CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement"), dated
as of March 1, 2001, between GSV, Inc., a Delaware corporation (the "Company"),
and Brooks Station Holdings, Inc., a Delaware Corporation (the "Purchaser").
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchaser and the
Purchaser desires to purchase from the Company, shares of the Company's 12%
Series A Convertible Redeemable Preferred Stock, par value $.001 per share (the
"Preferred Stock"), which are convertible into shares of the Company's common
stock, par value $.001 per share (the "Common Stock") for an aggregate Purchase
Price of $400,000.70.
IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchaser agree
as follows:
ARTICLE I
PURCHASE AND SALE
1.1 The Closing.
(a) The Closing. (i) Subject to the terms and conditions set forth
in this Agreement, the Company shall issue and sell to the Purchaser and the
Purchaser shall purchase from the Company 363,637 shares of Preferred Stock (the
"Shares") for a purchase price of $400,000.70 (the "Purchase Price"). The
closing of the purchase and sale of the Shares (the "Closing") shall take place
at the offices of Robinson Silverman Pearce Aronsohn & Berman LLP ("Robinson
Silverman"), 1290 Avenue of the Americas, New York, New York 10104, immediately
following the execution hereof or such later date as the parties shall agree.
The date of the Closing is hereinafter referred to as the "Closing Date."
(ii) At the Closing, the parties shall deliver or shall cause
to be delivered the following: (A) the Company shall deliver to the Purchaser
(1) stock certificates representing the Shares registered in the name of the
Purchaser, (2) the legal opinion of Davis & Gilbert LLP, outside counsel to the
Company in the form of Exhibit B and (3) a lock-up agreement between the Company
and each of Jeffrey Tauber, The Jeffrey S. Tauber Grantor Retained Annuity
Trust, Jane Tauber, and The Jane S. Tauber Grantor Retained Annuity Trust, and
(B) the Purchaser shall deliver the Purchase Price in United States dollars in
immediately available funds by wire transfer to an account designated in writing
by the Company for such purpose.
1.2 Terms of Preferred Stock. The Preferred Stock shall have the rights,
preferences and privileges set forth in the Company's Certificate of
Designations, Preferences and Rights or
Series A 12% Convertible Redeemable Preferred Stock, a copy of which is attached
hereto as Exhibit A, (the "Certificate of Designation") to be filed prior to the
Closing by the Company with the Delaware Secretary of State pursuant to the
Delaware General Corporation Law ("Delaware Law").
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company. The Company
hereby makes the following representations and warranties to the Purchaser:
(a) Organization and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, with the requisite corporate power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. The Company has no subsidiaries other than as set forth in Schedule
2.1(a) (collectively the "Subsidiaries"). Each of the Subsidiaries is an entity,
duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted. Each
of the Company and the Subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not, individually or in the aggregate, (x) adversely
affect the legality, validity or enforceability of the Securities (as defined
below) or this Agreement, (y) have or result in a material adverse effect on the
results of operations, assets, prospects, or condition (financial or otherwise)
of the Company and the Subsidiaries, taken as a whole, or (z) adversely impair
the Company's ability to perform fully on a timely basis its obligations under
this Agreement (any of (x), (y) or (z), a "Material Adverse Effect").
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
thereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company. This Agreement has been duly executed by the
Company and, when delivered (or filed, as the case may be) in accordance with
the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms. Neither
the Company nor any Subsidiary is in violation of any of the provisions of its
respective certificate or articles of incorporation, by-laws or other
organizational or charter documents.
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(c) Capitalization. The number of authorized, issued and outstanding
shares of capital stock of the Company is set forth in Schedule 2.1(c). Except
as disclosed in Schedule 2.1(c), the Company owns all of the capital stock of
each Subsidiary. No shares of Common Stock are entitled to preemptive or similar
rights, nor is any holder of the Common Stock entitled to preemptive or similar
rights arising out of any agreement or understanding with the Company by virtue
of this Agreement. Except as a result of the purchase and sale of the Shares and
as disclosed in Schedule 2.1(c), there are no outstanding options, warrants,
script rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind ("Person") any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings, or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock.
(d) Issuance of the Shares. The Shares are duly authorized and, when
issued and paid for in accordance with the terms hereof, will be duly and
validly issued, fully paid and nonassessable, free and clear of all liens,
encumbrances and rights of first refusal of any kind (collectively, "Liens").
