Agreement between
Vitech America, Inc.
and
Intel Corporation
AGREEMENT
---------
This Agreement dated as of May __, 2000 is entered into by and between
Vitech America, Inc., a Florida corporation (the "Company"), and Intel
Corporation, a Delaware corporation, (the "Purchaser").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. Satisfaction of Indebtedness and Purchase of Shares. Subject to the terms
and conditions of this Agreement, the Purchaser shall purchase such number
of shares of common stock of the Company as is set forth in this Section 1
(the "Shares"), and the purchase price of the Shares shall be cancellation
by the Purchaser of $3,511,287.02 of the Company's indebtedness to the
Purchaser, plus interest on such amount calculated at the rate of 7% per
annum from April 1, 2000 through the effective date of the registration
statement filed pursuant to Section 5. Such indebtedness and the interest
thereon shall be described as the "Indebtedness". The number of Shares to
be purchased by the Purchaser pursuant to this Agreement shall be
calculated as follows: the Indebtedness divided by the volume-weighted
average closing sale price of the Company's common stock as reported on the
Nasdaq National Market for the 20 trading days prior to the effective date
of the registration statement filed by the Company pursuant to Section 5
hereof. If the number of Shares as calculated above exceeds 4.99% of the
Company's outstanding common stock, the Company shall issue to the
Purchaser only such number of shares of common stock equal to 4.99% of the
Company's outstanding common stock, and it shall pay the balance of the
Indebtedness in cash.
2. Closing. The purchase of the Shares, and the payment of the balance of the
Indebtedness (as applicable), will take place at the offices of Intel
Corporation, Folsom, California at 10:00 a.m. Pacific Time, within three
(3) business days after the conditions set forth in Sections 4 and 5 hereof
have been satisfied, or at such other time and place as the Company and the
Purchaser mutually agree upon (which time and place are referred to in this
Agreement as the "Closing").
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser that the statements in this
Section 3 are true and correct.
3.1. 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 Florida and has all corporate power and
authority required to (a) carry on its business as presently conducted,
(b) enter into this Agreement, and to consummate the transactions
contemplated hereby. The Company is qualified to do business and is in
good standing in each jurisdiction in which it is required to do so,
except for jurisdictions in which the failure to so qualify would,
individually or in the aggregate, have a Material Adverse Effect. As
used in this Agreement, "Material Adverse Effect" means a material
adverse effect on, or a material adverse
1
change in, or a group of such effects on or changes in, the business,
operations, financial condition, results of operations, assets or
liabilities of the Company.
3.2. Capitalization. As of the date hereof, the authorized capital stock of
the Company consists of Thirty Million (30,000,000) shares of common
stock, with no par value, and Three Million (3,000,000) shares of
preferred stock, with no par value. As of the close of business on
April 12, 2000, there were (a) Sixteen Million Three Hundred Forty-five
Thousand Nine Hundred Thirty-nine (16,345,939) shares of common stock
outstanding, (b) Four Million Eight Hundred Two Thousand Three Hundred
Forty-seven (4,802,347) shares of common stock reserved for issuance
upon the exercise of outstanding options, (c) Five Hundred Thousand
(500,000) shares of common stock reserved for issuance pursuant to the
Company's stock option and stock purchase plans, (d) Four Million Six
Hundred Seventy-six Thousand Two Hundred Forty-nine (4,676,249) shares
of common stock reserved for issuance upon conversion of preferred
stock (e) Three Million (3,000,000) shares of common stock reserved for
issuance upon conversion of preferred stock and (f) Nine Hundred
Twenty-seven Thousand Seven Hundred Seventy-seven (927,777). Except as
set forth above, there are no other options, warrants or rights
outstanding to acquire shares of the Company's securities.
