligations in
this Agreement of each Purchaser shall be separate from the obligations of each
other Purchaser and shall relate solely to the Purchased Securities to be
purchased by such Purchaser. The obligations of the Company with respect to each
Purchaser shall be separate from the obligations of the Company to each other
Purchaser and shall not be conditioned as to any Purchaser upon the performance
of the obligations of any other Purchaser. At the Closing and thereafter, the
Company shall cause each of its subsidiaries to enter into such security
agreements and perform such obligations as are contemplated by this Agreement
and such security agreements and the transactions contemplated hereby and
thereby.
1.3 Closing Date. The date and time of the issuance, sale and purchase
of the Securities pursuant to this Agreement shall be the later of (i) the day
following the date of this Agreement and (ii) the date upon which all the
conditions set forth in Articles VI and VII are satisfied or waived. The Closing
shall occur at 11:00 a.m. Chicago time, at the offices of Altheimer & Gray, 10
S. Wacker Drive, Chicago, IL 60606. The date of the Closing is hereinafter
referred to as the "Closing Date."
ARTICLE II
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Each Purchaser represents and warrants on the date hereof, solely with
respect to itself and its purchase hereunder and not with respect to any other
Purchaser or the purchase hereunder by any other Purchaser (and no Purchaser
shall be deemed to make or have any liability for any representation or warranty
made by any other Purchaser), to the Company as set forth in this Article II. No
Purchaser makes any other representations or warranties, express or implied, to
the Company in connection with the transactions contemplated hereby and any and
all prior representations and warranties, if any, which may have been made by a
Purchaser to the Company in connection with the transactions contemplated hereby
shall be deemed to have been merged in this Agreement and any such prior
representations and warranties, if any, shall not survive the execution and
delivery of this Agreement.
2.1 Purchase for Own Account. Purchaser is purchasing the Securities
for Purchaser's own account for investment only and not with a view toward or in
connection with the public resale or distribution thereof, except pursuant to
sales that are exempt from the registration requirements of the Securities Act
and/or sales registered under the Securities Act. Purchaser will not resell any
of the Securities or any securities which may be issued upon exchange or
conversion thereof except pursuant to sales that are exempt from the
registration requirements of the Securities Act and/or sales registered under
the Securities Act. Purchaser understands that Purchaser must bear the economic
risk of this investment indefinitely, unless the Securities are registered
pursuant to the Securities Act and any applicable state securities laws or an
exemption from such registration is available, and that the Company has no
present intention of registering any such Securities other than as contemplated
by the Registration Rights Agreement. By making the representations in this
Section 2.1, the Purchaser does not agree to hold any Securities for any minimum
or other specific term and reserves the right to dispose of any or all of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption from registration under the Securities Act.
2.2 Accredited Investor Status. Purchaser is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D.
2.3 Reliance on Exemptions. Purchaser understands that the Securities
are being offered and sold to Purchaser in reliance upon specific exemptions
from the registration requirements of the United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of
the representations and warranties of Purchaser set forth herein in order to
determine the availability of such exemptions and the eligibility of Purchaser
to acquire the Securities.
2.4 Information. Purchaser and its counsel have been furnished 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
specifically requested by Purchaser. Purchaser has been afforded the opportunity
to ask questions of the Company and has received what Purchaser believes to be
complete and satisfactory answers to any such inquiries. Neither such materials
or inquiries nor any other due diligence investigation conducted by Purchaser
nor any of its representations, warranties, covenants or agreements shall
modify, amend or affect Purchaser's right to rely on the Company's
representations and warranties contained in Article III. Purchaser understands
that Purchaser's investment in the Securities involves a high degree of risk.
2.5 Governmental Review. 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 or an
investment therein.
2.6 Transfer or Resale. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be transferred unless subsequently registered thereunder or an
exemption from such registration is available (which exemption the Company
expressly agrees may be established as contemplated in clauses (b) and (c) of
Section 5.1 hereof or as otherwise may be permissible under the Securities Act);
(ii) any sale of such Securities made in reliance on Rule 144 under the
Securities Act (or a successor rule) ("Rule 144") may be made only in accordance
with the terms of said Rule and further, if said Rule is not applicable, any
resale of such Securities without registration under the Securities Act) may
require compliance with some other exemption under the Securities Act or the
rules and regulations of the SEC thereunder; and (iii) neither the Company nor
any other person is under any obligation to register such Securities under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder (in each case, other than pursuant to
this Agreement or the Registration Rights Agreement).
2.7 Legends. Purchaser understands that, subject to Article V hereof,
the certificates for the Debentures, Warrants, the Conversion Shares and the
Warrant Shares will bear a restrictive legend (the "Legend") in 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 OF
THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
Except for the Legend in accordance with this Section 2.7 and Section 5.1 hereof
and the legend required by the Subordination Agreement (as defined in Section
7.1), the Securities shall bear no other legend.
2.8 Authorization; Enforcement. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of Purchaser and are valid and binding agreements of Purchaser
enforceable against Purchaser in accordance with their terms.
2.9 Residency. Purchaser is a resident of the jurisdiction set forth
under Purchaser's name on the signature page hereto executed by Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser on the date
hereof that, except for such exceptions which are (a) specifically disclosed in
that certain disclosure letter delivered by the Company to each Purchaser
concurrently with the execution and delivery of this Agreement by the Company
and (b) schedules hereto numbered to conform with the applicable Sections of
this Article III with respect to which such exception is being made:
3.1 Organization and Qualification. The Company and each of its
subsidiaries is a corporation duly organized, validity existing and in good
standing under the laws of the jurisdiction in which it is incorporated, and has
the requisite corporate power and authority to own its properties and to carry
on its business as now being conducted. The Company and each of its subsidiaries
is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction where the failure to so qualify would have a
Material Adverse Effect. "Material Adverse Effect" means any material adverse
effect on (i) the business, operations, properties, financial condition,
operating results or prospects of the Company and its subsidiaries, taken as a
whole on a consolidated basis, (ii) the transactions contemplated hereby, (iii)
the ability of the Company to perform its obligations under this Agreement, the
Debentures, the Warrants or the Registration Rights Agreement (collectively, the
"Investment Agreements") or (iv) the Purchaser's interest in the Securities. A
"Material Adverse Effect" shall not include (i) adverse general economic
conditions, (ii) adverse general industry conditions in the industry in which
the Company operates or (iii) of itself, a decline in the Company's stock price.
3.2 Authorization; Enforcement. (a) The Company has the requisite
corporate power and authority to (i) enter into, and perform its obligations
under each of the Investment Agreements, (ii) issue, sell and perform its
obligations with respect to the Debentures and the Warrants in accordance with
the terms hereof and thereof, and (v) issue the Conversion Shares in accordance
with the terms and conditions of the Debentures and the Warrant Shares in
accordance with the terms and conditions of the Warrants; (b) the execution,
delivery and performance of this Agreement and the Registration Rights Agreement
by the Company and the execution and delivery of the Debentures and the
Warrants, and the consummation by it of the transactions contemplated hereby and
thereby (including without limitation the issuance of the Convertible Securities
and the Cap Debentures and the reservation for issuance and issuance of the
Shares and the Conversion Shares) have been duly authorized by all necessary
corporate action and, except as set forth on Schedule 3.2 hereof, no further
consent or authorization of the Company, its board of directors, or its
stockholders or any other person, body or agency is required with respect to any
of the transactions contemplated hereby or thereby (whether under rules of the
Nasdaq National Market System ("Nasdaq"), the National Association of Securities
Dealers or otherwise); (c) this Agreement, the Debentures, the Warrants and the
Registration Rights Agreement have been duly executed and delivered by the
Company and upon the issuance by the Company of PIK Debentures or Cap
Debentures, such PIK Debentures and Cap Debentures will be duly executed and
delivered by the Company; and (d) each of the Investment Agreements constitutes
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with their terms.
3.3 Capitalization. The capitalization of the Company as of the date of
this Agreement, including the authorized capital stock, the number of shares
issued and outstanding, the number of shares reserved for issuance pursuant to
the Company's stock option plans, the number of shares reserved for issuance
pursuant to securities (other than the Convertible Securities and the Warrants)
exercisable for, or convertible into or exchangeable for any shares of Common
Stock and the number of shares to be initially reserved for issuance upon
conversion of the Convertible Securities and the exercise of the Warrants is set
forth on Schedule 3.3. All of such outstanding shares of capital stock have
been, or upon issuance will be, validly issued, fully paid and non-assessable.
