Exhibit
4.1


 


THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is made as of the 29th
day of March, 2004, by and between Omtool, Ltd., a Delaware corporation (the
“Company”), and the investors listed on the Schedule of Investors attached
hereto as Exhibit A (each an “Investor” and collectively, the
“Investors”).


 


W I T N E S S E T H:


 


WHEREAS, the Company desires to sell to the Investors, and the
Investors desire to purchase from the Company, 300,000 shares (the “Shares”) of
common stock, par value $.01 per share (the “Common Stock”), at a price of
$12.00 per share, for a total purchase price of $3,600,000 pursuant to the
provisions of this Agreement;


 


NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:


 


1.                                       Purchase
and Sale of Common Stock.


 


1.1                                 Issuance
and Sale of Common Stock. Subject to the terms and conditions of this
Agreement, each Investor agrees, severally and not jointly, to purchase at the
Closing (as defined below), and the Company agrees to sell and issue to each
Investor, that number of Shares of Common Stock set forth opposite such
Investor’s name on Exhibit A attached hereto at a purchase price of
$12.00 per share (the “Per Share Price”). 
The aggregate purchase price (the “Purchase Price”) to be paid by the
Investors to the Company to acquire the Common Stock shall be $3,600,000.


 


1.2                                 Closing.


 


(a)                                  The
purchase and sale of the Common Stock (the “Closing”) shall take place at the
offices of Broadband Capital Management LLC, 805 Third Avenue, New York, New
York 10022 at 10:00 a.m., on March 30, 2004, or at such other time
and place as the Company and the Investors mutually agree upon orally or in
writing.


 


(b)                                 At
the Closing, the Company shall deliver to the Investors, share certificates
representing the Shares, against payment of the Purchase Price by wire transfer
to the Company.


 


2.                                       Representations
and Warranties of the Company.  The
Company hereby represents and warrants to the Investors, except as set forth on
a Schedule of Exceptions to Representations and Warranties attached hereto
as Exhibit B (the “Schedule of Exceptions”), the following:


 


2.1                                 Subsidiaries.  The Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity except as disclosed in the SEC Reports
(as hereinafter defined) (each, a “Subsidiary” and collectively, the
“Subsidiaries”).  Unless the context
requires otherwise, all references herein to the “Company” shall refer to the
Company and its Subsidiaries. The Company is not a party to any joint venture,
partnership, or similar arrangement.


 


2.2                                 Organization,
Good Standing, and Qualification. 
The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to carry on its business as now conducted.  The Subsidiaries are duly organized in their
respective jurisdictions of organization, validly existing and in good standing
in


 

















 


such respective jurisdictions and each has the power and authority to
carry on its respective business as now conducted. The Company is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure so to qualify would have a Material Adverse Effect (as
hereafter defined).


 


2.3                                 Capitalization.   The number of authorized, issued and outstanding
capital stock of the Company is set forth in Exhibit B.  Except as disclosed in Exhibit B, no
securities of the Company or any Subsidiary are entitled to preemptive or
similar rights, nor is any holder of securities of the Company or any Subsidiary
entitled to preemptive or similar rights arising out of any agreement or
understanding with the Company or any Subsidiary by virtue of any of the
Transaction Documents (defined hereinafter). 
Except as disclosed in Exhibit B, there are no outstanding options,
warrants, script rights to subscribe to, calls or commitments to issue, or
securities, except as a result of the purchase and sale of the Shares, or
rights or obligations convertible into or exchangeable for, or giving any
Person (as defined below) 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.  Except as
contemplated in the Registration Rights Agreement and as disclosed in Exhibit
B, the Company has not granted or agreed to grant any registration rights,
including piggyback rights, to any person or entity.


 


2.4                                 Authorization.  All corporate action on the part of the
Company necessary for the authorization, execution, and delivery of this
Agreement and the Registration Rights Agreement (as hereafter defined)
(collectively, the “Transaction Documents”), the performance of all obligations
of the Company hereunder and thereunder and the authorization, issuance and
delivery of the Shares, has been taken or will be taken prior to the Closing,
and the Transaction Documents constitute valid and legally binding obligations
of the Company, enforceable in accordance with their respective terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of creditors’
rights generally, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies, and
(iii) to the extent the indemnification provisions contained in the
Transaction Documents may be limited by applicable federal or state laws.