3.3. Due Authorization. All corporate action on the part of the Company
necessary for the authorization, execution, delivery of, and the
performance of all obligations of the Company under this Agreement has
been taken or will be taken prior to the Closing and this Agreement
constitutes a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization
or other laws of general application relating to, or affecting the
enforcement of creditors' rights generally and (ii) the effect of rules
of law governing the availability of equitable remedies.
3.4. Valid Issuance. Upon issuance and delivery pursuant to this Agreement,
the Shares will be duly and validly issued, fully paid and
nonassessable. Based in part on the representations made by the
Purchaser in Section 4 hereof, the Shares will be issued in full
compliance with applicable exemptions from the registration and
prospectus delivery requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the registration and qualification
requirements of all applicable securities laws of the states of the
United States.
3.5. Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing
with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, except for the filing of
such qualifications or filings under the Securities Act and the
regulations thereunder and all applicable state securities laws or with
any stock market or securities exchange on which the Shares are listed
as may be
2
required in connection with the transactions contemplated by this
Agreement. All such qualifications and filings will, in the case of
qualifications, be effective on the Closing and will, in the case of
filings, be made within the time prescribed by law.
3.6. Non-contravention. The execution, delivery and performance of this
Agreement by the Company, and the consummation by the Company of the
transactions contemplated hereby, do not and will not (i) contravene or
conflict with the Certificate of Incorporation or Bylaws of the
Company; (ii) constitute a violation of any provision of any federal,
state, local or foreign law binding upon or applicable to the Company;
or (iii) constitute a default or require any consent under, or give
rise to any right of termination, cancellation or acceleration of, or
to a loss of any benefit to which the Company is entitled under, or
result in the creation or imposition of any mortgage, pledge, security
interest, charge, lien, claim or encumbrance of any kind on any
property or assets of the Company under, any contract to which the
Company is a party or any permit, license or similar right relating to
the Company or by which the Company may be bound or affected.
3.7. Litigation. Except as expressly disclosed in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission
(the "SEC") for the year ended December 31, 1999, there is no action,
suit, proceeding, claim, arbitration or investigation ("Action")
pending: (a) against the Company, its activities, properties or assets,
or (b) that seeks to prevent, enjoin, alter or delay the transactions
contemplated by this Agreement. There is no lawsuit, arbitration or
mediation pending, relating to the current or prior employment of any
of the Company's current or former employees or consultants, their use
in connection with the Company's business of any information,
technology or techniques allegedly proprietary to any of their former
employers, clients or other parties, or their obligations under any
agreements with prior employers, clients or other parties. The Company
is not a party to or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or governmental agency or
instrumentality that has or could reasonably be expected to have a
Material Adverse Effect upon the Company.
3.8. No Material Adverse Change. Since December 31, 1999, except as
otherwise disclosed by the Company in writing to the Purchaser or as
set forth in the Company's SEC Documents (as defined below), in each
case on or prior to the date hereof, (a) there has been no material
adverse change in the business, operations, properties, results of
operations or financial condition of the Company, whether or not
arising in the ordinary course of business, (b) there have been no
material transactions entered into by the Company that have not arisen
in the ordinary course of business, and (c) there has been no dividend
or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
3
3.9. Access to Information. Prior to the Closing, the Company will provide
to the Purchaser, its officers, employees and professional
representatives such information as such persons from time to time
reasonably may request with respect to the Company and the transactions
contemplated by this Agreement, and prior to the Closing shall permit
the Purchaser, its officers, employees and professional representatives
reasonable access, during regular business hours and upon reasonable
notice, to the properties, books and records of the Company as the
Purchaser from time to time may reasonably request. No investigation
pursuant to this Section 3.9 shall affect any representation or
warranty given by the Company hereunder.
3.10. Compliance with Law and Charter Documents. The Company is not in
violation or default of any provisions of its Certificate of
Incorporation or Bylaws, both as amended. The Company has complied with
and is in compliance in all material respects with all applicable
statutes, laws and regulations and executive orders of the United
States of America and all states, foreign countries and other
governmental bodies and agencies having jurisdiction over the Company's
business and properties.