No shares of capital stock of the Company (including the Warrant Shares and the
Conversion Shares) are subject to preemptive rights or any other similar rights
of the stockholders of the Company or any liens or encumbrances. Except as
disclosed in Schedule 3.3, as of the date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable or exchangeable for, 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, and (ii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to
register the sale of any of its or their securities under the Securities Act
(except the Registration Rights Agreement). The Company has furnished to
Purchaser true and correct copies of the Company's Certificate of Incorporation
as currently in effect ("Certificate of Incorporation"), and the Company's
Bylaws as currently in effect (the "By-laws"). The Company has set forth on
Schedule 3.3 all instruments and agreements (other than the Certificate of
Incorporation and By-laws) governing securities convertible into or exercisable
or exchangeable for Common Stock of the Company (and the Company shall provide
to Purchaser copies thereof upon the request of Purchaser). Except as set forth
on Schedule 3.3, the Company has no indebtedness for borrowed money and no
agreement providing for indebtedness for borrowed money. Except as disclosed on
Schedule 3.3, the Company has no share purchase agreements, rights plans or
agreements containing similar provisions and no agreements containing
anti-dilution provisions. The Company shall provide Purchaser with a written
update of this representation signed by the Company's Chief Executive Officer or
Chief Financial Officer on behalf of the Company as of the date of the Closing
and it shall be a condition to Purchaser's obligations at Closing that there are
no material changes in such capitalization since the Company's representation on
the date hereof. The Company has no subsidiaries, except as provided on Schedule
3.3. Except as set forth on Schedule 3.3, all such subsidiaries included on
Schedule 3.3. are one hundred percent (100%) owned by the Company. Except as
provided on Schedule 3.3, the Company has no investments, either debt or equity,
in any other entity except for marketable securities. The Loan Agreement (as
herein defined) as of the date of this Agreement has been delivered to
Purchaser.
3.4 Issuance of Shares. The Conversion Shares and Warrant Shares are
duly authorized and reserved for issuance, and, upon conversion of the
Convertible Securities or exercise of the Warrants, each in accordance with the
terms thereof, will be validly issued, fully paid and non-assessable, and free
from all taxes, liens, claims and encumbrances and will not be subject to
preemptive rights or other similar rights of stockholders of the Company. The
Convertible Securities and Warrants are duly authorized and reserved for
issuance, and are validly issued, fully paid and non-assessable, and free from
all taxes, liens claims and encumbrances and are not and will not be subject to
preemptive rights or other similar rights of stockholders of the Company. The
Board of Directors of the Company (the "Board") has the right to consent to or
to block pursuant to the terms of the Convertible Securities (the "Cap Debenture
Election") the issuance of shares of Class A Common Stock in excess of twenty
percent (20%) of the outstanding shares of Common Stock upon conversion of the
Convertible Securities pursuant to the terms thereof. The Board has unanimously
approved the issuance of shares of Common Stock pursuant to this Agreement, upon
conversion of the Convertible Securities and upon the exercise of the Warrants
pursuant to the terms thereof, including the circumstance where such conversion
would, in the aggregate, require issuance in excess of twenty percent (20%) of
the outstanding shares of Common Stock (the "Rule 4460(i) Authorization"). No
further corporate authorization or approval (other than the authorization and
approval of the Rule 4460(i) Authorization by the shareholders of the Company (
the "Shareholder Approval")) is required under the rules of the Nasdaq with
respect to the transaction contemplated by this Agreement, including, without
limitation, the issuance of the Conversion Shares and the Warrant Shares and the
inclusion thereof for trading on the Nasdaq.
3.5 No Conflicts. The execution, delivery and performance of each of
the Investment Agreements, by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby (including the issuance and
reservation for issuance, as applicable, of the PIK Debentures, the Cap
Debentures, the Warrant Shares and the Conversion Shares) do not and will not
(a) result in a violation of the Certificate of Incorporation or By-laws of the
Company or any of its subsidiaries, (b) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party (except for such conflicts, defaults,
terminations, amendments, accelerations, and cancellations as would not,
individually or in the aggregate, have a Material Adverse Effect), or (c) result
in a violation of any law, rule, regulation, order, judgment or decree
(including, without limitation, U.S. federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries, or by which
any property or asset of the Company or any of its subsidiaries, is bound or
affected which would have a Material Adverse Effect. Neither the Company nor any
of its subsidiaries is in violation of its Certificate of Incorporation, by-laws
or other organizational documents, and neither the Company nor any of its
subsidiaries is in default (and no event has occurred which, with notice or
lapse of time or both, would put the Company or any of its subsidiaries in
default) under, nor has there occurred any event giving others (with notice or
lapse of time or both) any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, except for possible defaults or rights as
would not, individually or in the aggregate, have a Material Adverse Effect. The
business of the Company and its subsidiaries is not being conducted, and shall
not be conducted so long as a Purchaser owns any of the Securities, in violation
of any law, ordinance, rule, regulation, order, judgment or decree of any
governmental entity, court or arbitration tribunal except for possible
violations the sanctions for which either singly or in the aggregate would not
have a Material Adverse Effect. The Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency or any regulatory or self-regulatory agency in
order for it to execute, deliver or perform any of its obligations under any of
the Investment Agreements or to perform its obligations in accordance with the
terms hereof or thereof. The purchase and acquisition of the Securities by the
Purchaser does not violate any law, rule, regulation, order, judgment or decree
applicable to the Company, or require further filing by the Company or Purchaser
under such law, rule, regulation, order, judgment or decree, by virtue of the
Company's business or assets (it being understood that for the purposes of this
sentence, the Company is relying upon the Purchaser's representations and
warranties in Article 2 hereof). The Company is not in violation of the listing
requirements of Nasdaq and does not reasonably anticipate that the Common Stock
will be de-listed by Nasdaq for the foreseeable future, and the Company has made
all necessary filings and notifications with, and obtained all necessary
approvals from, Nasdaq with respect to the transactions contemplated hereby,
including, without limitation, the issuance of the Securities and the listing of
the Conversion Shares and the Warrant Shares on the Nasdaq.
3.6 Registration and SEC Documents. The Common Stock is registered
under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and has been so registered since November 30, 1995. Except as
disclosed in Schedule 3.6, since March 31, 1998, the Company has timely filed
all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of the Exchange
Act (all of the foregoing filed after March 31, 1998 and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein, being referred to herein as the "SEC
Documents"). The Company has delivered to each Purchaser true and complete
copies of the SEC Documents (the SEC documents filed prior to the date hereof,
the "Filed SEC Documents"). As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents, and none of the SEC Documents, at the time they were filed with
the SEC, 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. None of the statements made in any such SEC Document is, or has
been, required to be updated or amended under applicable law. The financial
statements of the Company included in the SEC Documents were prepared in
accordance with U.S. generally accepted accounting principles, consistently
applied, and the rules and regulations of the SEC during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the
extent they do not include footnotes or are condensed or summary statements) and
present accurately and completely the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal, immaterial
year-end audit adjustments). Except as set forth in the financial statements of
the Company included in the Filed SEC Documents, the Company has no liabilities,
contingent or otherwise, other than (i) liabilities incurred subsequent to the
date of such financial statements in the ordinary course of business consistent
with past practice and (ii) obligations under contracts and commitments incurred
in the ordinary course of business and not required under generally accepted
accounting principles to be reflected in such financial statements, in each case
of clause (i) and (ii) next above which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect. The Filed SEC
Documents, as supplemented by Schedule 3.6 hereto, contain a complete and
accurate list of all material undischarged written or oral contracts,
agreements, leases or other instruments to which the Company or any subsidiary
is a party or by which the Company or any subsidiary is bound or to which any of
the properties or assets of the Company or any subsidiary is subject (each a
"Contract"). None of the Company, its subsidiaries or, to the best knowledge of
the Company, any of the other parties thereto, is in breach or violation of any
Contract, which breach or violation relates to indebtedness for borrowed money,
is with respect to an obligation in excess of twenty five thousand dollars
($25,000) or would have a Material Adverse Effect. No event, occurrence or
condition exists which, with the lapse of time, the giving of notice, or both,
or the happening of any further event or condition, would become a breach or
default by the Company or its subsidiaries under any Contract which breach or
default would have a Material Adverse Effect.
3.7 Absence of Certain Changes. Since December 31, 1998, there has been
no material adverse change and no material adverse development in the business,
properties, operations, financial condition, results of operations or prospects
of the Company, except as disclosed in Schedule 3.7.