The Company has on the date hereof and will, at all times while the Shares are
outstanding, maintain an adequate reserve of duly authorized shares of Common
Stock, reserved for issuance to enable it to perform its conversion, and other
obligations under this Agreement and the Certificate of Designation. All such
authorized shares of Common Stock shall be duly reserved for issuance. The
shares of Common Stock issuable upon conversion of the Shares are referred to
herein as the "Underlying Shares." The Shares and the Underlying Shares are
collectively referred to herein as, the "Securities." When issued in accordance
with the Certificate of Designation, the Underlying Shares will be duly
authorized, validly issued, fully paid and nonassessable, free and clear of all
Liens.
(e) No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not (i) conflict with or violate any
provision of the Company's or any Subsidiary's certificate of incorporation,
bylaws or other charter documents (each as amended through the date hereof), or
(ii) subject to obtaining the Required Approvals (as defined below), 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 (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company or
a
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Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), as
could not, individually or in the aggregate, have or result in a Material
Adverse Effect. The business of the Company is not being conducted in violation
of any law, ordinance or regulation of any governmental authority, except for
violations which, individually or in the aggregate, could not have or result in
a Material Adverse Effect.
(f) Filings, Consents and Approvals. Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of this
Agreement other than (i) the filings required under Delaware Law ,(ii)
applicable Blue Sky filings and (iii) in all other cases where the failure to
obtain such consent, waiver, authorization or order, or to give such notice or
make such filing or registration could not have or result in, individually or in
the aggregate, a Material Adverse Effect (collectively, the "Required
Approvals").
(g) Litigation; Proceedings. Except as set forth in Schedule 2.1(g),
there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of their respective
properties before or by any court, arbitrator, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an "Action") which (i) adversely affects or challenges the
legality, validity or enforceability of this Agreement or the Securities or (ii)
could, individually or in the aggregate, have or result in a Material Adverse
Effect.
(h) No Default or Violation. Except as set forth in Schedule 2.1(h),
neither the Company nor any Subsidiary (i) is in default under or in violation
of (and no event has occurred which has not been waived which, with notice or
lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound, (ii) is in violation of
any order of any court, arbitrator or governmental body, or (iii) is in
violation of any statute, rule or regulation of any governmental authority, in
each case of clauses (i), (ii) or (iii) above, except as could not individually
or in the aggregate, have or result in a Material Adverse Effect.
(i) Private Offering. Assuming the accuracy of the representations
and warranties of the Purchaser set forth in Sections 2.2(b)-(g), the offer,
issuance and sale of the Securities to the Purchaser as contemplated hereby are
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"). Neither the Company nor any Person acting on its
behalf has taken or is, to the knowledge of the Company, contemplating taking
any action which could subject the offering, issuance or sale of the Securities
to the
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registration requirements of the Securities Act including soliciting any offer
to buy or sell the Securities by means of any form of general solicitation or
advertising.
(j) SEC Documents; Financial Statements. Except as disclosed in
Schedule 2.1(j), the Company has filed all reports required to be filed by it
under the Exchange Act of 1934, as amended (the "Exchange Act"), including
pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date
hereof (or such shorter period as the Company was required by law to file such
material) (the foregoing materials being collectively referred to herein as the
"SEC Documents" and, together with the Schedules to this Agreement, the
"Disclosure Materials") on a timely basis or has received a valid extension of
such time of filing and has filed any such SEC Documents prior to the expiration
of any such extension. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. All material
agreements to which the Company is a party or to which the property or assets of
the Company are subject have been filed as exhibits to the SEC Documents as
required. The financial statements of the Company included in the SEC Documents
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all material
respects the financial position of the Company and its consolidated subsidiaries
as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments. Since December 31, 1999, except as
specifically disclosed in the SEC Documents or in Schedule 2.1(j), (a) there has
been no event, occurrence or development that has resulted or that could result
in a Material Adverse Effect, (b) the Company has not incurred any liabilities
(contingent or otherwise) other than (x) liabilities incurred in the ordinary
course of business consistent with past practice and (y) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or otherwise required to be disclosed in filings made with the Commission, (c)
the Company has not altered its method of accounting or the identity of its
auditors and (d) the Company has not declared or made any payment or
distribution of cash or other property to its stockholders or officers or
directors (other than in compliance with existing Company stock option plans)
with respect to its capital stock, or purchased, redeemed (or made any
agreements to purchase or redeem) any shares of its capital stock.