3.11. SEC Documents.
(a) The Company has made available to the Purchaser prior to the date
hereof copies of its Annual Report on Form 10-K for the fiscal year
ended December 31, 1999 ("Form 10-K"), and all other registration
statements, reports and proxy statements filed by the Company with the
SEC on or after December 31, 1999 (the Form 10-K and such registration
statements, reports and proxy statements, are collectively referred to
herein as the "SEC Documents"). Each of the SEC Documents, as of the
respective date thereof, did not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements made therein, in light of the circumstances under
which they were made, not misleading, except as may have been corrected
in a subsequent SEC Document. The Company is not a party to any
material contract, agreement or other material arrangement which was
required to have been filed as an exhibit to the SEC Documents that is
not so filed.
(b) The audited and unaudited consolidated financial statements of the
Company included in the SEC Documents filed prior to the date hereof
fairly present, in conformity with generally accepted accounting
principles ("GAAP") (except as permitted by Form 10-Q) applied on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its consolidated
subsidiaries as at that date thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject to
normal year-end and audit adjustments in the case of unaudited interim
financial statements).
4
3.12. Full Disclosure. The information contained in this Agreement with
respect to the business, operations, assets, results of operations and
financial condition of the Company, and the transactions contemplated
by this Agreement, are true and complete in all material respects and
do not omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
4. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company, and agrees that:
4.1. Authorization. This Agreement has been duly authorized by all necessary
corporate action on the part of the Purchaser. This Agreement
constitutes the Purchaser's valid and legally binding obligations,
enforceable in accordance with its terms, except as may be limited by
(a) applicable bankruptcy, insolvency, reorganization or other laws of
general application relating to or affecting the enforcement of
creditors' rights generally and (b) the effect of rules of law
governing the availability of equitable remedies. The Purchaser has
full corporate power and authority to enter into this Agreement.
4.2. Disclosure of Information. The Purchaser has received or has had full
access to all the information it considers necessary to make an
informed investment decision with respect to the Shares to be purchased
by the Purchaser under this Agreement. The Purchaser has had the
opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Shares and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Purchaser or to
which the Purchaser had access. The foregoing, however, does not in any
way limit or modify the representations and warranties made by the
Company in Section 3 hereof.
4.3. Investment Experience. The Purchaser understands that the purchase of
the Shares involves substantial risk. The Purchaser: (a) has experience
as an investor in securities of companies and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment
in the Shares and has such knowledge and experience in business or
financial matters that it is capable of evaluating the risks and merits
of this investment in the Shares and protecting its own interests in
connection with this investment and/or (b) has a preexisting personal
or business relationship with the Company and certain of its officers,
directors or controlling persons of a nature and duration that enables
the Purchaser to be aware of the character, business acumen and
financial circumstances of such persons.
4.4. Accredited Purchaser Status. The Purchaser is an "accredited Purchaser"
within the meaning of Regulation D promulgated under the Securities
Act.
5
4.5. Restricted Securities. The Purchaser understands that the Shares to be
purchased by the Purchaser hereunder are characterized as "restricted
securities" under the Securities Act inasmuch as they are being
acquired from the Company in a transaction not involving a public
offering and that under the Securities Act and applicable regulations
thereunder, such securities may be resold without registration under
the Securities Act only in certain circumstances. The Purchaser is
familiar with Rule 144 of the Securities Act, as presently in effect,
and understands the resale limitations imposed thereby and by the
Securities Act. The Purchaser understands that the Company is under no
obligation to register any of the securities sold hereunder except as
provided in Section 5 hereof.
4.6. Legends. The Shares and certificates evidencing the Shares will bear
each of the legends set forth below:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. PURCHASERS SHOULD BE
AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
(b) Any legends required by applicable state securities laws.