3.8 Absence of Litigation. Except as disclosed in Schedule 3.8, there
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board, governmental agency or authority, or self-regulatory organization
or body pending or, to the knowledge of the Company or any of its subsidiaries,
threatened against or affecting the Company, any of its subsidiaries, or any of
their respective directors or officers in their capacities as such, wherein an
unfavorable decision, ruling or finding could have a Material Adverse Effect or
would adversely affect the transactions contemplated by this Agreement or any of
the documents contemplated hereby or which would adversely affect the validity
or enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of such other documents. There are no
facts which, if known by a potential claimant or governmental agency or
authority, could give rise to a claim or proceeding which, if asserted or
conducted with results unfavorable to the Company or any of its subsidiaries,
could have a Material Adverse Effect.
3.9 Disclosure. No information relating to or concerning the Company
set forth in this Agreement or provided to Purchaser in connection with the
transactions contemplated hereby contains an untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were made, not
misleading. Except for the execution and performance of this Agreement, no
material fact (within the meaning of the federal securities laws of the United
States) exists with respect to the Company or any of its subsidiaries which has
not been publicly disclosed.
3.10 Acknowledgment Regarding Purchaser's Purchase of the Securities.
The Company acknowledges and agrees that each Purchaser is acting independently
and is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement or the transactions
contemplated hereby, that this Agreement and the transaction contemplated
hereby, and the relationship between each Purchaser and the Company, are
"arms-length", and that, except for Purchasers' representations in Article 2
hereof, any statement made by any Purchaser, or any of its representatives or
agents, in connection with this Agreement or the transactions contemplated
hereby is not advice or a recommendation, is merely incidental to such
Purchaser's purchase of the Securities and has not been relied upon in any way
by the Company, its officers, directors or other representatives. The Company
further represents to Purchaser that the Company's decision to enter into this
Agreement and the transactions contemplated hereby has been based solely on an
independent evaluation by the Company and its representatives.
3.11 Current Public Information. On the date hereof, the Company is
currently eligible to register the resale of the Conversion Shares and Warrant
Shares by the Purchasers on a registration statement on Form S-3 under the
Securities Act.
3.12 No General Solicitation. Neither the Company nor any person acting
on behalf of the Company has conducted any "general solicitation," as described
in Rule 502(c) under Regulation D, with respect to any of the Securities being
offered hereby.
3.13 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would prevent the parties hereto from
consummating the transactions contemplated hereby pursuant to an exemption from
registration under the Securities Act pursuant to the provisions of Regulation
D. The transactions contemplated hereby are exempt from the registration
requirements of the Securities Act, assuming the accuracy of the representations
and warranties herein contained of each Purchaser to the extent relevant for
such determination.
3.14 No Brokers. The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments by Purchaser relating to this Agreement or the transactions
contemplated hereby, except for dealings with Hambrecht & Quist LLC (the fees of
which shall be paid in full by the Company).
3.15 Acknowledgment of Dilution. The number of Conversion Shares
issuable upon conversion of the Convertible Securities and/or Warrant Shares
issuable upon exercise of the Warrants may increase substantially in certain
circumstances, including the circumstance wherein the trading price of the
Common Stock declines. The Company's executive officers and directors have
studied and fully understand the terms of this Agreement and the transactions
contemplated hereby and the nature of the securities being sold hereunder and
recognize that they have a potential dilutive effect. The board of directors of
the Company has unanimously concluded in its good faith business judgment that
the issuance of the Securities as contemplated hereby is in the best interests
of the Company. The Company acknowledges that its obligation to issue Conversion
Shares upon conversion of the Convertible Securities and the Warrant Shares upon
exercise of the Warrants is binding upon it and enforceable regardless of the
dilution that such issuance may have on the ownership interests of other
stockholders.
3.16 Intellectual Property. Each of the Company and its subsidiaries
owns or possesses adequate and enforceable rights to use all patents, patent
applications, trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
knowledge (collectively, "Intangibles ") used or necessary for the conduct of
its business as now being conducted and as previously described in the Company's
Annual Report on Form 10-K most recently filed and any subsequently filed
reports on Form 10-Q and Form 8-K. Neither the Company nor any subsidiary of the
Company infringes on or is in conflict with any right of any other person with
respect to any Intangibles nor is there any claim of infringement made by a
third party against or involving the Company or any of its subsidiaries, which
infringement, conflict or claim, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a Material
Adverse Effect.
3.17 Foreign Corrupt Practices. Neither the Company, nor any of its
subsidiaries, nor any director, officer and, to the best knowledge of the
Company, agent, employee or other person acting on behalf of the Company or any
subsidiary has, in the course of his 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 from 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 bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee. Without limiting the
generality of the foregoing, the Company and its subsidiaries have not directly
or indirectly made or agreed to make (whether or not said payment is lawful) any
payment to obtain, or with respect to, sales other than usual and regular
compensation to its or their employees and sales representatives with respect to
such sales.
3.18 Key Employees. Each Key Employee (as defined below) is currently
serving the Company in the capacity disclosed in Schedule 3.18. No Key Employee,
to the best of the knowledge of the Company and its subsidiaries, is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each Key Employee does not subject the
Company or any of its subsidiaries to any liability with respect to any of the
foregoing matters. No Key Employee has, to the best of the knowledge of the
Company and its subsidiaries, any intention to terminate or limit his employment
with, or services to, the Company or any of its subsidiaries, nor is any such
Key Employee subject to any constraints (e.g., litigation) which would cause
such employee to be unable to devote his full time and attention to such
employment or services. "Key Employee" means each of Marc Zionts, J. William
Nelson, Stephen J. Hawrysz, Richard P. Reviere, Marc Hafner and William Noll.
3.19 Solvency. Immediately before and after giving effect to the
transactions contemplated by this Agreement, the Company (i) has not incurred
and does not intend to incur, or believe that it will incur, debts beyond its
ability to pay such debts as they become due, (ii) owns and will have assets,
the fair saleable value of which is (a) greater than the total amount of its
liabilities (including contingent liabilities) and (b) greater than the amount
that will be required to pay the probable liabilities of its then existing debts
as they become absolute and matured, and (iii) has and will have capital that is
not unreasonably small in relation to its business as presently conducted and as
proposed to be conducted.
3.20 Year 2000 Compliance. The information set forth in the Filed SEC
Documents with respect to Year 2000-related compliance by the Company does not
contain any untrue statement of a material fact or omit any material fact
necessary to make the statements contained therein not misleading. Management of
the Company believes in good faith that Seller's testing compliance program and
contingency plan, in each case regarding Year 2000-related matters, are adequate
to prevent a Material Adverse Effect.
ARTICLE IV
COVENANTS
4.1 Best Efforts. The Company shall use its best efforts timely to
satisfy each of the conditions described in Articles VI and VII of this
Agreement.
4.2 Securities Laws. The Company agrees to file a Form D with respect
to the Securities with the SEC as required under Regulation D and to provide a
copy thereof to each Purchaser on or prior to the date of the Closing. The
Company agrees to file a Form 8-K disclosing this Agreement and the transactions
contemplated hereby with the SEC as soon as possible, but in any event within
two (2) business days following the date of Closing. Such Form 8-K shall contain
as exhibits this Agreement, the form of Debenture, the form of Warrant and the
Registration Rights Agreement. The Company shall, on or prior to the date of the
Closing, take such action as is necessary to sell the Securities to each
Purchaser in accordance with applicable securities laws of the states of the
United States, and shall provide evidence of any such action so taken to each
Purchaser on or prior to the date of the Closing. Without limiting any of the
Company's obligations under any Investment Agreement from and after the date of
the Closing, neither the Company nor any person acting on its behalf shall take
any action which would adversely affect any exemptions from registration under
the Securities Act with respect to the transactions contemplated hereby.
4.3 Reporting Status. So long as any Purchaser beneficially owns any of
the Securities, the Company shall timely file all reports required to be filed
with the SEC pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would permit such
termination.
4.4 Use of Proceeds. The Company shall use the proceeds from the sale
of the Securities for working capital and general corporate purposes; pending
such uses, the Company intends to invest the proceeds in short-term
interest-bearing securities.