(k) Investment Company. Except as set forth in Schedule 2.1(k), the
Company is not, and is not an Affiliate (as defined in Rule 405 under the
Securities Act) of, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
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(l) Certain Fees. Except for certain fees payable to the Persons
listed on Schedule 2.1(l), by the Company, no fees or commissions will be
payable by the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement. The Purchaser shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by this Agreement. The
Company shall indemnify and hold harmless the Purchaser, its employees,
officers, directors, agents, and partners, and their respective Affiliates, from
and against all claims, losses, damages, costs (including the costs of
preparation and attorney's fees) and expenses suffered in respect of any such
claimed or existing fees, as such fees and expenses are incurred.
(m) Solicitation Materials. Neither the Company nor any Person
acting on the Company's behalf has solicited any offer to buy or sell the
Securities by means of any form of general solicitation or advertising.
(n) Seniority. No class of equity securities of the Company is
senior to the Shares in right of payment, whether upon liquidation or
dissolution, or other.
(o) Listing and Maintenance Requirements Compliance. Except as set
forth in the SEC Documents or in Schedule 2.1(o), the Company has not, in the
two years preceding the date hereof, received notice (written or oral) from any
stock exchange, market or trading facility on which the Common Stock is or has
been listed (or on which it has been quoted) to the effect that the Company is
not in compliance with the listing or maintenance requirements of such exchange
or market. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and
maintenance requirements.
(p) Patents and Trademarks. Schedule 2.1(p) sets forth a true and
complete list of all of the following items which the Company and/or its
Subsidiaries (1) own in whole or in part and/or (2) have a valid claim of
ownership in whole or in part (such as a contract right of assignment from an
employee or independent contractor) (hereinafter referred to as the
"Intellectual Property Rights"): (i) all United States and foreign patents and
applications therefor, (ii) all patentable inventions which have not yet become
the subject to a patent application, (iii) all United States and foreign
trademark, trade name, service mark, collective mark, and certification mark
registrations and applications therefor at the federal, state or local level,
(iv) all material trademarks, trade names, service marks, collective marks, and
certification marks which have been used by the Parent or its Subsidiaries in
commerce at any time in the last five years (and for each, the date of first use
in commerce and a description of the goods and services in connection with which
it has been used), and (v) all United States and foreign and copyright
registrations and applications therefor. Schedule 2.1(p) also sets forth a true
and complete list of all items described in subsections (i) through (iv) of the
previous sentence in which the Parent or any of its Subsidiaries own a license
(the "Licensed Rights"). Neither the Company nor any
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Subsidiary has (i) any unpatented inventions which have been the subject of a
patent application, (ii) any material copyrightable works of authorship which
have not been the subject of a copyright registration or application therefor,
including but not limited to software code, manuals and other text works,
photographs, video recordings, and audio recordings, or (iii) any mask works.
Except as set forth on Schedule 2.1(p), (i) the Intellectual Property Rights
owned by it and/or its Subsidiaries are free and clear of any Liens; (ii) the
Licensed Rights are free and clear of any Liens; and (iii) the Intellectual
Property Rights and the Licensed Rights are all those material rights necessary
to the conduct of the business of each of the Company and its Subsidiaries. The
validity of the Intellectual Property Rights and title thereto and validity of
the Licensed Rights, (i) have not been questioned in any prior Litigation; (ii)
are not being questioned in any pending Litigation; and (iii) are not the
subject(s) of any threatened or proposed Litigation. The business of each of the
Company and its Subsidiaries, as presently conducted, does not conflict with and
has not been alleged to conflict with any patents, trademarks, trade names,
service marks, copyrights or other intellectual property rights of others. The
consummation of the transactions contemplated hereby will not result in the loss
or impairment of any of the Intellectual Property Rights or the Company or its
Subsidiaries' right to use any of the Licensed Rights. There are no third
parties using any of the Intellectual Property Rights material to the business
of the Company or its Subsidiaries as presently conducted. Each of the Company
and its Subsidiaries owns, or possesses sufficiently broad and valid rights to,
all computer software programs that are material to the conduct of the business
of the Company and its Subsidiaries. There are no infringement suits, actions or
proceedings pending or threatened against the Company or any Subsidiary with
respect to any software owned or licensed by it or any Subsidiary.
(q) Rights of Participation. Except as set forth in Schedule 2.1(q),
the Company has not granted or agreed to grant to any Person any rights
(including "piggy-back" registration rights) to have any securities of the
Company registered with the Commission or any other governmental authority which
have not been satisfied. No Person, has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by this Agreement.
