<PAGE>
Exhibit 4.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as
of
December 20, 2004, among Interchange
Corporation, a Delaware corporation (the
"COMPANY"), and the investors identified on
the signature pages hereto (each, an
"INVESTOR" and collectively, the
"INVESTORS").
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of
the Securities Act (as defined below)
and Rule 506 promulgated thereunder, the
Company desires to issue and sell to
each Investor, and each Investor, severally
and not jointly, desires to purchase
from the Company certain securities of the
Company, as more fully described in
this Agreement.
NOW, THEREFORE, 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 Investors agree
as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in
this
Agreement, for all purposes of this
Agreement, the following terms shall have
the meanings indicated in this Section
1.1:
"ACTION" means any action, suit, inquiry, notice of violation,
proceeding (including any partial
proceeding such as a deposition) or
investigation pending or threatened in
writing against or affecting the Company,
any Subsidiary or any of their respective
properties before or by any court,
arbitrator, governmental or administrative
agency, regulatory authority
(federal, state, county, local or foreign),
stock market, stock exchange or
trading facility.
"AFFILIATE" means any Person that, directly or indirectly
through one or more intermediaries,
controls or is controlled by or is under
common control with a Person, as such terms
are used in and construed under Rule
144.
"BUSINESS DAY" means any day except Saturday, Sunday and any
day which is a federal legal holiday or a
day on which banking institutions in
the State of New York are authorized or
required by law or other governmental
action to close.
"CLOSING" means the closing of the purchase and sale of the
Securities pursuant to Article II.
"CLOSING DATE" means the Business Day immediately following
the date on which all of the conditions set
forth in Sections 5.1 and 5.2 hereof
are satisfied, or such other date as the
parties may agree.
"COMMISSION" means the Securities and Exchange Commission.
<PAGE>
"COMMON STOCK" means the common stock of the Company, par
value $0.00001 per share, and any
securities into which such common stock may
hereafter be reclassified.
"COMMON STOCK EQUIVALENTS" means any securities of the Company
or any Subsidiary which entitle the holder
thereof to acquire Common Stock at
any time, including without limitation, any
debt, preferred stock, rights,
options, warrants or other instrument that
is at any time convertible into or
exchangeable for, or otherwise entitles the
holder thereof to receive, Common
Stock or other securities that entitle the
holder to receive, directly or
indirectly, Common Stock.
"COMPANY COUNSEL" means Latham & Watkins LLP.
"COMPANY DELIVERABLES" has the meaning set forth in Section
2.2(a).
"DISCLOSURE MATERIALS" has the meaning set forth in Section
3.1(h).
"EFFECTIVE DATE" means the date that the initial Registration
Statement required by Section 2(a) of the
Registration Rights Agreement is first
declared effective by the Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means U.S. generally accepted accounting principles.
"INTELLECTUAL PROPERTY RIGHTS" has the meaning set forth in
Section 3.1(p).
"INVESTMENT AMOUNT" means, with respect to each Investor, the
Investment Amount indicated on such
Investor's signature page to this Agreement.
"INVESTOR DELIVERABLES" has the meaning set forth in Section
2.2(b).
"INVESTOR PARTY" has the meaning set forth in Section 4.7.
"LIEN" means any lien, charge, encumbrance, security interest,
right of first refusal or other
restrictions of any kind.
"MATERIAL ADVERSE EFFECT" means any of (i) a material and
adverse effect on the legality, validity or
enforceability of any Transaction
Document, (ii) a material and adverse
effect on the results of operations,
assets, prospects, business or condition
(financial or otherwise) of the Company
and the Subsidiaries, taken as a whole, or
(iii) an adverse impairment to the
Company's ability to perform on a timely
basis its obligations under any
Transaction Document.
"NEW YORK COURTS" means the state and federal courts sitting
in the City of New York, Borough of
Manhattan.
"OUTSIDE DATE" means January 15, 2005.
"PER UNIT PURCHASE PRICE" equals $18.25.
2
<PAGE>
"PERSON" means an individual or corporation, partnership,
trust, incorporated or unincorporated
association, joint venture, limited
liability company, joint stock company,
government (or an agency or subdivision
thereof) or other entity of any kind.