 


2.5                                 Valid
Issuance of Common Stock. The Common Stock being purchased by the Investors
hereunder, when issued, sold, and delivered in accordance with the terms hereof
for the consideration provided for herein, will be duly and validly issued,
fully paid and nonassessable, and, based in part upon the representations of
the Investors in this Agreement, will be issued in compliance with all
applicable federal and state securities laws.


 


2.6                                 Filings,
Consents and Approvals.  Assuming
the accuracy of the representations and warranties made by the Investors in
Section 3 hereof, 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 the Transaction
Documents, other than (i) a proper Form D in accordance with Regulation D
promulgated under the Securities Act of 1933, as amended (the “Act”), and
applicable Blue Sky filings, (ii) such matters contemplated by the Registration
Rights Agreement, (iii) a Notification Form: 
Listing of Additional Shares and (iv) 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 (financial or otherwise)
on the business, property, assets or liabilities of the Company and its
Subsidiaries taken as a whole (“Material Adverse Effect”).


 


2.7                                 Litigation.  There is no action, suit, proceeding, claim
or investigation pending


 


2

















 


or, to the knowledge of the Company, currently threatened against the
Company which questions the validity of the Transaction Documents, or the right
of the Company to enter into any of them, or to consummate the transactions contemplated
hereby or thereby, or which would reasonably be expected to result, either
individually or in the aggregate, in any material adverse change (financial or
otherwise) in the business, property, assets or liabilities of the Company, nor
is the Company aware that there is any basis for the foregoing.  The Company is not a party or subject to the
provisions of any order, writ, injunction, judgment, or decree of any court or
government agency or instrumentality specifically naming the Company.


 


2.8                                 Patents
and Trademarks.  The Company has
sufficient title and ownership of, or has otherwise acquired rights with
respect to, all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information, inventions, proprietary rights, and processes
necessary for its business as now conducted without, to the Company’s
knowledge, any conflict with or infringement of the rights of others.  The Company has not received any
communications alleging that the Company has violated or, by conducting its business
would violate any of the patents, trademarks, service marks, trade names,
copyrights, or trade secrets, or other proprietary rights of any other person
or entity which the Company believes will result in a Material Adverse Effect.  The Company is not aware that any of its
employees or officers are obligated under any contract (including licenses,
covenants, or commitments of any nature) or other agreement, or subject to any
judgment, decree, or order of any court or administrative agency, that would
interfere with the use of such employee’s or officer’s commercially reasonable
efforts to promote the interests of the Company or that would conflict with the
Company’s business as conducted. 
Neither the carrying on of the Company’s business by the employees of
the Company, nor the conduct of the Company’s business, will, to the Company’s
knowledge, conflict with or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, any contract, covenant, or
instrument under which any of such employees or officers are now obligated.


 


2.9                                 Compliance
with Other Instruments.  The Company
is not in violation or default of any provisions of its Amended and Restated
Certificate of Incorporation or Amended and Restated By-laws or, to its
knowledge, of any instrument, judgment, order, writ, decree, mortgage,
indenture, lease, license or contract to which it is a party or by which it is
bound or, to its knowledge, of any provision of federal, state, or local
statute, rule, or regulation applicable to the Company, except as would not
reasonably be expected, singly or in the aggregate, to have a Material Adverse
Effect.  The execution, delivery, and
performance of the Transaction Documents and the consummation of the
transactions contemplated thereby will not result in any such violation or be
in conflict with or constitute, with or without the passage of time and giving
of notice, either a default under any such provision, instrument, judgment,
order, writ, decree or contract, or an event which results in the creation of
any lien, charge, or encumbrance upon any assets of the Company or the
suspension, revocation, impairment, forfeiture, or nonrenewal of any material
permit, license, authorization, or approval applicable to the Company, its business
or operations, or any of its assets or properties, except as would not
reasonably be expected, singly or in the aggregate, to have a Material Adverse
Effect.