4.7. The legend set forth in Section 4.6(a) hereof will be removed by the
Company from any certificate evidencing the Shares upon delivery to the
Company of an opinion by counsel, reasonably satisfactory to the
Company, that a registration statement under the Securities Act is at
that time in effect with respect to the legended security or that such
security can be freely transferred in a public sale without such a
registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to
which the Company issued the Shares.
4.8. Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing
with, any federal, state or local governmental authority on the part of
the Purchaser is required in connection with the consummation of the
transactions contemplated by this Agreement, except for the filing of
such qualifications or filings under the Securities Act and the
6
regulations thereunder and all applicable state securities laws or with
any stock market on which the Shares are listed as may be required in
connection with the transactions contemplated by this Agreement. All
such qualifications and filings will, in the case of qualifications, be
effective on the Closing and will, in the case of filings, be made
within the time prescribed by law.
4.9. Non-contravention. The execution, delivery and performance of this
Agreement by the Purchaser, and the consummation by the Purchaser of
the transactions contemplated hereby, do not and will not (i)
contravene or conflict with the Certificate of Incorporation or Bylaws
of the Purchaser; (ii) constitute a violation of any provision of any
federal, state, local or foreign law binding upon or applicable to the
Purchaser; or (iii) constitute a default or require any consent under,
or give rise to any right of termination, cancellation or acceleration
of, or to a loss of any benefit to which the Purchaser is entitled
under, or result in the creation or imposition of any mortgage, pledge,
security interest, charge, lien, claim or encumbrance of any kind on
any property or assets of the Purchaser under, any contract to which
the Purchaser is a party or any permit, license or similar right
relating to the Purchaser or by which the Purchaser may be bound or
affected.
5. Registration Rights.
5.1. Definitions. For purposes of this Section 5:
(a) Registration. The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement
(b) Registrable Securities. The term "Registrable Securities" means: (1)
the Shares, (2) any shares of Common Stock of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, any Shares and (3)
any other Common Stock of the Company owned or hereafter acquired by
the undersigned. Notwithstanding the foregoing, "Registrable
Securities" shall exclude any Registrable Securities sold by a person
in a transaction in which rights under this Section 5 are not assigned
in accordance with this Agreement or any Registrable Securities sold
pursuant to Rule 144 promulgated under the Securities Act, or in a
registered public offering, or otherwise.
(c) Form S-3. The term "Form S-3" means such form under the Securities Act
as is in effect on the date hereof or any successor registration form
under the Securities Act subsequently adopted by the SEC which permits
inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
7
(d) Holder. For purposes of this Section 5, the term "Holder" means the
Purchaser and any permitted transferee of the Purchaser holding
Registrable Securities.
5.2. Form S-3 Registration. Within 30 calendar days after the Closing, the
Company shall effect a registration on Form S-3 and any related
qualification or compliance with respect to all of the Registrable
Securities.
(a) Expenses. The Company shall pay all expenses incurred in connection
with each registration requested pursuant to this Section 5.2
(excluding underwriters' or brokers' discounts and commissions relating
to shares sold by the Holder), including without limitation federal and
"blue sky" registration, filing and qualification fees, printers' and
accounting fees, fees and disbursements of counsel to the Company and
legal fees of one special counsel for Holder.
5.3. Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the
Company shall, as expeditiously as reasonably possible:
(a) Registration Statement. Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become effective and to
maintain the effectiveness of such registration statement for the
period of time required by the Holder to sell the Registrable
Securities registered pursuant to such Registration Statement, subject
to Section 9.3.
(b) Amendments and Supplements. Prepare and file with the SEC such
amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may
be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement.
(c) Prospectuses. Furnish to Holder such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements
of the Securities Act, and such other documents as it may reasonably
request in order to facilitate the disposition of the Registrable
Securities owned by it that are included in such registration.
(d) Blue Sky. Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by
Holder, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
8
(e) Underwriting. In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement in
usual and customary form, with the managing underwriter(s) of such
offering.