4.5 Restriction on Issuance of Securities. (a) For a period beginning
on the date hereof and ending one hundred and eighty (180) days after the date
of the Closing, the Company shall not issue or agree to issue, (except (i) to
Purchasers pursuant to this Agreement, the Convertible Securities or the
Warrants, (ii) equity securities issued in a public offering, (iii) equity
securities issued as payment for corporate acquisitions, (and issuances of
convertible securities, options and rights in exchange for equivalent
outstanding instruments of the other business combination party, to the extent
required by its terms) (iv) shares of Class A Common Stock issued upon
conversion of shares of Class B Common Stock, or (v) stock options issued to
directors, officers and employees pursuant to any employee stock option, stock
purchase or restricted stock plan of the Company in effect on the date hereof up
to the aggregate amounts set forth on Schedule 4.5 hereto), any equity
securities, any equity-like or any equity-linked securities (or any security
convertible into or exercisable or exchangeable, directly or indirectly, for
equity, equity-like or equity-linked securities of the Company) (each of the
foregoing being a "Restricted Security"). At the Closing, the Company will
deliver to each Purchaser a letter in the form of Exhibit G providing a right of
first refusal to such Purchaser with respect to future issuances of securities
by the Company which occur during the period beginning six (6) months after the
date of the Closing and ending twelve (12) months after the date of the Closing.
4.6 Expenses. The Company shall pay to each Castle Creek Technology
Partners LLC ("CCTP"), or at its direction, at the Closing, reimbursement for
the expenses incurred by it and its affiliates and advisors in connection with
the negotiation, preparation, execution, and delivery of this Agreement and the
other agreements and documents to be executed in connection herewith, including,
without limitation, CCTP's and its affiliates' and advisors' due diligence and
attorneys' fees and expenses (the "Expenses"); provided, however, that such
reimbursement of Expenses shall not exceed $60,000. In addition, from time to
time thereafter, upon CCTP's written request, subject to such $60,000 limit, the
Company shall pay to CCTP such Expenses, if any, not so paid at the Closing
and/or covered by such payment, in each case to the extent incurred by CCTP.
4.7 Information. The Company agrees to send the following reports to
each Purchaser until such Purchaser transfers, assigns or sells all of its
Securities: (a) within three (3) days after the filing with the SEC, a copy of
its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, any proxy
statements and any Current Reports on Form 8-K; and (b) within one (1) day after
release, copies of all press releases issued by the Company or any of its
subsidiaries. The Company further agrees to promptly provide to any Purchaser
any information with respect to the Company, its properties, or its business or
Purchaser's investment as such Purchaser may reasonably request; provided,
however, that if any information requested by a Purchaser from the Company
contains material non-public information, the Company shall inform the Purchaser
in writing that the information requested contains material non-public
information and shall in no event provide the material non-public portion of
such information to Purchaser without the express prior written consent of such
Purchaser after being so informed.
4.8 Intentionally omitted.
4.9 Intentionally omitted.
4.10 Prospectus Delivery Requirement. Each Purchaser understands that
the Securities Act may require delivery of a prospectus relating to the Class A
Common Stock in connection with any sale thereof pursuant to a registration
statement under the Securities Act covering the resale by such Purchaser of the
Class A Common Stock being sold.
4.11 Intentional Acts or Omissions. The Company shall not intentionally
perform any act which if performed, or intentionally omit to perform any act
which, if omitted to be performed, would prevent or excuse the performance of
this Agreement or any of the transactions contemplated hereby or the benefits
intended to be secured thereby by the Purchasers (including, without limitation,
pursuant to any agreements or documents obtained by the Company as a condition
to any Closing hereunder).
4.12 Corporate Existence. So long as any Purchaser beneficially owns
any Convertible Securities or Warrants, the Company shall maintain its corporate
existence, except in the event of a merger, consolidation or sale of all or
substantially all of the Company's assets, as long as 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
regardless of whether or not the Company would have had a sufficient number of
shares of Class A Common Stock authorized and available for issuance in order to
effect the conversion of all Convertible Securities outstanding as of the date
of such transaction and (ii) is a publicly traded corporation whose Common Stock
is listed for trading on The Nasdaq National Market or the New York Stock
Exchange.
4.13 Share Authorization. The Company covenants and agrees that it
shall (i) solicit by proxy the authorization and approval (the "Shareholder
Approval") of the Rule 4460(i) Authorization by the stockholders of the Company
and (ii) use its best efforts to obtain the Shareholder Approval at its next
annual stockholder meeting, which shall not be held later than September 20,
1999.
4.14 Intentionally omitted.
4.15 Reserved Amount. On the date of the Closing and thereafter, the
Company shall have authorized and reserved and keep available for issuance not
less than 8,500,000 (subject to equitable adjustment for any stock splits, stock
dividends, reclassification or similar events and subject to reduction for the
number of any shares of Class A Common Stock issued upon conversion of the
Convertible Securities and upon the exercise of the Warrants) shares of Class A
Common Stock (the " Reserved Amount") solely for the purpose of effecting the
conversion of the Convertible Securities and the exercise of the Warrants. The
Company shall at all times reserve and keep available out of its authorized but
unissued shares of Class A Common Stock a sufficient number of shares of Class A
Common Stock to provide for the full conversion of all Convertible Securities
and the issuance of the shares of Class A Common Stock in connection therewith
and the full exercise of the Warrants and the issuance of the shares of Class A
Common Stock in connection therewith, in each of the foregoing cases without
regard to any limitation on conversion or exercise. The Reserved Amount shall be
allocated ratably among the Purchasers in accordance with the principal amount
of Convertible Securities and Warrants held by them from time to time. If the
Reserved Amount for any three (3) consecutive trading days (the last of such
three (3) trading days being the "Authorization Trigger Date") shall be less
than 175% of the number of shares of Class A Common Stock issuable upon
conversion of Convertible Securities and 100% of the number of shares then
issuable upon exercise of the Warrants on such trading days, the Company shall
immediately notify each Purchaser of such occurrence and shall take action as
soon as possible, but in any event within sixty (60) days after an Authorization
Trigger Date (including, if necessary, shareholder approval to authorize the
issuance of additional shares of Class A Common Stock), to increase the Reserved
Amount to two hundred percent (200%) of the number of shares of Class A Common
Stock then issuable upon conversion of the Convertible Securities and 100% of
the number of shares then issuable upon exercise of the Warrants in each of the
foregoing cases without regard to any limitation on conversion or exercise.
4.16 Additional Amounts. All payments made by the Company under or with
respect to the Convertible Securities will be made free and clear of, and
without withholding or deduction for or on account of, any present or future
tax, duty, levy, impost, assessment or other governmental charge imposed or
levied by or on behalf of any government or any political subdivision or taxing
authority or agency thereof or therein (hereinafter "Taxes") unless the Company
is required to withhold or deduct Taxes by law or by the interpretation or
administration thereof. If the Company is so required to withhold or deduct any
amount for or on account of Taxes from any payment made under or with respect to
the Convertible Securities, the Company will pay such additional amounts
("Additional Amounts") as may be necessary so that the net amount received by
each holder of Convertible Securities (including Additional Amounts) after such
withholding or deduction will not be less than the amount such holder would have
received if such Taxes had not been required to be withheld or deducted. The
Company will furnish to each holder on its request certified copies of tax
receipts evidencing the payment of any Taxes by the Company, in such form as
provided in the normal course by the taxing authority imposing such Taxes and as
are reasonably available to the Company, within 30 days after the later of the
date of receipt of such evidence and the date of receipt of such request. At
least 30 days prior to each date on which any payment under or with respect to
the Convertible Securities is due and payable, if the Company will be obligated
to pay Additional Amounts with respect to such payment (unless such obligation
to pay Additional Amounts arises after the thirtieth (30th) day prior to the
date on which payment under or with respect to the Convertible Securities is due
and payable, in which case it shall be as promptly as possible thereafter), the
Company will deliver to all holders of Convertible Securities a certificate
stating the fact that such Additional Amounts will be payable and the amounts so
payable. Whenever there is mentioned, in any context, the payment of principal,
interest, if any, or any other amount payable under or with respect to any
Convertible Securities, such mention shall be deemed to refer as well to the
payment of Additional Amounts to the extent that, in such context, Additional
Amounts are, were or would be payable.
4.17 Waiver of Usury Defense. To the extent permitted by applicable
law, the Company agrees that it will not assert, plead (as a defense or
otherwise) or in any manner whatsoever claim (and will actively resist any
attempt to compel it to assert, plead or claim) in any action, suit or
proceeding that the effective interest rate on the Convertible Securities
violates present or future usury or other laws relating to the interest payable
on any indebtedness and will not otherwise avail itself (and will actively
resist any attempt to compel it to avail itself) of the benefits or advantages
of any such laws.
4.18 Permanent Financing. The Company agrees to use its best efforts to
obtain financing sufficient to provide for the payment or prepayment in full of
the Convertible Securities, and to effect such payment or prepayment on or
before the Maturity Date (as defined in the Debenture).
