Securities Exchange Agreement - Ramp Corp. and Blue Valley Ltd.
SECURITIES EXCHANGE AGREEMENT
This agreement (this "Agreement") by and between RAMP CORPORATION (the
"Company") and BLUE VALLEY LTD., a secured creditor of the Company (the
"Holder").
WHEREAS, on behalf of the Company, Harborview Capital Management, LLC,
the Company's investment advisor (the "Advisor"), previously negotiated the
terms and conditions of an exchange of the Company's outstanding secured debt
securities into equity securities of the Company with the holders of such
outstanding secured debt securities, including the Holder.
WHEREAS, on December 3, 2004, the Holder and the Advisor agreed in
principle to a transaction pursuant to which Holder agreed to exchange its
Convertible Promissory Note of the Company (the "Note") having such maturity
dates and in the principal and accrued but unpaid interest amount (the "Exchange
Amount") set forth in the schedule attached hereto as Schedule A, closing on the
date on which the Holder shall deliver Notes to the Company (the "Settlement
Date"), in exchange for shares of the Company's common stock, par value $0.001
per share (the "Shares") and warrants ("Warrants") to purchase shares of common
stock ("Warrant Shares") as set forth on Schedule A attached hereto. The
exchange transaction (the "Exchange") was intended to be exempt from
registration pursuant to Section 4(2) and Regulation S under the Securities Act
of 1933, as amended (the "Securities Act"), and was subject to written
confirmation by the Company and ratification by the Company's Board of
Directors.
NOW, THEREFORE, in consideration of the representations, warranties and
agreements contained herein and other good and valuable consideration, the
receipt and legal adequacy of which is hereby acknowledged by the parties, the
Company and the Holder hereby agree as follows:
1. Exchange of Shares. The number of Shares to be exchanged (the
"Exchanged Shares") on the Settlement Date shall be determined by dividing the
Exchange Amount by the closing market price of the Common Stock, as determined
by Bloomberg, on the date immediately prior to the date hereof, equal to $1.14
per share (the "Note Exchange Price"). It is the intention of the parties that
the Note Exchange Price is at or above the market price at the time of entering
into this Agreement. The Warrant issued to the Holder shall be in the form
attached as Exhibit A hereto.
2. Offer Period. This offer period shall begin on the date hereof and
end upon the earlier to occur of (i) the close of business on December 6, 2004,
and (ii) the date on which the offer is accepted by the Holder. The Settlement
Date shall occur three (3) business days after the Holder accepts the Exchange.
3. AMEX Approval of Listing of Shares and Warrant Shares. Promptly
following the execution of this Agreement, the Company shall use its best
efforts to obtain written approval of the listing of the Exchanged Shares or
Warrant Shares on the American Stock Exchange ("AMEX") in accordance with AMEX
rules and regulations.
4. Settlement; Termination of Security Interest. On the Settlement
Date, the Holder shall deliver or cause to be delivered to the Company good,
valid and marketable title to the Notes being exchanged, free and clear of any
liens, claims or encumbrances, and the Company shall issue and deliver to the
Holder the Exchanged Shares and Warrants with the following restrictive legend.
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR RAMP CORPORATION SHALL HAVE
RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES
UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
On the Settlement Date, any and all obligations of the Company under the Note
shall automatically, and without further action, terminate and be null and void,
and the Company shall file a UCC-3 or other appropriate form to terminate any
and all liens against the assets and property of the Company, including the
Company's intellectual property, software code, trademarks and trade names, or
other security interest of the Holder.
5. Representations, Warranties and Covenants of the Company.
(a) Organization; Capacity and Authority. The Company is a
corporation duly organized, validly existing and, as of the date
hereof, in good standing under the laws of the State of Delaware. The
Company has the requisite corporate power and corporate authority to
enter into and perform its obligations under this Agreement and to
issue and sell the Shares in accordance with the terms hereof. The
execution, delivery and performance of this Agreement by the Company
and the consummation by it of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action of
the Company. The undersigned officer of the Company has full authority
to execute this Agreement and to bind the Company thereby. This
Agreement has been duly executed and delivered by the Company. This
Agreement constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other laws affecting the enforceability of
creditors' rights generally and to general principles of equity
(regardless of whether enforcement is considered at law or in equity).