(f) Notification. Notify Holder at any time when a prospectus relating to
such registration is required to be delivered under the Securities Act
of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Opinion. Furnish, at the request of Holder, on the date that Holder's
Registrable Securities are delivered to the underwriter(s) for sale, if
such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that
the registration statement with respect to such securities becomes
effective, an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an
underwritten public offering and reasonably satisfactory to Holder,
addressed to the underwriters, if any, and to Holder.
(h) Comfort Letter. Furnish, at the request of Holder, on the date that
Holder's Registrable Securities are delivered to the underwriter(s) for
sale, if such securities are being sold through underwriters, if
permitted by the rules and regulations governing independent certified
public accountants, a "comfort" letter dated as of such date, from the
independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering and
reasonably satisfactory to Holder, addressed to the underwriters, and
to Holder.
5.4. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 5
that Holder shall furnish to the Company such information regarding
itself, the Registrable Securities held by it, and the intended method
of disposition of such securities as shall be required to timely effect
the Registration of such Registrable Securities.
5.5. Indemnification. In the event any Registrable Securities are included
in a registration statement pursuant to this Section 5:
(a) By the Company. To the extent permitted by law; the Company will
indemnify and hold harmless Holder, the partners, officers and
directors of Holder, any underwriter (as determined in the Securities
Act) for Holder and each person, if any, who controls Holder or
underwriter within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended, (the "1934 Act"), against any losses,
claims, damages, or liabilities (joint or several) to which they may
9
become subject under the Securities Act, the 1934 Act or other federal
or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of
the following statements, omissions or violations (collectively a
"Violation"):
(i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein
or any amendments or supplements thereto;
(ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make
the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the
Securities Act, the 1934 Act, any federal or state securities law
or any rule or regulation promulgated under the Securities Act,
the 1934 Act or any federal or state securities law in connection
with the offering covered by such registration statement;
and the Company will reimburse Holder, and each partner,
officer or director, underwriter or controlling person for any
legal or other expenses reasonably incurred by them, as incurred,
in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 5.5(a) shall not
apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability or action to
the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by Holder, and each partner, officer, director,
underwriter or controlling person of Holder.
(b) By Holder. To the extent permitted by law, Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers
who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act and any
underwriter, against any losses, claims, damages or liabilities (joint
or several) to which the Company or any such director, officer,
controlling person, or underwriter may become subject under the
Securities Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by
Holder expressly for use in connection with such registration; and
10
Holder will reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, controlling person, or
underwriter in connection with investigating or defending any such
loss, claim, damage, liability or action: provided, however, that the
indemnity agreement contained in this Section 5.5(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of Holder,
which consent shall not be unreasonably withheld; and provided,
further, that the total amounts payable in indemnity by Holder under
this Section 5.5(b) in respect of any Violation shall not exceed the
net proceeds received by Holder in the registered offering out of which
such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party under this
Section 5.5 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this
Section 5.5, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to
retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due
to actual or potential conflict of interests between such indemnified
party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action
shall relieve such indemnifying party of liability to the indemnified
party under this Section 5.5 to the extent the indemnifying party is
prejudiced as a result thereof, but the omission so to deliver written
notice to the indemnified party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this
Section 5.5.
(d) Defect Eliminated in Final Prospectus. The foregoing indemnity
agreements of the Company and Holder are subject to the condition that,
insofar as they relate to any Violation made in a preliminary
prospectus but eliminated or remedied in the amended prospectus on file
with the SEC at the time the registration statement in question becomes
effective or the amended prospectus filed with the SEC pursuant to SEC
Rule 424(b) (the "Final Prospectus"), such indemnity agreement shall
not inure to the benefit of any person if a copy of the Final
Prospectus was timely furnished to the indemnified party and was not
furnished to the person asserting the loss, liability, claim or damage
at or prior to the time such action is required by the Securities Act.