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation,
an investigation or partial
proceeding, such as a deposition), whether
commenced or threatened.
"REGISTRATION STATEMENT" means a registration statement
meeting the requirements set forth in the
Registration Rights Agreement and
covering the resale by the Investors of the
Shares and the Warrant Shares.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this
Agreement, among the Company and the
Investors, in the form of Exhibit B
hereto.
"RULE 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such
Rule may be amended from time to time,
or any similar rule or regulation hereafter
adopted by the Commission having
substantially the same effect as such
Rule.
"SEC REPORTS" has the meaning set forth in Section 3.1(h).
"SECURITIES" means the Shares, the Warrants and the Warrant
Shares.
"SHARES" means the shares of Common Stock issued or issuable
to the Investors pursuant to this
Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHORT SALES" include, without limitation, all "short sales"
as defined in Rule 3b-3 of the Exchange Act
and Rule 200 promulgated under
Regulation SHO under the Exchange Act and
all types of direct and indirect stock
pledges, forward sale contracts, options,
puts, calls, short sales, swaps and
similar arrangements (including on a total
return basis), and sales and other
transactions through non-US broker dealers
or foreign regulated brokers.
"SUBSIDIARY" means any "significant subsidiary" as defined in
Rule 1-02(w) of the Regulation S-X
promulgated by the Commission under the
Exchange Act.
"TRADING DAY" means (i) a day on which the Common Stock is
traded on a Trading Market (other than the
OTC Bulletin Board), or (ii) if the
Common Stock is not listed on a Trading
Market (other than the OTC Bulletin
Board), a day on which the Common Stock is
traded in the over-the-counter
market, as reported by the OTC Bulletin
Board, or (iii) if the Common Stock is
not quoted on any Trading Market, a day on
which the Common Stock is quoted in
the over-the-counter market as reported by
the National Quotation Bureau
Incorporated (or any similar organization
or agency succeeding to its functions
of reporting prices); provided, that in the
event that the Common Stock is not
listed or quoted as set forth in (i), (ii)
and (iii) hereof, then Trading Day
shall mean a Business Day.
3
<PAGE>
"TRADING MARKET" means whichever of the New York Stock
Exchange, the American Stock Exchange, the
NASDAQ National Market, the NASDAQ
SmallCap Market or OTC Bulletin Board on
which the Common Stock is listed or
quoted for trading on the date in
question.
"TRANSACTION DOCUMENTS" means this Agreement, the Registration
Rights Agreement, the Warrants and any
other documents or agreements executed in
connection with the transactions
contemplated hereunder.
"WARRANTS" means the Common Stock purchase warrants in the
form of Exhibit A, which are issuable to
the Investors at the Closing.
"WARRANT SHARES" means the shares of Common Stock issuable
upon exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. Subject to the terms and conditions set forth in
this
Agreement, at the Closing the Company shall
issue and sell to each Investor, and
each Investor shall, severally and not
jointly, purchase from the Company, the
Shares and the Warrants representing such
Investor's Investment Amount. The
Closing shall take place at the offices of
Bryan Cave LLP, 1290 Avenue of the
Americas, New York, NY 10104 on the Closing
Date or at such other location or
time as the parties may agree.
2.2 Closing Deliveries. (a) At the Closing, the Company shall
deliver
or cause to be delivered to each Investor
the following (the "COMPANY
DELIVERABLES"):
(i) a
certificate evidencing a number of Shares equal
to such Investor's Investment Amount
divided by the Per Share Purchase Price,
registered in the name of such
Investor;
(ii) a Warrant, registered in the name of such
Investor, pursuant to which such Investor
shall have the right to acquire the
number of shares of Common Stock equal to
20% of the number of Shares issuable
to such Investor pursuant to Section
2.2(a)(i);
(iii) the legal opinion of Company Counsel, in agreed
form, addressed to the Investors; and
(iv) the Registration Rights Agreement, duly executed
by the Company.