(r) Regulatory Permits. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate Federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as described in the SEC Documents, except where the failure to
possess such permits could not, individually or in the aggregate, have or result
in a Material Adverse Effect ("Material Permits"), and neither the Company nor
any such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.
(s) Title. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them which is material to the
business of the Company and its Subsidiaries and good and marketable title in
all personal property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and
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clear of all Liens, except for Liens as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company and its Subsidiaries. Except as set forth in
Schedule 2.1(s), any real property and facilities held under lease by the
Company and its Subsidiaries are held by them under valid, subsisting and
enforceable leases of which the Company and its Subsidiaries are in compliance
and do not interfere with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries.
(t) Absence of Certain Proceedings. Except as described in the SEC
Documents or as set forth in Schedule 2.1(t), (i) there is no Action pending or,
to the knowledge of the Company, threatened against the Company, in any such
case wherein an unfavorable decision, ruling or finding could have or result in
a Material Adverse Effect; (ii) neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action involving
(A) a claim of violation of or liability under federal or state securities laws
or (B) a claim of breach of fiduciary duty; (iii) the Company does not have
pending before the Commission any request for confidential treatment of
information; and (iv) there has not been, and to the best of the Company's
knowledge there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer of
the Company.
(u) Labor Relations. No material labor problem exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company.
(v) Taxes. The Company and each of its Subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax purposes of which the
Company or any of its Subsidiaries is or has been a member has timely filed all
material Tax Returns required to be filed by it in the manner provided by law,
has timely paid all material Taxes (including interest and penalties) due and
has provided adequate reserves in its financial statements for any Taxes that
have not been paid, whether or not shown as being due on any returns. All such
Tax Returns were true, correct and complete in all material respects. No
material deficiencies for any Taxes have been proposed, asserted or assessed
against the Company or any of its Subsidiaries that are not adequately reserved
for. As used herein, "Taxes" shall mean (A) any taxes of any kind, including but
not limited to those on or measured by or referred to as income, gross receipts,
capital, sales, use, ad valorem, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, value added,
property or windfall profits taxes, customs, duties or similar fees, assessments
or charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any governmental authority,
domestic or foreign and (B) any liability of the Company or any Subsidiary for
the payment of any amount of the type described in clause (A) as a result of
being a member of an affiliated or combined group, by contract or otherwise. As
used herein, "Tax Return" shall mean any return, report or statement required to
be filed with any governmental authority with respect to Taxes.
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(w) Disclosure. Except as specifically set forth in the immediately
following sentence, the Company confirms that neither it nor any other Person
acting on its behalf has provided the Purchaser or its agents or counsel with
any information that constitutes or might constitute material non-public
information. The Purchaser understands that certain of the disclosures set forth
in the Schedules to this Agreement may contain information that is not public
and which may have the consequence of precluding the Purchaser right to trade in
the Company's Common Stock. The Company understands and confirms that the
Purchaser shall be relying on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided to the
Purchaser regarding the Company, its business and the transactions contemplated
hereby, including the Schedules to this Agreement, furnished by or on behalf of
the Company are true and correct and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
2.2 Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company as follows:
(a) Organization; Authority. The Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
thereunder. The purchase by the Purchaser of the Securities hereunder has been
duly authorized by all necessary action on the part of such Purchaser. The
Agreement has been duly executed by the Purchaser, and when delivered in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of the Purchaser, enforceable against it in accordance with its
terms.
(b) Investment Intent. The Purchaser is acquiring the Securities as
principal for its own account for investment purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof, without
prejudice, however, to such Purchaser's right, subject to the provisions of this
Agreement at all times to sell or otherwise dispose of all or any part of such
Securities pursuant to an effective registration statement under the Securities
Act or under an exemption from such registration and in compliance with
applicable federal and state securities laws. The Purchaser is acquiring the
Securities hereunder in the ordinary course of its business. The Purchaser does
not have any agreement or understanding, directly or indirectly, with any person
to distribute the Securities. While it is the intention of the Purchaser to hold
the Securities, nothing contained herein shall be deemed a representation or
warranty by the Purchaser to hold Securities for any amount of time.
(c) Purchaser Status. At the time the Purchaser was offered the
Securities, it was, and at the date hereof it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. The Purchaser has not been
formed solely for the purpose of acquiring the Securities.
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(d) Experience of such Purchaser. The Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.
(e) Ability to Bear Risk of Investment. The Purchaser is able to
bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.