4.19 Further Restriction on Issuance of Securities. Except with respect
to a transaction that is a Major Transaction (as defined in each of the
Debenture and the Warrant and as to which the provisions of Section 8.3 of the
Debenture and Section 4(e) of the Warrant shall apply), except for issuances (i)
in the ordinary course of business pursuant to employee stock option and
employee stock purchase plans in effect on the date hereof and (ii) up to eight
and two tenths percent (8.2%) of Conference Plus, Inc. a subsidiary of the
Company, to a strategic investor (provided that in each case of (i) and (ii) the
Company shall at all times continue to own at least eighty percent (80%) of such
subsidiary), while any Purchaser holds at least $2,500,000 principal amount of
Debentures, the Company and each of its subsidiaries, without the consent of
such Purchaser (it being understood and agreed that a determination with respect
to such consent shall not be unreasonably delayed and any failure to consent
shall be accompanied by a written description in reasonable detail setting forth
the reason for so not consenting), shall not, directly or indirectly, issue or
authorize for issuance, or enter into any commitment to issue, sell, transfer,
distribute or otherwise dispose of any equity security of any of, or with
respect to, the Company's subsidiaries, in each case, in any manner that would
adversely affect in a material manner the interests of such Purchaser in the
Securities.
ARTICLE V
LEGEND REMOVAL, TRANSFER, AND CERTAIN SALES
5.1 Removal of Legend. The Legend shall be removed and the Company
shall issue a certificate without any legend to the holder of any Security upon
which such Legend is stamped, and a certificate for a Security shall be
originally issued without the Legend if (a) the sale of such Security is
registered under the Securities Act, (b) such holder provides the Company with
an opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions (the reasonable cost of which shall be borne
by the Company) to the effect that a public sale or transfer of such Security
may be made without registration under the Securities Act, (c) such Security can
be sold pursuant to Rule 144 and a registered broker dealer provides to the
Company's transfer agent and counsel copies of (i) a "will sell" letter
satisfying the guidelines established by the SEC and its staff from time to time
and (ii) a customary seller's representation letter with respect to such a sale
to be made pursuant to Rule 144 and (iii) a Form 144 in respect of such Security
executed by such holder and filed (or mailed for filing) with the SEC or (d)
such Security can be sold pursuant to Rule 144(k). Each Purchaser agrees to sell
all Securities, including those represented by a certificate(s) from which the
Legend has been removed, or which were originally issued without the Legend,
pursuant to an effective registration statement and to deliver a prospectus in
connection with such sale or in compliance with an exemption from the
registration requirements of the Securities Act. In the event the Legend is
removed from any Security or any Security is issued without the Legend and
thereafter the effectiveness of a registration statement covering the resale of
such Security is suspended or a supplement or amendment thereto is required by
applicable securities laws, then upon reasonable advance notice to Purchaser
holding such Security, the Company may require that the Legend be placed on any
such Security that cannot then be sold pursuant to an effective registration
statement or Rule 144 or with respect to which the opinion referred to in clause
(b) next above has not been rendered, which Legend shall be removed when such
Security may be sold pursuant to an effective registration statement or Rule 144
or such holder provides the opinion with respect thereto described in clause (b)
next above. In the event that a Purchaser privately transfers or otherwise
privately disposes of any Security which does not contain a Legend and as to
which following such transfer or other disposition the transferee is not
entitled to sell such Security freely or pursuant to Rule 144 and the re-sale of
such Security by such transferee is not immediately thereafter registered under
the Securities Act, then, in connection with such transfer or other disposition
Purchaser and such transferee shall submit such Security for re-legending
applicable to such Security as held by such transferee.
5.2 Transfer Agent Instructions. The Company shall instruct its
transfer agent to issue certificates, registered in the name of each Purchaser
or its nominee, for the Conversion Shares or Warrant Shares in such amounts as
specified from time to time by such Purchaser to the Company upon, and in
accordance with, the conversion of the Convertible Securities and the exercise
of the Warrants. Such certificates shall bear a legend only in the form of the
Legend and only to the extent permitted by Section 5.1 above. The Company
warrants that no instruction other than such instructions referred to in this
Article V, and no stop transfer instructions other than stop transfer
instructions to give effect to Section 2.6 hereof in the case of the Conversion
Shares or Warrant Shares prior to registration under the Securities Act, will be
given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company.
Nothing in this Section shall affect in any way a Purchaser's obligations and
agreement set forth in Section 5.1 hereof to resell the Securities pursuant to
an effective registration statement and to deliver a prospectus in connection
with such sale or in compliance with an exemption from the registration
requirements of applicable securities laws. Without limiting any other rights of
Purchasers or obligations of the Company, if (a) a Purchaser provides the
Company with an opinion of counsel, which opinion of counsel shall be in form,
substance and scope customary for opinions of counsel in comparable transactions
(the reasonable cost of which shall be borne by the Company), to the effect that
the Securities to be sold or transferred may be sold or transferred pursuant to
an exemption from registration or (b) a Purchaser transfers Securities pursuant
to Rule 144, the Company shall permit the transfer, and, in the case of the
Conversion Shares and Warrant Shares, promptly instruct its transfer agent to
issue one or more certificates in such name and in such denomination as
specified by such Purchaser in order to effect such a transfer or sale. The
Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to a Purchaser by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Article V will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Article V, that a Purchaser shall be entitled,
in addition to all other available remedies, to an 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.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 Conditions to the Company's Obligation to Sell. The obligation of
the Company hereunder to issue and sell the Purchased Securities to a Purchaser
at the Closing is subject to the satisfaction, as of the date of such Closing
and with respect to such Purchaser, of each of the following conditions thereto,
provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion:
(i) Such Purchaser shall have executed the signature page to
this Agreement and the Registration Rights Agreement and delivered the same to
the Company.
(ii) Such Purchaser shall deliver the applicable Purchase Price for
the Convertible Securities and Warrants purchased at such Closing.
(iii) The representations and warranties of such Purchaser shall be
true and correct as of the date when made and as of such Closing as though made
at that time, and such Purchaser shall have performed, satisfied and complied in
all material respects with the covenants and agreements required by this
Agreement to be performed or complied with by such Purchaser at or prior to such
Closing. (iv) 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 or any self-regulatory
organization having authority over the matters contemplated hereby which
restricts or prohibits the consummation of any of the transactions contemplated
by this Agreement.
ARTICLE VII
CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE
7.1 Conditions to the Closing. The obligation of each Purchaser
hereunder to purchase the Convertible Securities and Warrants to be purchased by
it on the date of the Closing is subject to the satisfaction of each of the
following conditions, provided that these conditions are for each Purchaser's
sole benefit and may be waived by such Purchaser (with respect to it) at any
time in such Purchaser's sole discretion:
(i) The Company shall have executed the signature page to this
Agreement, the Warrant and the Registration Rights Agreement and delivered the
same to Purchaser.
(ii) The Company shall have delivered duly executed Debentures
(in such denominations as Purchaser shall request) being so purchased by
Purchaser at the Closing.
(iii) The Class A Common Stock, including 7,251,887 shares for
issuance as Conversion Shares and the Warrant Shares, shall be listed on The
Nasdaq National Market or the New York Stock Exchange, subject to issuance, and
trading in the Class A Common Stock shall not have been suspended by The Nasdaq
National Market or the New York Stock Exchange, the SEC or other regulatory
authority and no de-listing or suspension shall be reasonably likely in the
judgment of Purchaser for the foreseeable future.
(iv) The representations and warranties of the Company shall
be true and correct as of the date when made and as of the Closing as though
made at that time and the Company shall have performed, satisfied and complied
with the covenants and agreements required by this Agreement to be performed or
complied with by the Company at or prior to the Closing. Purchaser shall have
received a certificate, executed by the Chief Executive Officer or Chief
Financial Officer of the Company, dated as of the Closing to the foregoing
effect and as to such other matters as may be reasonably requested by Purchaser.
(v) 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 or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
(vi) Purchaser shall have received the officer's certificate
described in Section 3.3, dated as of the Closing.
(vii) Purchaser shall have received the opinion of the
Company's counsel, dated as of the Closing, in the form attached hereto as
Exhibit D.
(viii) The Company's transfer agent has agreed to act in
accordance with irrevocable instructions in the form attached hereto as Exhibit
E.
(ix) Purchaser shall have received the Solvency Certificate in
the form of Exhibit F.
(x) The Company shall have received and delivered to Purchaser
an amendment under its Loan and Security Agreement dated as of October 13, 1998
by and among LaSalle National Bank ("LaSalle"), Westell Technologies, Inc.,
Westell, Inc., Westell International, Inc., and Conference Plus, Inc., in the
form attached as Exhibit H and, since the date of this Agreement, no other
changes to that loan agreement have been made except as contemplated by clause
(3) of (xvi) below.