11
(e) Contribution. In order to provide for just and equitable contribution
to joint liability under the Securities Act in any case in which either
(1) Holder, or any controlling person of Holder, makes a claim for
indemnification pursuant to this Section 5.5 but it is judicially
determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not
be enforced in such case notwithstanding the fact that this Section 5.5
provides for indemnification in such case, or (2) contribution under
the Securities Act may be required on the part of Holder or any such
controlling person in circumstances for which indemnification is
provided under this Section 5.5; then, and in each such case, the
Company and Holder will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution
from others) in such proportion so that Holder is responsible for the
portion represented by the percentage that the public offering price of
its Registrable Securities offered by and sold under the registration
statement bears to the public offering price of all securities offered
by and sold under such registration statement, and the Company and
other selling stockholders are responsible for the remaining portion;
provided, however, that, in any such case: (a) Holder will not be
required to contribute any amount in excess of the public offering
price of all such Registrable Securities offered and sold by Holder
pursuant to such registration statement; and (b) no person or entity
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent
misrepresentation.
(f) Survival. The obligations of the Company and Holder under this Section
5.5 shall survive until the fifth anniversary of the completion of any
offering of Registrable Securities in a registration statement,
regardless of the expiration of any statutes of limitation or
extensions of such statutes.
6. Conditions to the Purchaser's Obligations at Closing. The obligations of
the Purchaser under Sections 1 and 2 of this Agreement are subject to the
fulfillment or waiver, on or before the Closing, of each of the following
conditions:
6.1. Representations and Warranties True. Each of the representations and
warranties of the Company contained in Section 3 will be true and
correct on and as of the date hereof and as of the date of the
Closing, with the same effect as though such representations and
warranties had been made as of the date of the Closing; provided,
however, that such representations and warranties that speak as of a
certain date shall be true and correct as of the specific date to
which such representations and warranties refer.
6.2. Performance. The Company will 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 and will have obtained all approvals, consents and
12
qualifications necessary to complete the purchase and sale described
herein.
6.3. Compliance Certificate. The Company will have delivered to the
Purchaser at the Closing a certificate signed by its Chief Executive
Officer or Chief Financial Officer certifying that the conditions
specified in Sections 6.1 and 6.2 hereof have been fulfilled.
6.4. Securities Exemptions. The offer and sale of the Shares to the
Purchaser pursuant to this Agreement will be exempt from the
registration requirements of the Securities Act and the registration
and/or qualification requirements of all applicable state securities
laws.
6.5. Opinion of Company Counsel. The Purchaser will have received an opinion
on behalf of the Company, dated as of the date of the Closing, from
counsel reasonably acceptable to the Purchaser, in form and substance
reasonably satisfactory to the Purchaser.
6.6. Delivery of the Shares. The Company shall have issued the Shares and
will have delivered the Shares and any cash compensation required
pursuant to Section 1.
7. Conditions to the Company's Obligations at Closing. The obligations of the
Company to the Purchaser under this Agreement are subject to the
fulfillment or waiver, on or before the Closing, of each of the following
conditions:
7.1. Representations and Warranties True. The representations and warranties
of the Purchaser contained in Section 4 will be true and correct on and
as of the date hereof and on the date of the Closing with the same
effect as though such representations and warranties had been made as
of the Closing.
7.2. Cancellation of Indebtedness. Pursuant to Section 1, the Purchaser
shall have canceled the Indebtedness.
7.3. Securities Exemptions. The offer and sale of the Shares to the
Purchaser pursuant to this Agreement will be exempt from the
registration requirements of the Securities Act and the registration
and/or qualification requirements of all applicable state securities
laws.
8. Indemnification.
8.1. Definitions. As used in this Section 8:
(a) "Affiliate" means, with respect to any person or entity, any person or
entity directly or indirectly controlling, controlled by or under
direct or indirect common control with such other person or entity.