(f) Access to Information. The Purchaser acknowledges that it has
been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Securities and the
merits and risks of investing in the Securities; (ii) access to information
about the Company and the Company's financial condition, results of operations,
business, properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such additional
information which the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with
respect to the investment.
(g) General Solicitation. The Purchaser is not purchasing the
Securities as a result of or subsequent to any advertisement, article, notice or
other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement.
(h) Reliance. The Purchaser understands and acknowledges that (i)
the Securities are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and such Purchaser hereby consents to such
reliance.
The Company acknowledges and agrees that the Purchaser does not make
or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in this
Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions. (a) Securities may only be disposed of pursuant
to an effective registration statement under the Securities Act, to the Company
or pursuant to an available exemption from or in a transaction not subject to
the registration requirements of the Securities Act, and in compliance with any
applicable federal and state securities laws. In
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connection with any transfer of Securities other than pursuant to an effective
registration statement or to the Company, except as otherwise set forth herein,
the Company may require the transferor thereof to provide to the Company an
opinion of counsel selected by the transferor, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred securities under the
Securities Act. Notwithstanding the foregoing, the Company, without requiring a
legal opinion as described in the immediately preceding sentence, hereby
consents to and agrees to register on the books of the Company and with any
transfer agent for the securities of the Company any transfer of Securities by
the Purchaser to an Affiliate of the Purchaser and any transfer among any such
Affiliates provided that the transferee provides representations to the Company
generally consistent with those set forth in Section 2.2 (b)-(e). Any such
transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights of the Purchaser under this Agreement.
(b) The Purchaser agrees to the imprinting, so long as is required
by this Section 3.1(b), of the following legend on any Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
Underlying Shares shall not contain the legend set forth above nor
any other legend if the conversion of the Shares or other issuances of
Underlying Shares occurs at any time while a registration statement is effective
under the Securities Act or the holder has satisfied the requirements of Rule
144 promulgated under the Securities Act ("Rule 144") in connection with the
intended resale of such Underlying Shares or, in the event there is not an
effective registration statement at such time and Rule 144 is not then available
to the holder, if, in the opinion of counsel to the Company, such legend is not
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission).
3.2 Acknowledgment of Dilution. The Company acknowledges that the issuance
of the Underlying Shares upon conversion of the Shares will result in dilution
of the outstanding shares of Common Stock, which dilution may be substantial
under certain market conditions.
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The Company further acknowledges that its obligation to issue Underlying Shares
upon conversion of the Shares is unconditional and absolute, subject to the
limitations set forth in the Shares regardless of the effect of any such
dilution.
3.3 Furnishing of Information As long as the Purchaser owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to Section 13(a) or 15(d) of the
Exchange Act. As long as the Purchaser owns Securities, if the Company is not
required to file reports pursuant to such sections, it will prepare and furnish
to the Purchasers and make publicly available in accordance with Rule 144(c)
promulgated under the Securities Act such information as is required for the
Purchaser to sell the Securities under Rule 144 promulgated under the Securities
Act. The Company further covenants that it will take such further action as any
holder of Securities may reasonably request, all to the extent required from
time to time to enable such Person to sell Underlying Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act, including causing its
attorneys to render and deliver any legal opinion required in order to permit
the Purchaser to receive Underlying Shares free of all restrictive legends and
to subsequently sell Underlying Shares under Rule 144 upon receipt of notice of
an intention to sell or other form of notice having a similar effect. Upon the
request of any such Person, the Company shall deliver to such Person a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
3.4 Integration The Company shall not, and shall use its best efforts to
ensure that, no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchaser.
3.5 Reservation of Underlying Shares The Company shall maintain a reserve
of shares of Common Stock for issuance upon the conversion of the Shares in full
in accordance with the Certificate of Designation in such amount as may be
required to fulfill its obligations in full under this Agreement.
3.6 Certain Securities Laws Disclosures; Publicity. The Company shall: (i)
on the Closing Date issue a press release acceptable to the Purchaser disclosing
the transactions contemplated hereby, (ii) file with the Commission a Report on
Form 8-K disclosing the transactions contemplated hereby within 10 business days
after the Closing Date, and (iii) timely file with the Commission a Form D
promulgated under the Securities Act as required under Regulation D promulgated
under the Securities Act and provide a copy thereof to the Purchaser promptly
after the filing thereof. The Company shall, no less than two business days
prior to the filing of any disclosure required by clauses (ii) and (iii) above,
provide a copy thereof to the Purchaser. The Company and the Purchaser shall
consult with each other in issuing any press releases or otherwise making public
statements or filings and other communications with the
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Commission or any regulatory agency or stock market or trading facility with
respect to the transactions contemplated hereby and neither party shall issue
any such press release or otherwise make any such public statement, filings or
other communications without the prior written consent of the other, which
consent shall not be unreasonably withheld or delayed, except that no prior
consent shall be required if such disclosure is required by law, in which such
case the disclosing party shall provide the other party with prior notice of
such public statement, filing or other communication.