 


2.10                           Permits.  The Company has all material governmental
franchises, permits, licenses, and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which would
reasonably be expected to have a Material Adverse Effect and believes it can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted. 
The Company is not in default in any material respect under any of such
franchises, permits, licenses, or other similar authority.


 


2.11                           Compliance
with Laws.  The conduct of business
by the Company and each Subsidiary as presently and proposed to be conducted is
not subject to continuing oversight, supervision, regulation or examination by
any governmental official or body of the United States or any other


 


3

















 


jurisdiction wherein the Company or any Subsidiary conducts or proposes
to conduct such business, except such regulation as is applicable to commercial
enterprises generally.  Except as set
forth in the Disclosure Materials, neither the Company nor any of the
Subsidiaries has received any notice of any violation of or noncompliance with,
any federal, state, local or foreign laws, ordinances, regulations and orders
(including, without limitation, those relating to environmental protection, occupational
safety and health, federal securities laws, equal employment opportunity,
consumer protection, credit reporting, “truth-in-lending”, and warranties and
trade practices) applicable to its business or to the business of any
Subsidiary, the violation of, or noncompliance with, which would have a
Material Adverse Effect, and the Company knows of no facts or set of
circumstances which would reasonably be expected to give rise to such a notice.


 


2.12                           Disclosure.  This Agreement, and any other statements or
certificates made or delivered in connection herewith or therewith, when taken
together with the Disclosure Materials (as defined below), do not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements herein or therein not misleading.


 


2.13                           Title
to Property and Assets.  The Company
owns its property and assets free and clear of all mortgages, liens, loans,
pledges, security interests, claims, equitable interests, charges, and
encumbrances, except such encumbrances and liens which arise in the ordinary
course of business and do not materially impair the Company’s ownership or use
of such property or assets.  With
respect to the property and assets it leases, the Company is in compliance in
all material respects with such leases and, to its knowledge, holds a valid
leasehold interest free of any liens, claims, or encumbrances.


 


2.14                           Insurance.  The Company has in full force and effect
fire and casualty insurance policies, with extended coverage, sufficient in
amount (subject to reasonable deductibles) to allow it to replace any of its
properties that might be damaged or destroyed, and the Company has insurance
against other hazards, risks, and liabilities to persons and property to the
extent and in the manner customary for companies in similar businesses
similarly situated.


 


2.15                           SEC
Reports; Financial Statements.  The
Company has filed all reports required to be filed by it under the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the 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 Reports” and, together with the
Schedule of Exceptions 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 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.  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 Reports to the
extent required.  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 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 and the absence of certain footnotes.  Except as set forth on Exhibit B or except as 


 


4

















 


specifically disclosed in the Disclosure Materials, since
December 31, 2003  (a) there
has been no event, occurrence or development that has had or that could
reasonably be expected to have or result in a Material Adverse Effect, (b) the
Company has not incurred any material 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 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 (other than in compliance with existing Company stock or stock
option plans) with respect to its capital stock, or purchased or redeemed or
except as disclosed to the Investors, made or intends to make any agreements to
purchase or redeem) any shares of its capital stock.  Additionally, since the adoption of the Sarbanes-Oxley Act of
2002 (the “New Act”), the Company has complied in all material respects with the
laws, rules and regulation under the New Act.


 


2.16                           No
Conflict of Interest.  Except as
otherwise disclosed in the Disclosure Materials, the Company is not indebted in
excess of $25,000, directly or indirectly, to any of its executive officers or
directors other than in connection with expenses or advances of expenses
incurred in the ordinary course of business or relocation expenses of executive
officers and directors, nor is the Company contemplating such indebtedness as
of the date of this Agreement.  Except
as otherwise disclosed in the Disclosure Materials and except for transactions
on an arms length basis, none of said executive officers or directors is
directly or indirectly indebted in excess of $25,000 to the Company or to the
Company’s knowledge have any direct or indirect ownership interest in any firm
or corporation with which the Company is affiliated or with which the Company
has a business relationship or any firm or corporation which competes with the
Company, nor is the Company contemplating such indebtedness as of the date of
this Agreement, except that executive officers and directors may own stock in
publicly traded companies (not in excess of 1% of the outstanding capital stock
thereof) which may be affiliated, have a business relationship or compete with
the Company.