(b) Issuance of Shares. The Shares and Warrants to be issued
under this Agreement have been duly authorized by all necessary
corporate action and, when issued in accordance with the terms hereof,
the Shares and Warrant Shares shall be validly issued and outstanding,
fully paid and non-assessable.
(c) No Commissions or Remuneration. Except for commissions or
other remuneration paid to the Advisor, the Company hereby represents
that it has not paid, and shall not pay, any commissions or other
remuneration, directly or indirectly, to the Holder or to any third
party for the solicitation of the Exchange under this Agreement.
(d) Costs and Expenses. The Company shall pay its own costs
and expenses, including but not limited to attorneys fees, incurred in
connection with its performance of transactions contemplated hereby.
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(e) Publicity. The Company will not disclose the identity of
Holder in any press release or other public filing issued by the
Company with respect to this Agreement or the transactions contemplated
hereby without the prior written consent of Holder unless the Company
in good faith determines, upon advice of counsel, that it is required
by law or regulations to issue such a press release. In such event, the
Company shall notify Holder in advance and give Holder an opportunity
to promptly review and comment on the form and substance of such press
release.
(f) Transfer Agent. If required to do so by its transfer agent
for the Shares and so long as Holder is not in breach of this
Agreement, the Company will deliver or cause to be delivered to the
transfer agent a legal opinion to the effect that the Exchanged Shares
may be issued to the Holder.
(g) Independent Nature of Holder. The Company acknowledges
that the obligations of Holder under the Agreement are several and not
joint with the obligations of any other holder of notes issued by the
Company and no Holder shall be responsible in any way for the
performance of the obligations of any other person under the Agreement.
The decision of Holder to purchase the Securities pursuant to this
Agreement has been made by such Holder independently of any other
purchase and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise)
or prospects of the Company which may have made or given by any other
person or by any agent or employee of any other person, and no Holder
or any of its agents or employees shall not have any liability to any
person relating to or arising from any such information, materials,
statements or opinions. The Company acknowledges that nothing contained
herein, or in any agreement, and no action taken by Holder pursuant
hereto or thereto, shall be deemed to constitute a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Holder is in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated
by the Agreement. The Company acknowledges that Holder shall be
entitled to independently protect and enforce its rights, including
without limitation, the rights arising out of this Agreement and it
shall not be necessary for any other person to be joined as an
additional party in any proceeding for such purpose.
6. Representations, Warranties and Covenants of the Holder.
(a) Organization; Power and Authority. The Holder is a
corporation duly organized and validly existing under the laws of
______________ . The Holder has the requisite power and authority to
enter into and perform its obligations under this Agreement and to
exchange the Notes in accordance with the terms hereof. The execution,
delivery and performance of this Agreement by the Holder and the
consummation by it of the transactions contemplated hereby have been
duly and validly authorized by all necessary action. The undersigned
officer of the Holder has full authority to execute this Agreement and
to bind the Holder thereby. This Agreement has been duly executed and
delivered by the Holder. This Agreement constitutes, or shall
constitute when executed and delivered, a valid and binding obligation
of the Holder enforceable against the Holder in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and other laws affecting the
enforceability of creditors' rights generally and to general principles
of equity (regardless of whether enforcement is considered at law or in
equity).
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(b) Exempt Offering. The Holder acknowledges that the
transaction contemplated hereby is intended to be exempt from
registration by virtue of Section 4(2) and Regulation S of the
Securities Act. The Holder knows of no reason why such exemption is not
available.
(c) No Solicitation by the Company. The Holder acknowledges
that it contacted the Company and initiated negotiations with the
Company regarding the Exchange as described above. Neither the Company
nor anyone acting on the Company's behalf solicited the Holder or
initiated contact with the Holder regarding this transaction in any
manner whatsoever.
(d) Existing Holder of Exchange Notes. Holder represents and
warrants that Holder is the sole legal and beneficial holder of the
Notes being exchanged by Holder.