13
(b) "Associate" means, when used to indicate a relationship with any person
or entity, (i) any person or entity of which such first person or
entity is an officer, director or partner, or is, directly or
indirectly, the beneficial owner of 10% or more of any class of equity
securities, membership interests or other comparable ownership
interests issued by such other person or entity; (ii) any trust or
estate in which such first person or entity has a 10% or more
beneficial interest or as to which such first person or entity serves
as a trustee or in a similar fiduciary capacity; and (iii) any relative
or spouse of such first person or who is a director or officer of such
first entity.
(c) "Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments,
awards, fines, response costs, sanctions, taxes, penalties, charges and
amounts paid in settlement, including (i) interest on cash
disbursements in respect of any of the foregoing at the prime rate of
Xxxxx Fargo Bank, as in effect from time to time, compounded quarterly,
from the date such cash disbursement is made until the date the party
incurring such cash disbursement shall have been indemnified in respect
thereof, and (ii) reasonable out-of-pocket costs, fees and expenses
(including reasonable costs, fees and expenses of attorneys,
accountants and other agents of, or other parties retained by, such
party), and
(d) "Proceeding" means any action, suit, hearing, arbitration, audit,
proceeding (public or private) or investigation that is brought or
initiated by or against any federal, state, local or foreign
governmental authority or any other person or entity.
8.2. Agreement to Indemnify.
(a) Company Indemnity. The Purchaser and each of its affiliates, officers,
directors, stockholders, employees, representatives and agents
(collectively, the "Purchaser Indemnitees") shall each be indemnified
and held harmless to the extent set forth in this Section 8 by the
Company with respect to any and all Damages (as defined below) incurred
by any Purchaser Indemnitee as a proximate result of any inaccuracy or
misrepresentation in, or breach of, any representation, warranty,
covenant or agreement made by the Company in this Agreement (including
any schedules or exhibits hereto).
(b) Purchaser Indemnity. The Company and each of its affiliates, officers,
directors, stockholders, employees, representatives and agents
(collectively, the "Company Indemnitees") shall each be indemnified and
held harmless to the extent set forth in this Section 8, by the
Purchaser, in respect of any and all Damages incurred by any Company
Indemnitee as a result of any inaccuracy or misrepresentation in, or
breach of, any representation, warranty, covenant or agreement made by
the Purchaser in this Agreement (including any schedules or exhibits
hereto).
14
(c) Equitable Relief. Nothing set forth in this Section 8 shall be deemed
to prohibit or limit any Purchaser Indemnitee's or Company Indemnitee's
right at any time before, on or after the date of the Closing, to seek
injunctive or other equitable relief for the failure of any
indemnifying party to perform or comply with any covenant or agreement
contained herein.
8.3. Survival. All representations and warranties of the Purchaser and the
Company contained herein, and all claims of any Purchaser Indemnitee or
Company Indemnitee in respect of any inaccuracy or misrepresentation in
or breach thereof, shall survive the Closing until the third
anniversary of the date of this Agreement, regardless of whether the
applicable statute of limitations, including extensions thereof, may
expire (except to the extent any such representation or warranty shall
expire by its terms). All covenants and agreements of the Purchaser and
the Company contained herein shall survive the Closing in perpetuity
(except to the extent any such covenant or agreement shall expire by
its terms). All claims of any Purchaser Indemnitee or Company
Indemnitee in respect of any breach of such covenants or agreements
shall survive the Closing until the expiration of one year following
the non-breaching party's obtaining actual knowledge of such breach.
8.4. Claims for Indemnification. If any Purchaser Indemnitee or Company
Indemnitee (each, an "Indemnitee") shall believe that such Indemnitee
is entitled to indemnification pursuant to this Section 8 in respect of
any Damages, such Indemnitee shall give the appropriate indemnifying
party (for which purposes hereof, in the case of a Purchaser
Indemnitee, means the Company, and in the case of a Company Indemnitee,
means the Purchaser) prompt written notice thereof. Any such notice
shall set forth in reasonable detail and to the extent then known the
basis for such claim for indemnification. The failure of such
Indemnitee to give notice of a claim for indemnification promptly shall
not adversely affect such Indemnitee's right to indemnity hereunder
except to the extent that such failure adversely affects the right of
the indemnifying party to assert any reasonable defense to such claim.