 


2.17                           S-3
Eligibility.  The Company is
currently eligible to register the resale of its common stock in a secondary
offering on a registration statement on Form S-3 under the Securities Act.


 


2.18                           Nasdaq
Listing.  The Company’s Common Stock
is registered pursuant to Section 12(g) of the Exchange Act and is listed
on the Nasdaq SmallCap Market and the Company has taken no action designed to,
or likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from the Nasdaq Small Cap
Market, nor has the Company received, nor has it any reason to believe it will
receive, any notification that the Securities and Exchange Commission or Nasdaq
is currently contemplating terminating such registration or listing.


 


2.19                           Tax
Reporting.  The Company has made or
filed all federal, state and foreign income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject and which
are due (unless and only to the extent that the Company has set aside on its
books provisions reasonably adequate for the payment of all unpaid and
unreported taxes or has obtained an extension of the deadline for such filing)
and has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply.  To the Company’s
knowledge, there are no unpaid taxes in any material amount claimed to be due
by the taxing authority of any jurisdiction. 
The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any


 


5

















 


foreign, federal, statue or local tax. 
To the Company’s knowledge, none of the Company’s tax returns is
presently being audited by any taxing authority.


 


3.                                       Representations
and Warranties of the Investors. 
Each of the Investors, severally and not jointly, hereby represents and
warrants that:


 


3.1                                 Authorization.  The execution of the Transaction Documents
to which such Investor is a party and the consummation of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of such Investor and that the Transaction Documents to which such Investor
is a party have been duly executed and delivered and constitute valid and
legally binding obligations of the Investor enforceable in accordance with
their terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors’ rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies.


 


3.2                                 Purchase
Entirely for Own Account.  The
Common Stock to be purchased by the Investor will be acquired for investment
for the Investor’s own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof, and such Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same.  Such Investor
does not have any contract, undertaking, agreement, or arrangement with any
person to sell, transfer, or grant participation to any person with respect to
any of the Shares.  The Investor
represents that it has full power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby.


 


3.3                                 Disclosure
of Information.  The Investor
acknowledges that it has received all the information that it has requested
relating to the Company and the purchase of the Common Stock.  The Investor further represents that it has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Common Stock.  The foregoing, however, does not limit or
modify the representations and warranties of the Company in Section 2 of
this Agreement or the right of the Investor to rely thereon.


 


3.4                                 Accredited
Investor.  The Investor is an
“accredited investor” within the meaning of Rule 501 of Regulation D of
the Securities and Exchange Commission (the “SEC”), as presently in effect and
the Investor is also knowledgeable, sophisticated and experienced in making,
and is qualified to make decisions with respect to the transactions
contemplated hereby.


 


3.5                                 Restricted
Securities.  Investor understands
that the Common Stock that it is purchasing is characterized as “restricted
securities” under the federal securities laws inasmuch as it is being acquired
from the Company in a transaction not involving a public offering, and that
under such laws and applicable regulations such securities may be resold
without registration under the Act, only in certain limited circumstances.  In this connection, the Investor represents
that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.


 


3.6                                 Legends.  It is understood that the certificates
evidencing the Common Stock shall bear a legend, reading substantially as
follows:


 


“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE
SECURITIES LAWS OF ANY STATE AND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AS SET FORTH IN THIS CERTIFICATE.  THE
SECURITIES REPRESENTED


 


6

















 


HEREBY MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED,
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT THE
PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.”


 


3.7                                 Confidential
Information.  At all times during
the Company’s offering of the Shares, the Investor has maintained in confidence
all non-public information regarding the Company received by the Investor from
the Company or its agents, has not traded in the Company’s securities on the
basis of any non-public information.


 


3.8                                 Agent
Appointment.  The Investor hereby
appoints Broadband Capital Management LLC to act as its agent on its behalf for
the limited purposes described in the Registration Rights Agreement.