3.7 Use of Proceeds The Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes, including developing
new business opportunities globally, and not for the satisfaction of any portion
of the Company's debt to redeem any Company equity or equity-equivalent
securities or to settle any outstanding litigation.
3.8 Board of Directors. The Company shall use its best efforts to cause
the size of its board of directors to be maintained at seven (7) directors and
to have the composition of the board of directors to be maintained in accordance
with the Certificate of Designation.
3.9 Option to Purchase Additional Shares of Preferred Stock. At any time during
the six-month period following the Closing Date, the Purchaser shall have the
right, upon written notice to the Company, to purchase, and the Company shall
sell to the Purchaser, up to $300,000.80 of shares of Preferred Stock on the
same terms and conditions as the Shares purchased pursuant to this Agreement
except that no right to appoint additional directors shall be granted, no
further lock-up restrictions shall be imposed and no additional legal fees, as
set forth in Section 4.1, shall be payable.
3.10 Lock-up Agreement. Concurrently of the execution of this Agreement,
the Company shall enter into lock-up agreements, in the form established herein
as Exhibit C attached hereto, with each of Jeffrey Tauber, The Jeffrey S. Tauber
Grantor Retained Annuity Trust, Jane Tauber and The Jane S. Tauber Grantor
Retained Annuity Trust.
ARTICLE IV
MISCELLANEOUS
4.1 Fees and Expenses. At the Closing, the Company shall reimburse the
Purchaser for their legal fees and expenses incurred in connection with the
preparation and negotiation of this Agreement by paying to Robinson Silverman
$20,000 for the preparation and negotiation of this Agreement. The amount
contemplated by the immediately preceding sentence shall be retained by the
Purchaser and shall not be delivered to the Company at the Closing. Other than
the amount contemplated herein each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement.
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The Company shall pay all stamp and other taxes and duties levied in connection
with the issuance of the Securities.
4.2 Entire Agreement; Amendments. This Agreement, together with the
Exhibits and Schedules thereto contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
4.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (New York City
time) on a business day (with confirmation of transmission), (ii) the business
day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile telephone number specified in this Agreement
later than 6:30 p.m. (New York City time) on any date and earlier than 11:59
p.m. (New York City time) on such date (with confirmation of transmission),
(iii) the business day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and
communications shall be as follows:
If to the Company: GSV, Inc.
116 Newark Avenue
Jersey City, NJ 07302
Facsimile No.: (201) 395-0076
Attn: President
With copies to: Davis & Gilbert
1740 Broadway
New York, NY 10019
Facsimile No.: (212) 468-4888
Attn: Walter Epstein, Esq.
If to a Purchaser: Brooks Station Holdings, Inc.
c/o Cavallo Capital Corp.
660 Madison Avenue. .
New York, NY 10021
Facsimile No.(212) 651-9010
Attn: President
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With copies to: Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, NY 10104
Facsimile No.: (212) 541-4630
Attn: Kenneth L. Henderson, Esq.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4.4 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Purchaser or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
4.5 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
4.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchaser. Except as set forth in
Section 3.1(a), the Purchaser may not assign this Agreement or any of the rights
or obligations hereunder without the consent of the Company.
4.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
4.8 Governing Law. The corporate laws of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders. All other
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of this
Agreement),and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or
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overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.
4.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery and conversion of
the Shares.
4.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4.11 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
4.12 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchaser
will be entitled to specific performance of the obligations of the Company under
this Agreement. The Company and the Purchaser agree that monetary damages may
not be adequate compensation for any loss incurred by reason of any breach of
its obligations described in the foregoing sentence and hereby agrees to waive
in any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Convertible
Preferred Stock Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated above.
GSV, INC.
By: /s/ Jeffrey Tauber
----------------------------------------
Name: Jeffrey Tauber
Title: Chief Executive Officer
BROOK STATION HOLDINGS, INC.
By: /s/ Gilad Gat
----------------------------------------
Name: Gilad Gat
Title: President
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