(xi) The Company shall have delivered to each Purchaser a
letter in the form of Exhibit G hereto providing a right of first refusal to
such Purchaser with respect to future issuances of securities by the Company.
(xii) No event has occurred which constitutes an Event of
Failure (as defined in the Debenture) or an Event of Default (as defined in the
Loan Agreement), or which would constitute an Event of Failure or an Event of
Default with notice or the passage of time or both which have not been cured or
waived to the satisfaction of Purchaser.
(xiii) [Intentionally Deleted].
(xiv) The Company has entered into a Security Agreement with
each Purchaser in the form attached hereto as Exhibit I.
(xv) [Intentionally Deleted].
(xvi) LaSalle shall have entered into a Subordination
Agreement with Purchasers (the "Subordination Agreement") which shall (v)
provide for a "standstill" period of not longer than thirty (30) days following
an Event of Failure during which any Purchaser shall be required to refrain from
foreclosing on any collateral of the Company securing the Debentures (the
"Standstill Period"), (w) permit payments to be made pursuant to Section 7.5 of
the Debentures (for a period not to exceed thirty (30) days) in an amount equal
to 1% per day of the aggregate principal amount on the Debentures to the extent
that such payments will not result in any breach of the covenants contained in
Section 6.1(b) of the Loan Agreement as in effect on the date hereof (measured
as if such payments had been made at the end of the immediately preceding
financial period reported to LaSalle), (x) permit payments of interest and
payments of outstanding principal and interest upon maturity of the Debentures
and permit payments of outstanding principal and interest upon maturity of the
Cap Debentures, (y) permit payment of interest under the Debentures (including
interest payments pursuant to Section 10.2 of the Debenture), Conversion Default
Payments (as defined in the Debentures) pursuant to Section 6.1 of the
Debentures, any required payments pursuant to Section 6.2 of the Debentures, any
required payments pursuant to Section 8.9 of the Debentures, any required
payments pursuant to Section 8.3 of the Debentures, any required payments
pursuant to Section 1(e) of the Warrants, any required payments pursuant to
Section 4(e) of the Warrants and required payments pursuant to Section 2.3 of
the Registration Rights Agreement (all of the foregoing payments described in
the foregoing clauses (w), (x) and (y) being referred to herein as "Permitted
Payments"), in each case (1) prior to the declaration of an Event of Failure and
the expiration of the Standstill Period, (2) to the extent that there has not
occurred an Event of Default under the Loan Agreement (taking into account
clause (z) below) and (3) to the extent such payments will not result in any
breach of the covenants contained in Section 6.1(b) of the Loan Agreement as in
effect on the date hereof (measured as if such payments had been made at the end
of the immediately preceding financial period reported to LaSalle) and (z)
contain an Agreement by LaSalle that events giving rise to Permitted Payments
shall not of themselves constitute Events of Default under the Loan Agreement
unless and until any such event results in a Demand Redemption Notice having
been delivered under the Debenture.
ARTICLE VIII
ADDITIONAL COVENANTS
8.1 Effect. The provisions of this Article VIII will remain in effect
as long as any Convertible Securities remain outstanding, except that the
covenants contained in Sections 8.13, 8.15, 8.17, 8.20 and 8.25 shall not apply
during such time as (i) less than five million dollars ($5,000,000) principal
amount of Debentures are outstanding and (ii) no Cap Debentures are outstanding.
8.2 Definitions. For purposes of this Article VIII, the following terms
shall have the indicated meaning:
"Affiliate" means (i) any shareholder of the Company or any of
its subsidiaries, (ii) any corporation or any other person or entity that
directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with the Company or any of its
subsidiaries or (iii) any officer, director, trustee, partner or shareholder of
any corporation or any other person or entity that directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under
common control with the Company or any of its subsidiaries.
"Employee Plan" includes any pension, retirement, disability,
medical, dental or other health plan, life insurance or other death benefit
plan, profit sharing, deferred compensation, stock option, bonus or other
incentive plan, vacation benefit plan, severance plan, or other employee benefit
plan or arrangement, including, without limitation, those pension,
profit-sharing and retirement plans of the Company and each of its subsidiaries
and any pension plan, welfare plan, Defined Benefit Pension Plans (as defined in
the Employee Retirement Income Security Act of 1974, as amended from time to
time ("ERISA")) or any multi-employer plan, maintained or administered by the
Company and each of its subsidiaries to which the Company or any of its
subsidiaries is a party or may have any liability or by which the Company or any
of its subsidiaries is bound.
"Environmental Laws" means all federal, state and local Laws
(including, without limitation, the common law), statutes, ordinances, rules,
regulations and other requirements (including, without limitation,
administrative orders, consent agreements and conditions contained in the
applicable permits), relating to health, safety and the protection of the
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq.,
the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et seq.,
and the Clean Air Act 42. U.S.C. ss. 7401 et seq., as amended or hereafter
amended.
8.3 Intentionally omitted.
8.4 Financial Information and Reporting. The Company shall cause to be
furnished to the Purchasers:
(i) As soon as practicable and, in any event, within ninety
(90) days after the end of each of the Company's fiscal years,
beginning with the fiscal year ended March 31, 1999, a written
statement of such Company's independent certificated public accountant
(i) that in performing the audit such accountant has not obtained
knowledge of any Event of Default or any Event of Failure, or
disclosing all Events of Default or Events of Failure of which it has
obtained knowledge and (ii) that such accountant is aware that the
Purchasers are relying on such accountant's certification, together
with a copy of the Company's 10-K, as filed with the SEC;
(ii) Without limitation, but without duplication of,
obligations under 8.22 and 8.23, together with the delivery of the
Company's 10-Q and 10-K required to be delivered under this Agreement,
a certificate of the Company executed by an authorized officer of the
Company stating whether any Event of Default or Event of Failure, or
any event which, with the passage of time or giving of notice or both,
would constitute such an Event of Default or Event of Failure,
currently exists and is continuing and what action, if any, the Company
and/or any of its subsidiaries is taking or propose to take with
respect thereto;
(iii) Without limitation, but without duplication of,
obligations under 8.22 and 8.23, promptly after the occurrence thereof,
notice, in writing, of any Event of Default or Event of Failure, or any
event which, with the passage of time or giving of notice or both,
would constitute such an Event of Default or Event of Failure and what
action, if any, the Company and/or any of its subsidiaries are taking
or propose to take with respect thereto; and
(iv) Promptly after the occurrence thereof, a Material Adverse
Effect.
8.5 Intentionally omitted.
8.6 Corporate Existence. The Company and each of its subsidiaries shall
maintain and preserve their corporate existence, good standing, certificates of
authority, licenses, permits, franchises, patents, trademarks, trade names,
service marks, copyrights, leases and all other contracts and rights necessary
or desirable to continue their operations and business as now conducted and will
generally continue the substantially same lines of business as those being
presently conducted and related businesses in the telecommunications area which
would not have a Material Adverse Effect.
8.7 Taxes and Laws. The Company and each of its subsidiaries will pay
when due all taxes, including excise taxes and duty, assessments, charges and
levies imposed on the Company and each of its subsidiaries or any of their
income, profits, property or assets, or which they are required to withhold and
pay out, and will comply with all applicable present and future laws unless the
Company or any of its affiliates is contesting in good faith, by an appropriate
proceeding, the validity, amount or imposition of the above, subject to
appropriate reserves, and such contest does not have or cause a Material Adverse
Effect or impair the Company or any of its affiliates ability to perform any of
its material obligations.
8.8 Repair and Maintenance. The Company and each of its subsidiaries
will maintain all of their assets and properties in good condition and repair
and in proper working order, normal wear and tear excepted as the Company deems
necessary for the conduct of its business.
8.9 Intentionally omitted.
8.10 Employee Plans. The Company and each of its subsidiaries shall (i)
keep in full force and effect any and all Employee Plans which are presently in
existence or may, from time to time, come into existence under ERISA, and not
withdraw from or terminate any such Employee Plans, unless such withdrawal or
termination can be effected or such Employee Plans can be terminated without
material liability to the Company and each of its subsidiaries; (ii) make
contributions to all of such Employee Plans in a timely manner and in a
sufficient amount to comply with the requirements of ERISA, including the
minimum funding standards of Section 302 of ERISA; (iii) comply with all
material requirements of ERISA which relate to such Employee Plans; (iv) notify
the Purchasers immediately upon receipt by the Company or any of its
subsidiaries of any notice concerning the imposition of any withdrawal liability
or of the institution of any proceeding or other action which may result in the
termination of any such Employee Plans or the appointment of a trustee to
administer such Employee Plans; and (v) promptly advise the Purchasers of the
occurrence of any Reportable Event or Prohibited Transaction that is not exempt
by statute, as defined in ERISA, with respect to any such Employee Plans.