 


3.9                                 Investor
Questionnaire.  The Investor
covenants to execute and deliver to the Company at or promptly following the
Closing an investor questionnaire supplied by the Company to facilitate the
registration of the Shares pursuant to the Registration Rights Agreement and
the information contained therein shall be true and correct.  


 


4.                                       Conditions
of the Investors’ Obligations at Closing. 
The obligations of the Investors under subsection 1.1(a) of this
Agreement is subject to the fulfillment on or before the Closing of each of the
following conditions:


 


4.1                                 Representations
and Warranties.  The representations
and warranties of the Company contained in Section 2 hereof shall be true
on and as of the Closing with the same effect as though such representations
and warranties had been made on and as of the date of such Closing.


 


4.2                                 Performance.  The Company shall have performed and
complied with all agreements, obligations, and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.


 


4.3                                 Compliance
Certificate.  The President of the
Company shall deliver to the Investors, at the Closing, a certificate
certifying that the conditions specified in Sections 4.1  and
4.2  have
been fulfilled.


 


4.4                                 Proceedings
and Documents.  All corporate and
other proceedings in connection with the transactions contemplated at the
Closing and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Investors and counsel to the Investors, and they
shall have received all such counterpart original and certified or other copies
of such documents as they may reasonably request.


 


4.5                                 Opinion
of Company Counsel.  The Investors
shall have received from Testa Hurwitz & Thibeault, LLP an opinion, dated
as of the Closing, substantially in form attached hereto as Exhibit C.


 


4.6                                 Good
Standing Certificates.  The Company
shall have delivered to the Investors, dated as of a date within five (5)
business days of the Closing, a certificate issued by the Secretary of


 


7

















 


State of Delaware to the effect that it is legally existing and in good
standing.


 


4.7                                 Secretary’s
Certificate.  The Company shall have
delivered to the Investors a certificate executed by the Secretary of the
Company dated as of the Closing certifying the resolutions adopted by the
Company’s Board of Directors relating to the transactions contemplated by this
Agreement.


 


4.8                                 Delivery
of Common Stock. The Company shall have delivered the Common Stock to the
Investors, as specified in Section 1.


 


4.9                                 Registration
Rights Agreement.  The Company and
the Investors, excluding the Investors listed on Exhibit E (the
“Excluded Investors”), shall have entered into a registration rights agreement
dated of even date herewith, a form of which is attached hereto as Exhibit D
(the “Registration Rights Agreement”).


 


4.10                           Other
Payments.  Concurrent with the
Closing, the Company shall issue the Broadband Compensation (as such term is
defined in Section 7.7 hereto).


 


5.                                       Conditions
of the Company’s Obligations at Closing. 
The obligations of the Company to the Investors under this Agreement is
subject to the fulfillment on or before any Closing of each of the following
conditions by the Investors:


 


5.1                                 Representations
and Warranties.  The representations
and warranties of the Investors contained in Section 3 shall be true on
and as of such Closing with the same effect as though such representations and
warranties had been made on and as of such Closing.


 


5.2                                 Payment
of Purchase Price.  The Investors
shall have delivered the purchase price specified in Section 1.2.


 


5.3                                 Registration
Rights Agreement.  The Company and
the Investors, other than the Excluded Investors, shall have entered into the
Registration Rights Agreement.


 


6.                                       Indemnification.  The Company agrees to indemnify and hold
harmless each of the Investors and their respective affiliates against any
investigations, proceedings, claims or actions and for any expenses, damages,
liabilities or losses (joint or several) that arise out of or are based upon
any breach of any representation, warranty, agreement, obligation or covenant
of the Company contained herein.


 


7.                                       Miscellaneous.


 


7.1                                 Survival
of Representations and Warranties. 
All of the representations and warranties made herein shall survive the
execution and delivery of this Agreement for a period of eighteen (18) months
following the Closing and be of no further force or effect as of such date,
except that the representations and warranties set forth in Sections 2.3, 2.4
and 2.6 shall survive forever and shall not terminate.  The Investors are entitled to rely, and the
parties hereby acknowledge that the Investors have so relied, upon the truth,
accuracy and completeness of each of the representations and warranties of the
Company contained herein, irrespective of any independent investigation made by
Investors.  The Company is entitled to
rely, and the parties hereby acknowledge that the Company has so relied, upon
the truth, accuracy and completeness of each of the representations and
warranties of the Investors contained herein, irrespective of any independent
investigation made by the Company.