(b) At the Closing, each Investor shall deliver or cause to be
delivered to the Company the following (the
"INVESTOR DELIVERABLES"):
(i) its Investment Amount, in United States dollars
and in immediately available funds, by wire
transfer to an account designated in
writing by the Company for such purpose;
and
4
<PAGE>
(ii) the Registration Rights Agreement, duly executed
by such Investor.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company
hereby
makes the following representations and
warranties to each Investor:
(a) Subsidiaries. The Company has no direct or indirect
Subsidiaries other than as specified in the
SEC Reports. The Company owns,
directly or indirectly, all of the capital
stock of each Subsidiary free and
clear of any and all Liens, and all the
issued and outstanding shares of capital
stock of each Subsidiary are validly issued
and are fully paid, non-assessable
and free of preemptive and similar
rights.
(b) Organization and Qualification. The Company and each
Subsidiary are 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. Neither the Company nor any
Subsidiary is in violation of any of the
provisions of its respective certificate or
articles of incorporation, bylaws or
other organizational or charter documents.
The Company and each Subsidiary are
duly qualified to conduct its respective
businesses and are in good standing as
a foreign corporation or other entity 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, have or reasonably
be expected to result in a Material Adverse
Effect.
(c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into
and to consummate the transactions
contemplated by each of the Transaction
Documents and otherwise to carry out its
obligations thereunder. The execution and
delivery of each of the Transaction
Documents by the Company and the
consummation by it of the transactions
contemplated thereby have been duly
authorized by all necessary action on the
part of the Company and no further action
is required by the Company in
connection therewith. Each Transaction
Document has been (or upon delivery will
have been) duly executed by the Company
and, when delivered in accordance with
the terms hereof, will constitute the valid
and binding obligation of the
Company enforceable against the Company in
accordance with its terms, except as
such enforceability may be limited by
applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or
similar laws relating to, or
affecting generally the enforcement of,
creditors' rights and remedies or by
other equitable principles of general
application.
(d) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company
and the consummation by the Company of
the transactions contemplated thereby do
not and will not (i) conflict with or
violate any provision of the Company's or
any Subsidiary's certificate or
articles of incorporation, bylaws or other
organizational or charter documents,
or (ii) conflict with, or constitute a
default (or an event that
5
<PAGE>
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
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), such as could not,
individually or in the aggregate,
have or reasonably be expected to result in
a Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not
required to obtain any consent, waiver,
authorization or order of, give any
notice to, or make any filing or
registration with, any court or other federal,
state, local or other governmental
authority or other Person in connection with
the execution, delivery and performance by
the Company of the Transaction
Documents, other than (i) the filing with
the Commission of one or more
Registration Statements in accordance with
the requirements of the Registration
Rights Agreement, (ii) filings required by
state securities laws, (iii) the
filing of a Notice of Sale of Securities on
Form D with the Commission under
Regulation D of the Securities Act, (iv)
the filings required in accordance with
Section 4.5 (v) the filing of an Additional
Shares Listing Application with the
NASDAQ and (vi) those that have been made
or obtained prior to the date of this
Agreement.
(f) Issuance of the Securities. The Securities have been duly
authorized and, when issued and paid for in
accordance with the Transaction
Documents, will be duly and validly issued,
fully paid and nonassessable, free
and clear of all Liens. The Company has
reserved from its duly authorized
capital stock the shares of Common Stock
issuable pursuant to this Agreement and
the Warrants in order to issue the Shares
and Warrant Shares.
(g) Capitalization. The number of shares and type of all
authorized, issued and outstanding capital
stock of the Company, and all shares
of Common Stock reserved for issuance under
the Company's various option and
incentive plans, is specified in the SEC
Reports as of the date of such SEC
Report. Except as specified in the SEC
Reports, no securities of the Company are
entitled to preemptive or similar rights,
and no Person has any right of first
refusal, preemptive right, right of
participation, or any similar right to
participate in the transactions
contemplated by the Transaction Documents.
Except as specified in the SEC Reports,
there are no outstanding options,
warrants, scrip 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 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.
The issue and sale of the Securities
will not, immediately or with the passage
of time, obligate the Company to issue
shares of Common Stock or other securities
to any Person (other than the
Investors) and will not result in a right
of any holder of Company securities to
adjust the exercise, conversion, exchange
or reset price under such securities.