8.11 Intentionally deleted.
8.12 Environmental Matters - Indemnification. The Company and each of
its subsidiaries shall take or cause to be taken all actions to comply in all
material respects with the requirements of all Environmental Laws including,
without limitation, all filing and reporting requirements thereof. The Company
hereby agree to indemnify, hold harmless and reimburse the Purchaser for any and
all loss, damage, expenses or costs of any kind or nature arising out of or
incurred in connection with any prior, existing or future violations by the
Company and each of its subsidiaries of any Environmental Laws.
8.13 Transfer of Assets. The Company and each of its subsidiaries shall
not sell, lease, transfer or otherwise dispose of any of their assets,
properties or rights, except in the ordinary course of business consistent with
past practice except as permitted by the holders of Permitted Senior
Indebtedness.
8.14 Intentionally deleted.
8.15 Prepayment or Modification of Indebtedness. Except for Permitted
Senior Indebtedness (as defined below) the Company and each of its subsidiaries
will not incur any additional indebtedness, including for purposes of this
Section 8.15 any capitalized leases. Except for Permitted Senior Indebtedness,
the Company and each of its subsidiaries will not (i) prepay any indebtedness
for money borrowed or any indebtedness secured by any of their assets and (ii)
enter into or modify any agreement as a result of which the terms of payment of
any of the foregoing indebtedness are amended or modified in a manner which
would accelerate its payment. "Permitted Senior Indebtedness" shall mean (i) the
obligations of the Company pursuant to that certain Loan and Security Agreement
dated as of October 13, 1998 by and among LaSalle National Bank, the Company,
Westell, Inc., Westell International, Inc., and Conference Plus, Inc., in its
form as of the date of the Closing as amended and in effect (the "Loan
Agreement") and any extensions, amendments and replacements of the Loan
Agreement (x) which do not increase the amount outstanding, other than increases
resulting from an increase in the Company's inventory or receivables borrowing
base (provided that the advance rates with respect to such inventory and
receivables are no more favorable to the Company than contained in the Loan
Agreement as of the date of this Agreement) and (y) which do not otherwise
materially increase amounts required to be paid under the Loan Agreement as of
the date of this Agreement, and which, in any event, (other than by virtue of
indebtedness permitted by the foregoing clause (x)) do not affect the Purchasers
or the Purchasers' interests in the Securities in any manner materially more
adverse to the Purchasers than the Loan Agreement in its form as of the date of
the Closing, (ii) capitalized leases of the Company in existence as of the date
hereof or for Permitted Capital Expenditures (as defined in Section 8.20), (iii)
existing purchase money financing and purchase money financing for Permitted
Capital Expenditures and (iv) Permitted Acquisition Financing (as defined
below); provided, however that the Company shall not incur any Permitted
Acquisition Financing (x) during the period beginning on the date hereof and
ending one hundred and eighty (180) days after the Closing, unless the Company
shall have effectively waived the restrictions on conversion of the Debentures
during such period contained in Section 3.7(c) of the Debentures and shall not
have issued, and shall have waived its right to thereafter issue, Cap
Debentures, (y) during the continuance of any Event of Failure or any event
which, with notice or the passage of time or the continuance of such event,
would constitute an Event of Failure or (z) at any time that the Conversion
Shares cannot then be effectively sold pursuant to an effective registration
statement filed with the SEC pursuant to the Registration Rights Agreement. For
purposes of this Section 8.15: the term "Permitted Acquisition Financing" means
(a) Pari Passu Indebtedness (defined below) which meets the Acquisition
Financing Criteria and which does not provide for maturity, under any
circumstances, until following the maturity of the Debentures and (b)
indebtedness that (i) is senior to the indebtedness evidenced by the Debentures,
(ii) is issued to finance the acquisition of a conferencing services business
which, on a pro forma basis after giving effect to the incurrence of such
indebtedness, will provide the Company with an additional $100,000 per year in
cash flow (a "CSB Acquisition"), and (iii) meets the Acquisition Financing
Criteria; the "Acquisition Financing Criteria" with respect to indebtedness
incurred to finance the acquisition by the Company of any business shall be
satisfied if (i) on a pro forma historical basis (with respect to an acquisition
that is not a CSB Acquisition), for the most recent 12-month period ended prior
to the consummation of such acquisition, the Company's gross margin would have
been greater than the actual gross margin of the Company for such prior 12-month
period, (ii) on a pro forma projected basis, for the 12 month period commencing
as of the consummation of such acquisition, the Company's (x) gross margin (with
respect to an acquisition that is a CSB Acquisition) and earning per share would
each be greater than the projected gross margin or earnings per share (with
respect to any acquisition), as the case may be, of the Company for such future
12-month period in the absence of such acquisition and (y) operating expenses as
a percentage of gross revenues would be less than projected operating expenses
as a percentage of gross revenues for such future 12-month period in the absence
of such acquisition, and (iii) such indebtedness does not cause the Company's
debt to equity ratio to exceed 1:2, including as equity for these purposes any
outstanding Debentures, in each case, with respect to the foregoing clauses (i)
through (iii), as determined by the Board of Directors of the Company in good
faith. Upon any replacement of LaSalle National Bank as senior lender,
Purchasers agree to execute and deliver a subordination agreement with such
replacement senior lender in substantially the same form as the Subordination
Agreement. "Pari Passu Indebtedness" means indebtedness which shares equal
priority as to payment and lien with the Purchasers' rights to payment and lien
under the Debentures and the Security Agreement, pro rata, in the proportion
that the principal amount outstanding of each of the Debentures and such pari
passu indebtedness bears to the sum of the outstanding principal amount of the
Debentures plus the outstanding principal amount of such indebtedness and
Purchasers agree to execute and deliver any required documents which evidence
the pari passu status of such liens.
8.16 Transactions with Affiliates. The Company and each of its
subsidiaries will not enter into any agreement or arrangement, written or oral,
directly or indirectly, with an Affiliate, or provide services or sell goods to,
or for the benefit of, or pay or otherwise distribute monies, goods or other
valuable consideration to, an Affiliate, except upon fair and reasonable terms
no less favorable to the Company and each of its subsidiaries than terms in a
comparable arm's length transaction with an unaffiliated person or entity and
except for intercompany debt.
8.17 Guarantees. The Company and each of its subsidiaries shall not
guarantee, assume, endorse or otherwise, in any way, become directly or
contingently liable in any manner with respect to the obligations or liabilities
of any other person or entity, except by endorsement of instruments or items for
payment or deposit or collection and except for guarantees by the Company of
indebtedness or other obligations of its subsidiaries permitted by Section 8.15
or other obligations of its subsidiaries guaranteed in the ordinary course of
business consistent with past practice and which do not otherwise constitute a
violation of the obligations of the Company or its subsidiaries under this
Agreement or the Debentures or the Cap Debentures.
8.18 Intentionally deleted.
8.19 Intentionally deleted.
8.20 Capital Expenditures. The Company and each of its subsidiaries
shall not make or incur or commit to incur aggregate capital expenditures in any
fiscal year in excess of ten percent (10%) of the Company's revenues for its
immediately preceding fiscal year ("Permitted Capital Expenditures").
8.21 Limitation of Agreements. Except for the Subordination Agreement,
the Company will not, and will not permit any Subsidiary to, enter into any
Contract, or any amendment, modification, extension or supplement to any
existing Contract, which contractually prohibits the Company from paying
interest on, or principal of, the Debentures or effecting the conversion of the
Debentures.
8.22 Compliance Certification. At the end of each quarter of the
Company's fiscal year, the Company shall deliver to each Purchaser a certificate
of an authorized financial officer of the Company regarding compliance by the
Company with the covenants set forth herein and certifying that no default under
this Agreement, default or Event of Default under the Loan Agreement, or default
or Event of Failure under the Debentures shall have occurred and be continuing.
8.23 Notice of Breach. As promptly as practicable, and in any event not
later than five business days after senior management of the Company becomes
aware thereof, the Company shall provide each Purchaser with written notice of
any breach by the Company of any provision of this Agreement, the Senior
Indebtedness or the Debentures, including, without limitation, this Article
VIII, specifying the nature of such breach and any actions proposed to be taken
by the Company to cure such breach.