 


8

















 


7.2                                 Successors
and Assigns.  Except as otherwise
provided in this Agreement, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties to this Agreement; provided, however,
that the right of the Investors to purchase the Shares shall not be assignable
without the prior written consent of the Company.  Notwithstanding the foregoing but subject to compliance with
applicable securities laws, the parties agree that following the Closing, the
Investors may assign their rights and obligations under this Agreement to any
of their affiliates or to any successors to the Investors or such affiliates.


 


7.3                                 Governing
Law.  This Agreement shall be
governed by and construed under the laws of the State of New York as applied to
agreements among New York residents entered into and to be performed entirely
within New York. The Company (1) agrees that any legal suit, action or
proceeding arising out of or relating to this Agreement shall be instituted
exclusively in New York State Supreme Court, County of New York, or in the
United States District Court for the Southern District of New York, (2) waives
any objection which the Company may have now or hereafter to the venue of any
such suit, action or proceeding, and (3) irrevocably consents to the
jurisdiction of the New York State Supreme Court, County of New York, and the
United States District Court for the Southern District of New York in any such
suit, action or proceeding.  The Company
further agrees to accept and acknowledge service of any and all process which
may be served in any such suit, action or proceeding in the New York State
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York and agrees that service of process upon the
Company mailed by certified mail to the Company’s address shall be deemed in
every respect effective service of process upon the Company, in any such suit,
action or proceeding.  THE PARTIES
HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR
AGREEMENT CONTEMPLATED HEREBY.


 


7.4                                 Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.


 


7.5                                 Titles
and Subtitles.  The titles and
subtitles used in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement.


 


7.6                                 Notices.  Unless otherwise provided, any notice,
authorization, request or demand required or permitted to be given under this
Agreement shall be given in writing and shall be deemed effectively given upon
personal delivery to the party to be notified or three (3) days following
deposit with the United States Post Office, by registered or certified mail,
postage prepaid, or two days after it is sent by an overnight delivery service,
or when sent by facsimile with machine confirmation of delivery addressed as
follows:


 


If to the Investors to
such address as is set forth on Exhibit A annexed hereto


If to Company, to:


 


Omtool, Ltd.


8A Industrial Way


Salem, NH 03079


Telecopier No.: 603-890-1925


Attention: Chairman


 


9

















 


With a copy to:


 


Testa Hurwitz & Thibeault, LLP


125 High Street


Boston, MA 02110


Telecopier No.:
617-248-7100


Attention:  John A. Meltaus, Esq.


 


Any party may change its address for such communications by giving
notice thereof to the other parties in conformity with this Section.


 


7.7                                 Finder’s
Fee.  Each party represents that it
neither is nor will be obligated for any finders’ or brokers’ fee or commission
in connection with this transaction; provided, however, that the Company is
obligated to pay certain compensation upon consummation of the transactions
contemplated hereby to Broadband Capital Management LLC (“Broadband
Compensation”) pursuant to that certain engagement agreement dated
March 26, 2004.  The Broadband
Compensation shall consist of the issuance of 25,500 shares of Common Stock
(“Advisor Stock”) and warrants to purchase 25,500 shares of Common Stock at an
exercise price of $12.00 per share (“Advisor Warrants”).


 


7.8                                 Transaction
Expenses; Enforcement of Transaction Documents.  The Company and each Investor shall pay their respective costs
and expenses incurred with respect to the negotiation, execution, delivery
and performance of this Agreement. 
If any action at law or in equity is necessary to enforce or interpret
the terms of the Transaction Documents, the prevailing party shall be entitled
to reasonable attorney’s fees, costs, and necessary disbursements in addition
to any other relief to which such party may be entitled.