(e) Title to Exchange Notes. At the Settlement Date, Holder
shall deliver good, valid and marketable title to the Notes transferred
to the Company hereunder free and clear of any liens, charges, and
encumbrances.
(f) No Commissions or Remuneration. Holder hereby represents
that it has not and shall not, and no one acting on its behalf has or
shall, receive any commissions or other remuneration paid or given
directly or indirectly for soliciting the Exchange under this Agreement
and that Holder shall not pay or agree to pay commissions or
remuneration to any other third party directly or indirectly for
soliciting such Exchange.
(g) Accredited Investor. Holder represents and warrants that
(i) it is an "accredited investor" as such term is defined in Rule 501
of Regulation D, promulgated under the Securities Act, (ii) it is not a
"U.S. person", as defined under Rule 902(o) of Regulation S of the
Securities Act and is not acquiring the Note for the account or benefit
of any U.S. person, (iii) the Holder is acquiring the Note in an
"offshore transaction", as defined in Rule 902(i) of Regulation S, (iv)
the Note was not offered to the Holder in the United States and, at the
time of execution of this Note and the time of any offer to the Holder
hereunder, the Holder was physically located outside of the United
States, and (v) the Note has been sold pursuant to Regulation S under
the Securities Act.
(h) Access to Information. The Holder has had such opportunity
as it has deemed adequate to obtain from representatives of the Company
such information as is necessary to permit the Holder to evaluate the
merits and risks of the transaction contemplated hereby and
acknowledges that it, among other things, has received or reviewed
copies of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2003 and Quarterly Reports on Form 10-Q for each of
the fiscal quarters ended March 31, 2004, June 30, 2004 and September
30, 2004. The Holder has sufficient experience in business, financial
and investment matters to be able to evaluate the risks involved in the
acquisition of the Shares and Warrants and to make an informed
investment decision with respect to such acquisition and the exchange
contemplated hereby, and the Holder acknowledges that the Company makes
no representation regarding the value of the Notes, the Shares or the
Warrants.
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(i) No Distribution. Holder represents and warrants that it
currently has no present plans, transactions, or agreements with any
third party for the distribution of the common stock to be received
under this Agreement and that the common stock to be received under
this Agreement shall be acquired by Holder for its own investment
holdings and purposes.
(j) No Violation. The Holder represents and warrants that the
execution and delivery of this agreement by the Holder and the
performance by the Holder of its obligations hereunder do not and will
not violate any law or regulation applicable to the Holder.
(k) Publicity. The Holder covenants that it will keep the
terms of this Agreement confidential and shall not disclose such terms
to any other person or entity.
(l) Costs and Expenses. The Holder shall pay its own costs and
expenses, including but not limited to attorneys fees, incurred in
connection with its performance of transactions contemplated hereby.
(m) Independent Investment. Holder has not agreed to act with
any other holder of notes for the purpose of acquiring, holding, voting
or disposing of the Shares to be acquired hereunder for purposes of
Section 13(d) under the Securities Exchange Act if 1934 as amended and
Holder is acting independently with respect to its investment in the
Shares.
7. Registration Rights. (a) If at any time the Company shall determine
to prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or its then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans (a "Registration Statement"), the Company shall send to the Holder
written notice of such determination and, if within 30 days after receipt of
such notice, Holder shall so request in writing (which request shall specify the
Shares and Warrant Shares intended to be disposed of by the Holder), the Company
will cause the registration under the Securities Act of all Shares and Warrant
Shares which the Company has been so requested to register by the Holder, to the
extent requisite to permit the disposition of the Shares and Warrant Shares so
to be registered, provided that if at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to the Holder and, thereupon, (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Shares and
Warrant Shares in connection with such registration, and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Shares and Warrant Shares being registered pursuant to this Section 7 for the
same period as the delay in registering such other securities. The Company shall
include in such registration statement all or any part of such Shares and
Warrant Shares such Holder requests to be registered; provided, however, that
the Company shall not be required to register any Shares and Warrant Shares
pursuant to this Section 7 that are eligible for sale pursuant to Rule 144(k) of
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the Securities Act. The Company acknowledges and agrees that if it shall file a
registration statement, the Shares and Warrant Shares must be included thereon
and the Company shall not enter into and contract or agreement to the contrary.