8.24 Intentionally deleted.
8.25 Liens. The Company shall not create or suffer to exist any Lien
upon any of its property now owned or hereafter acquired, or acquire any
property upon any conditional sale or other title retention device or
arrangement or any purchase money security agreement, other than Permitted Liens
and Liens to secure Permitted Senior Indebtedness. As used in this Agreement:
(a) "Lien" means any mortgage, lien, title claim, assignment, encumbrance,
security interest, adverse claim, contract of sale, restriction on use or
transfer or other defect of title of any kind; and (b) "Permitted Liens" means
(i) statutory Liens for Taxes not yet due; (ii) Liens of carriers, warehousemen,
mechanics and materialmen incurred in the ordinary course of business for sums
not yet due; (iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security; and (iv) Liens securing Permitted Senior
Indebtedness.
ARTICLE IX
GOVERNING LAW; MISCELLANEOUS
9.1 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York. The parties hereto
irrevocably consent to the jurisdiction of the United States federal courts
located in the State of New York. The parties hereto irrevocably consent to the
jurisdiction of the United States federal courts located in the state of New
York and the state courts located in the County of New York in the State of New
York in any suit or proceeding based on or arising under this Agreement or the
transactions contemplated hereby and irrevocably agree that all claims in
respect of such suit or proceeding may be determined in such courts. The Company
irrevocably waives the defense of an inconvenient forum to the maintenance of
such suit or proceeding. The Company further agrees that service of process upon
the Company mailed by the first class mail shall be deemed in every respect
effective service of process upon the Company in any suit or proceeding arising
hereunder. Nothing herein shall affect Purchaser's right to serve process in any
other manner permitted by law. The parties hereto agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
9.2 Counterparts. This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile transmission, all of
which counterparts 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. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be promptly delivered to the other parties.
9.3 Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
9.4 Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
9.5 Scope of Agreement; Amendments. This Agreement and the documents
and instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein, no Purchaser makes any representation, warranty,
covenant or undertaking with respect to the transactions contemplated hereby. No
provision of this Agreement may be waived other than by an instrument in writing
signed by the party to be charged with enforcement and no provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and each Purchaser.
9.6 Notice. Any notice herein required or permitted to be given shall
be in writing and may be personally served or delivered by courier or by
facsimile-machine confirmed telecopy, and shall be deemed delivered at the time
and date of receipt (which shall include telephone line facsimile transmission).
The addresses for such communications shall be:
If to the Company:
Westell Technologies, Inc.
750 N. Commons Drive
Aurora, IL 60504
Telecopy: (630) 375-4940
Attention: Stephen J. Hawrysz
with a copy to:
Neal J. White, P.C.
McDermott, Will & Emery
227 West Monroe Street
Chicago, IL 60606
Telecopy: (312) 984-3669
Attention: (312) 984-7579
If to any Purchaser, to such address set forth under such Purchaser's name on
the signature page hereto executed by such Purchaser. Each party shall provide
notice to the other parties of any change in address.
9.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor any Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other, which, in
the case of any consent required of the Company, shall not be unreasonably
withheld. Notwithstanding the foregoing, each Purchaser may assign its rights
and obligations hereunder and may transfer any or all of its Securities to any
of its "affiliates",as that term is defined under the Exchange Act, without the
consent of the Company so long as such affiliate is an accredited investor. This
provision shall not limit each Purchaser's right to transfer the Securities
pursuant to the terms of this Agreement. In addition, and notwithstanding
anything to the contrary contained in this Agreement, the Convertible
Securities, the Warrants or the Registration Rights Agreement, the Securities
may be pledged, and all rights of Purchaser under this Agreement or any other
agreement or document related to the transaction contemplated hereby may be
assigned, without further consent of the Company, to a bona fide pledgee in
connection with a Purchaser's margin or brokerage accounts.
9.8 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.
9.9 Survival. The representations, warranties, agreements and covenants
of the Company in this Agreement shall survive each and every Closing hereunder
notwithstanding any due diligence investigation conducted by or on behalf of
Purchaser. The Company agrees to indemnify and hold harmless each Purchaser and
each of each Purchaser's officers, directors, employees, partners, agents and
affiliates for loss or damage arising as a result of or related to (a) any
breach by the Company of any of its representations or covenants set forth
herein, or (b) any cause of action, suit or claim brought or made against such
indemnitee, other than by the Company solely for breach of this Agreement, the
Warrant, the Debenture or the Registration Rights Agreement by the indemnitee or
by governmental or regulatory authorities, and arising out of or resulting from
the execution, delivery, performance or enforcement of this Agreement or any
other instrument, document or agreement executed pursuant hereto or contemplated
hereby, any transaction financed or to be financed in whole or in part, directly
or indirectly, with the proceeds of the issuance of the Securities or the status
of Purchaser as an investor in the Company, except to the extent that such
actual loss or damage directly results from a breach by such indemnitee of this
Agreement, the Warrant, the Debenture or the Registration Rights Agreement or
from a violation of law. The right to indemnification shall include the right to
advancement of expenses as they are incurred
9.10 Public Filings; Publicity. Immediately following execution of this
Agreement, the Company shall issue a press release with respect to the
transactions contemplated hereby. The Company and each Purchaser shall have the
right to approve before issuance any press releases (including the foregoing
press release), SEC or other filings, or any other public statements, with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Purchaser, to make
any press release or SEC, Nasdaq, NASD or exchange filings with respect to such
transactions as is required by applicable law and regulations (although each
Purchaser shall (to the extent time permits) be consulted by the Company in
connection with any such press release prior to its release and shall be
provided with a copy thereof).
9.11 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.
9.12 Remedies. No provision of this Agreement providing for any remedy
to a Purchaser shall limit any remedy which would otherwise be available to such
Purchaser at law or in equity. Nothing in this Agreement shall limit any rights
a Purchaser may have with any applicable federal or state securities laws with
respect to the investment contemplated hereby.
9.13 Directly or Indirectly. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such Person.
9.14 Termination. In the event that the Closing shall not have occurred
by April 16, 1999, unless the parties agree otherwise, this Agreement shall
terminate; except for any material breach of this Agreement prior to the
termination of this Agreement, no party shall have any liability to any other
party hereunder in the event of such termination.
IN WITNESS WHEREOF, the undersigned Purchasers and the Company have
caused this Agreement to be duly executed as of the date first above written.
COMPANY:
WESTELL TECHNOLOGIES, INC.
By:
Name:
Title:
PURCHASER:
CASTLE CREEK TECHNOLOGY PARTNERS LLC
By: CASTLE CREEK PARTNERS LLC
Its: Investment Manager
By:
-------------------------------------------------------------------
Name: John D. Ziegelman
Title: Managing Member
Address: 77 W. Wacker, Suite 4040
Chicago, IL 60601
Telephone: (312) 499-6900
Telecopy: (312) 499-6999
Jurisdiction: Illinois
Purchase Price $9,000,000
Debenture Allocation: $8,856,818
Warrant Allocation: $143,182
Number of Warrant Shares 409,091
MARSHALL CAPITAL MANAGEMENT, INC.
By:
Name:
Title:
Address:
Attention:
Telephone:
Telecopy:
Jurisdiction: _____________
Purchase Price $6,000,000
Debenture Allocation: $5,904,546
Warrant Allocation: $95,454
Number of Warrant Shares 272,727
CAPITAL VENTURES INTERNATIONAL
by HEIGHTS CAPITAL MANAGEMENT, as agent
By:
Name:
Title:
Address:
Attention:
Telephone:
Telecopy:
Jurisdiction: _____________
Purchase Price $5,000,000
Debenture Allocation: $4,920,454
Warrant Allocation: $79,546
Number of Warrant Shares 227,273
SECURITIES PURCHASE AGREEMENT
SCHEDULE OF EXHIBITS AND SCHEDULES
EXHIBIT A Debenture
EXHIBIT B Warrants
EXHIBIT C Registration Rights Agreement
EXHIBIT D Opinion of Counsel
EXHIBIT E Irrevocable Instruction
EXHIBIT F Solvency Certificate
EXHIBIT G Right of First Refusal Letter
EXHIBIT H Amendment to Loan Agreement
EXHIBIT I Security Agreement
SCHEDULE 3.2 Necessary Authorization or Consents
SCHEDULE 3.3 Other Convertible Securities
SCHEDULE 3.6 Registration and SEC Documents
SCHEDULE 3.7 Certain Changes
SCHEDULE 3.8 Litigation
SCHEDULE 3.18 Key Employees
SCHEDULE 4.5 Restrictions on Issuance of Securities