 


7.9                                 Amendments
and Waivers.  Any term of this
Agreement may be amended and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Investors holding a majority of the Shares; provided, however, that
this Agreement may not be amended and the observance of any term hereunder may
not be waived with respect to any Investor without the written consent of such
Investor unless such amendment or waiver applies to all Investors in the same
fashion.  Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding, each
future holder of all such securities, and the Company.


 


7.10                           Severability.  If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.


 


7.11                           Entire
Agreement.  This Agreement and the
documents referred to herein constitute the entire agreement among the parties
and no party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein.


 


7.12                           Independent
Nature of Investors’ Obligations and Rights.  The obligations of each Investor under any Transaction Document
are several and not joint with the obligations of any other Investor, and no
Investor shall be responsible in any way for the performance of the obligations
of any other Investor under any Transaction Document.  Nothing contained herein or in any Transaction Document, and no
action taken by any Investor pursuant thereto, shall be deemed to constitute
the


 


10

















 


Investors as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Investors are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Document.  Each Investor shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose.  Each Investor has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents.


 


7.13                           Excluded
Investors.  Notwithstanding anything
to the contrary set forth in the Transaction Documents, neither the Excluded
Investors (nor any and all of their direct or indirect assigns (including
without limitation affiliated assignees), successors (including without
limitation successors to affiliated assignees), heirs, executors,
administrators, or transferees), nor any of the Shares acquired hereunder by
the Excluded Investors shall be entitled to the benefits of the Registration
Rights Agreement, nor any other registration rights or related notice rights,
nor the benefit of any representation, warranty, condition, covenant,
obligation or legal opinion provided hereunder or in connection herewith or the
transactions contemplated hereby, to the extent relating to the Registration
Rights Agreement or the matters contemplated thereby.


 


11

















 


IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.


 


	
  OMTOOL, LTD.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Robert Voelk

  	
   

  
	
   

  	
  Name:

  	
  Robert Voelk

  
	
   

  	
  Title:

  	
  President

  
				



 


 


	
  “INVESTORS”

  
	
   

  
	
  The Doug Levine 2002
  Qualified Annuity Trust

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Doug Levine

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Doug Levine

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  DKR Sound Shore Strategic Holding Fund Ltd.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Barbara Burger

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Barbara Burger

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Alternate Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  DKR Sound Shore Oasis Holding Fund Ltd.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Barbara Burger

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Barbara Burger

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Alternate Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Fraydon Manocherian

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Fraydon Manocherian

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Fraydon Manocherian

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Self

  	
   

  
					



 


SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT


 

















 


	
  /s/ Michael Rapoport

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Michael Rapoport

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Jeffrey Meshel

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Jeffrey Meshel

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Corsair Capital
  Partners, L.P.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jay Petschet

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Jay Petschet

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Managing Member of G.P.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Corsair Capital
  Partners 700, L.P.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jay Petschet

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Jay Petschet

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Managing Member of G.P.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Corsair Capital
  Investors, Ltd.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jay Petschet

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Jay Petschet

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Managing Member of I.M.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Alexander Enterprise
  Holdings Corp.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jared Bluestein

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Jared Bluestein

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Director

  	
   

  
					



 

















 


	
  Selwyn Partners LP

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Victor M. Dandridges

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Victor M. Dandridges

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  General Partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  The FM Grandchildren’s
  Trust

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Greg Mandcherian

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Greg Mandcherian

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Trinad Capital LP

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Robert Ellin

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Robert Ellin

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Managing Member

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Kabuki Partners ADP,
  G.P.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Greg Mandcherian

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Greg Mandcherian

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Leviticus Partners L.P.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Adam M. Hutt

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Adam M. Hutt

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  President, AMH Equity, The General

  Partner of Leviticus Partners LP

  	
   

  
								



 

















 


EXHIBIT
A


 


SCHEDULE OF
INVESTORS


 


	
  Investor

  Name and Address

  	
   

  	
  Number of

  Shares

  of Common

  Stock Purchased

  	
   

  	
  Per Share

  Purchase Price

  	
   

  	
  Portion of

  Purchase Price

  Payable

  	
   

  
	
  The Doug Levine 2002 Qualified Annuity
  Trust

  2760 North Bay Road

  Miami Beach, FL 33140

  	
   

  	
  41,667

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  500,004.00

  	
   

  
	
  DKR Soundshore Strategic Holding Fund Ltd.

  c/o DKR Management Company Ind.