6
<PAGE>
(h) SEC Reports; Financial Statements. The Company has filed
all reports required to be filed by it
under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or
15(d) thereof, for the twelve months
preceding the date hereof (or such shorter
period as the Company was required by
law to file such reports) (the foregoing
materials being collectively referred
to herein as the "SEC REPORTS" and,
together with the Schedules to this
Agreement (if any), the "DISCLOSURE
MATERIALS") on a timely basis or has timely
filed a valid extension of such time of
filing and has filed any such SEC
Reports prior to the expiration of any such
extension. As of their respective
dates, the SEC Reports 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 Reports, 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. The financial statements of the
Company included in the SEC Reports
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
GAAP applied on a consistent basis during
the periods involved, except as may be
otherwise specified in such financial
statements or the notes thereto, and
fairly present in all material respects the
financial position of the Company
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.
(i) Material Changes. Since the date of the latest audited
financial statements included within the
SEC Reports, except as specifically
disclosed in the SEC Reports, (i) there has
been no event, occurrence or
development that has had or that could
reasonably be expected to result in a
Material Adverse Effect, (ii) the Company
has not incurred any material
liabilities other than liabilities incurred
in the ordinary course of business
or liabilities which are not required to be
disclosed in the SEC Reports, (iii)
the Company has not altered its method of
accounting or the identity of its
auditors, (iv) the Company has not declared
or made any dividend or distribution
of cash or other property to its
stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares
of its capital stock, and (v) the
Company has not issued any equity
securities to any officer, director or
Affiliate, except pursuant to existing
Company stock option plans. The Company
does not have pending before the Commission
any request for confidential
treatment of information.
(j) Litigation. There is no Action which (i) adversely affects
or challenges the legality, validity or
enforceability of any of the Transaction
Documents or the Securities or (ii) except
as specifically disclosed in the SEC
Reports, could, if there were an
unfavorable decision, individually or in the
aggregate, have or reasonably be expected
to result in a Material Adverse
Effect. Neither the Company nor any
Subsidiary, nor any director or officer
thereof (in his or her capacity as such),
is or has been the subject of any
Action involving a claim of violation of or
liability under federal or state
securities laws or a claim of breach of
fiduciary duty, except as specifically
disclosed in the SEC Reports. There has not
been, and to the knowledge of the
Company, there is not pending any
investigation by the Commission involving the
Company or any current or former director
or officer of the Company (in his or
her capacity as such). The Commission has
not issued any stop order or other
order suspending the
7
<PAGE>
effectiveness of any registration statement
filed by the Company or any
Subsidiary under the Exchange Act or the
Securities Act.
(k) Labor Relations. No material labor dispute exists or, to
the knowledge of the Company, is imminent
with respect to any of the employees
of the Company.
(l)
Compliance. Neither the Company nor any Subsidiary (i) is
in default under or in violation of (and no
event has occurred that has not been
waived that, 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 (whether or not such default or
violation has been waived), (ii) is in
violation of any order of any court,
arbitrator or governmental body, or (iii)
is or has been in violation of any statute,
rule or regulation of any
governmental authority, including without
limitation all foreign, federal, state
and local laws relating to taxes,
environmental protection, occupational health
and safety, product quality and safety and
employment and labor matters, except
in each case as could not, individually or
in the aggregate, have or reasonably
be expected to result in a Material Adverse
Effect. The Company is in compliance
with all effective requirements of the
Sarbanes-Oxley Act of 2002, as amended,
and the rules and regulations thereunder,
that are applicable to it, except
where such noncompliance could not have or
reasonably be expected to result in a
Material Adverse Effect.
(m) Regulatory Permits. The Company and the Subsidiaries
possess all certificates, authorizations
and permits issued by the appropriate
federal, state, local or foreign regulatory
authorities necessary to conduct
their respective businesses as described in
the SEC Reports, except where the
failure to possess such permits could not,
individually or in the aggregate,
have or reasonably be expected to result in
a Material Adverse Effect, and
neither the Company nor any Subsidiary has
received any notice of proceedings
relating to the revocation or modification
of any such permits.