(b) On or prior to the date that is sixty (60) days from the
date of this Agreement, upon written request of the Holder, the Company shall
prepare and file with the Commission a "resale" Registration Statement covering
all Shares and Warrant Shares. The Company shall use its reasonable best efforts
to cause the Registration Statement to be declared effective under the
Securities Act as promptly as possible after the filing thereof, and to keep
such Registration Statement continuously effective under the Securities Act
until such date as is the earlier of (x) the date when all Registrable
Securities covered by such Registration Statement have been sold or (y) the date
on which the Registrable Securities may be sold without any restriction pursuant
to Rule 144 as determined by the counsel to the Company pursuant to a written
opinion letter, addressed to the Company's transfer agent to such effect.
8. Notices. Any notice, demand, request, waiver or other communication
required or permitted to be given hereunder shall be in writing and shall be
effective (a) upon hand delivery, or on the date transmitted by telecopy or
facsimile at the address or number designated below (if delivered or transmitted
on a business day), or the first business day following such delivery or
transmission (if delivered other than on a business day) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:
If to the Company: Ramp Corporation
33 Maiden Lane, 5th Floor
New York, NY 10038
Attn: Andrew Brown
Telephone No.: (212) 440-1548
Telecopier No.: (212)
with copies (which copies
shall not constitute notice
to the Company) to: Jenkens & Gilchrist Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
Attn: Martin Eric Weisberg
New York, NY 10174
Telephone No.: (212) 704-6050
Telecopier No.: (212) 704-6288
If to the Holder: At the address of such Holder set forth on
the signature page to this Exchange Offer.
with copies to: Richard Naimer, Esq.
Granot Strauss & Co.
28th Floor
7 Menachem Begin Street
Ramat Gan 52521
Israel
Telephone: ( )
Telecopier: ( )
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Any party hereto may from time to time change its address for notices by giving
at least ten (10) days written notice of such changed address to the other party
hereto.
9. Amendment; Entire Agreement. This Agreement cannot be amended or
modified except by a writing executed by both parties which expresses, by its
terms, an intention to modify this agreement. This Agreement and the other
agreements between the parties and their respective representatives and advisors
being entered into concurrently herewith, constitutes the entire agreement by
and among the parties hereto and supercedes any prior proposals, agreements or
understandings relating to the subject matter hereof. Each party acknowledges
and agrees that it is relying on no other representation, warranty, covenant or
agreement of the other party except for those set forth in this Agreement and
such other agreements.
10. Governing Law. This Agreement shall be governed by the laws of the
State of New York without giving effect to the conflict of law provisions
contained therein and each party hereby irrevocably and unconditionally submits
to the exclusive jurisdiction of any New York State court or Federal court
sitting in the Borough of Manhattan, City of New York in any action or
proceeding arising out of or in relation to this Agreement.
11. Execution in Counterparts. This Agreement may be executed in
several counterparts by one or more of the parties named herein and all such
counterparts once so executed shall together be deemed to constitute one final
agreement, as if one document had been signed by all of the parties hereto, and
each such counterpart, upon execution and delivery, shall be deemed a complete
original, binding on the parties to this Agreement. This Agreement may be
delivered by facsimile, and the facsimile copy shall be deemed to be an original
for all purposes.
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IN WITNESS WHEREOF, the Company and the Holder acknowledge and agree
that this Exchange Agreement was duly executed on the date first written above
set forth below its name.
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RAMP CORPORATION
Signature:________________________________
Name:
Title:
Date:
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The terms set forth herein are accepted by __________________.
_________________________
Signature:________________________________
Name:
Title:
Date:
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SCHEDULE A TO THE EXCHANGE AGREEMENT
SCHEDULE OF NOTES, SHARES AND WARRANTS
Principal Amount Interest Maturity Date Shares Warrants
---------------- -------- ------------- ------ --------
$1,000,000.00 $29,935.81 January 14, 2005 903,453 211,372
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EXHIBIT A TO THE SECURITIES EXCHANGE AGREEMENT
FORM OF WARRANT