  1281 East Main Street

  Stamford, CT 06902

  	
   

  	
  6,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  72,000.00

  	
   

  
	
  DKR Soundshore Oasis Holding Fund Ltd.

  c/o DKR Management Company Ind.

  1281 East Main Street

  Stamford, CT 06902

  	
   

  	
  34,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  408,000.00

  	
   

  
	
  Fraydon Manocherian

  46 Westchester Avenue

  Pound Ridge, NY 10576

  	
   

  	
  20,833

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  249,996.00

  	
   

  
	
  Michael Rapoport

  c/o Broadband Capital Management LLC

  New York, NY 10022

  	
   

  	
  25,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  300,000.00

  	
   

  
	
  Jeffrey Meshel

  Mercury Capital

  317 Madison Avenue

  New York, NY 10017

  	
   

  	
  10,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  120,000.00

  	
   

  
	
  Corsair Capital Investors Ltd.

  350 Madison Avenue

  New York, NY 10017

  	
   

  	
  4,500

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  54,000.00

  	
   

  
	
  Corsair Capital Partners 700 L.P.

  350 Madison Avenue

  New York, NY 10017

  	
   

  	
  1,500

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  18,000.00

  	
   

  
	
  Corsair Capital Partners, L.P.

  350 Madison Avenue

  New York, NY 10017

  	
   

  	
  34,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  408,000.00

  	
   

  
	
  Alexander Enterprise Holdings Corp.

  801 Brickness Avenue

  Suite 2580

  Miami, FL 33131

  	
   

  	
  20,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  240,000.00

  	
   

  
	
  Selwyn Partners LP

  315 Old Ivy Way, Suite 302

  Charlottesville, VA 22903

  	
   

  	
  10,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  120,000.00

  	
   

  
	
  The FM Grandchildren’s Trust

  46 Westchester Avenue

  Pond Ridge, NY 10576

  	
   

  	
  12,500

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  150,000.00

  	
   

  
	
  Trinad Capital LP

  153 E. 53rd Street, 48th Floor

  New York, NY 10022

  	
   

  	
  10,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  120,000.00

  	
   

  
	
  Kaburi Partners ADP, G.P.

  46 Westchester Avenue

  Pound Ridge, NY 10576

  	
   

  	
  50,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  600,000.00

  	
   

  
	
  Leviticus Partners LP

  30 Park Avenue, Suite 12F

  New York, NY 10016

  	
   

  	
  20,000

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  240,000.00

  	
   

  
	
  TOTAL

  	
   

  	
  300,000

  	
   

  	
   

  	
   

  	
  $

  	
  3,600,000.00

  	
   

  



 

















 


EXHIBIT
B


 


SCHEDULE OF
EXCEPTIONS


 


2.3                                 Capitalization.


 


As of the date hereof, the authorized capital stock of the Company
consists of 2,000,000 shares of preferred stock, $.01 par value, and 35,000,000
shares of common stock, $.01 par value.


 


As of March 29, 2004, there were 1,757,546 shares of common stock
issued and outstanding, 108,189 shares of common stock held in treasury, and no
shares of preferred stock issued and outstanding.


 


As of March 29, 2004, options to purchase approximately 240,158
shares of common stock were outstanding under the Company’s stock and stock
option plans.


 


The Company has agreed to issue 25,500 shares of common stock and a
warrant to purchase 25,500 shares of common stock to Broadband Capital
Management LLC.


 


The Company has granted certain registration rights pursuant to the
Series B Preferred Stock Purchase Agreement dated as of July 22, 1996.


 


The Company’s board of directors has authorized a two-for-one stock
split in the form of a stock dividend on the common stock.


 

















 


EXHIBIT
C


 


FORM
OF LEGAL OPINION


 

















 


EXHIBIT
D


 


REGISTRATION
RIGHTS AGREEMENT


 

















 


EXHIBIT
E


 


EXCLUDED
INVESTORS


 


Jeffrey Meshel


 


Michael Rapp