(n) Title to Assets. The Company and the Subsidiaries have
good and marketable title in fee simple to
all real property owned by them that
is material to their respective businesses
and good and marketable title in all
personal property owned by them that is
material to their respective businesses,
in each case free and clear of all Liens,
except for Liens as do not materially
affect the value of such property and do
not materially interfere with the use
made and proposed to be made of such
property by the Company and the
Subsidiaries. Any real property and
facilities held under lease by the Company
and the Subsidiaries are held by them under
valid, subsisting and enforceable
leases of which the Company and the
Subsidiaries are in compliance, except as
could not, individually or in the
aggregate, have or reasonably be expected to
result in a Material Adverse Effect.
(o) Patents and Trademarks. The Company and the Subsidiaries
have, or have rights to use, all patents,
patent applications, trademarks,
trademark applications, service marks,
trade names, copyrights, licenses and
other similar rights that are necessary or
material for use in connection with
their respective businesses as described in
the SEC Reports and which the
failure to so have could, individually or
in the aggregate, have or reasonably
be expected to result in a Material Adverse
Effect (collectively, the
"INTELLECTUAL PROPERTY RIGHTS"). Neither
the
8
<PAGE>
Company nor any Subsidiary has received a
written notice that the Intellectual
Property Rights used by the Company or any
Subsidiary violates or infringes upon
the rights of any Person. Except as set
forth in the SEC Reports, to the
knowledge of the Company, all such
Intellectual Property Rights are enforceable
and there is no existing infringement by
another Person of any of the
Intellectual Property Rights.
(p) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial
responsibility against such losses and risks
and in such amounts as are prudent and
customary in the businesses in which the
Company and the Subsidiaries are engaged.
The Company has no reason to believe
that it will not be able to renew its and
the Subsidiaries' existing insurance
coverage as and when such coverage expires
or to obtain similar coverage from
similar insurers as may be necessary to
continue its business on terms
consistent with market for the Company's
and such Subsidiaries' respective lines
of business.
(q) Transactions With Affiliates and Employees. Except as set
forth in the SEC Reports, none of the
officers or directors of the Company and,
to the knowledge of the Company, none of
the employees of the Company is
presently a party to any transaction with
the Company or any Subsidiary (other
than for services as employees, officers
and directors), including any contract,
agreement or other arrangement providing
for the furnishing of services to or
by, providing for rental of real or
personal property to or from, or otherwise
requiring payments to or from any officer,
director or such employee or, to the
knowledge of the Company, any entity in
which any officer, director, or any such
employee has a substantial interest or is
an officer, director, trustee or
partner.
(r) Internal Accounting Controls. The Company and the
Subsidiaries maintain a system of internal
accounting controls sufficient to
provide reasonable assurance that (i)
transactions are executed in accordance
with management's general or specific
authorizations, (ii) transactions are
recorded as necessary to permit preparation
of financial statements in
conformity with generally accepted
accounting principles and to maintain asset
accountability, (iii) access to assets is
permitted only in accordance with
management's general or specific
authorization, and (iv) the recorded
accountability for assets is compared with
the existing assets at reasonable
intervals and appropriate action is taken
with respect to any differences. The
Company has established disclosure controls
and procedures (as defined in
Exchange Act rules 13a-15 and 15d-15) for
the Company and designed such
disclosure controls and procedures to
ensure that material information relating
to the Company, including its Subsidiaries,
is made known to the certifying
officers by others within those entities,
particularly during the period in
which the Company's Form 10-KSB or 10-QSB,
as the case may be, is being
prepared. The Company's certifying officers
have evaluated the effectiveness of
the Company's controls and procedures in
accordance with Item 307 of Regulation
S-K under the Exchange Act for the
Company's most recently ended fiscal quarter
or fiscal year-end (such date, the
"EVALUATION DATE"). The Company presented in
its most recently filed Form 10-KSB or Form
10-QSB the conclusions of the
certifying officers about the effectiveness
of the disclosure controls and
procedures based on their evaluations as of
the Evaluation Date. Since the
Evaluation Date, there have been no
significant changes in the Company's
internal controls (as such term is defined
in Item 308(c) of Regulation S-K
under the Exchange Act) or, to the
Company's knowledge, in other factors t