Each such claim for indemnity shall expressly state that the
indemnifying party shall have only the 20 business day period referred
to in the next sentence to dispute or deny such claim. The indemnifying
party shall have 20 business days following the receipt of such notice
either (a) to acquiesce in such claim by giving such Indemnitee written
notice of such acquiescence or (b) to object to such claim by giving
such Indemnitee written notice of such objection. If the indemnifying
party does not object thereto within such 20 business day period, such
Indemnitee shall be entitled to be indemnified for all Damages
reasonably and proximately incurred by such Indemnitee in respect of
such claim. If the indemnifying party objects to such claim in a timely
manner, the senior management of the Company and the Purchaser shall
meet to attempt to resolve such dispute. If the dispute cannot be
resolved by the senior management, either party may make a written
demand for formal dispute resolution and specify therein the scope of
the dispute. Within 30 days after such written notification, the
parties agree to meet for one day with an impartial mediator and
consider dispute resolution alternatives other than litigation. If an
alternative method of dispute resolution is not agreed upon by the
15
parties within 30 days after the one-day mediation, either party may
begin litigation proceedings. Nothing in this Section 8.4 shall be
deemed to require arbitration.
8.5. Defense of Claim. In connection with any claim that may give rise to
indemnity under this Section 8 resulting from or arising out of any
claim or Proceeding against an Indemnitee by a person or entity that is
not a party hereto, the Indemnifying Party may, but shall not be
obligated to (unless such Indemnitee elects not to seek indemnity
hereunder for such claim), upon written notice to the relevant
Indemnitee, assume the defense of any such claim or proceeding if the
Indemnifying Party with respect to such claim or Proceeding
acknowledges to the Indemnitee the Indemnitee's right to indemnify
pursuant hereto to the extent provided herein (as such claim may have
been modified through written agreement of the parties or arbitration
hereunder) and provides assurances, satisfactory to such Indemnitee,
that the Indemnifying Party will be financially able to satisfy such
claim to the extent provided herein if such claim or Proceeding is
decided adversely; provided, however, that nothing set forth herein
shall be deemed to require the Indemnifying Party to waive any
crossclaims or counterclaims the Indemnifying Party may have against
the Indemnified Party for damages. The Indemnified Party shall be
entitled to retain separate counsel, reasonably acceptable to the
Indemnifying Party, if the Indemnified Party shall determine, upon the
written advice of counsel, that an actual or potential conflict of
interest exists between the Indemnifying Party and the Indemnified
Party in connection with such Proceeding. The Indemnifying Party shall
be obligated to pay the reasonable fees and expenses of such separate
counsel to the extent that the Indemnified Party is entitled to
indemnification by the Indemnifying Party with respect to such claim or
Proceeding under this Section 8.5. If the Indemnifying Party assumes
the defense of any such claim or Proceeding, the Indemnifying Party
shall select counsel reasonably acceptable to such Indemnitee to
conduct the defense of such claim or Proceeding, shall take all steps
necessary in the defense or settlement thereof and shall at all times
diligently and promptly pursue the resolution thereof. If the
Indemnifying Party shall have assumed the defense of any claim or
Proceeding in accordance with this Section 8.5, the Indemnifying Party
shall be authorized to consent to a settlement of, or the entry of any
judgment arising from, any such claim or Proceeding, with the prior
written consent of such Indemnitee, not to be unreasonably withheld;
provided, however, that that the Indemnifying Party shall pay or cause
to be paid all amounts arising out of such settlement or judgment
concurrently with the effectiveness thereof; provided, further, that
the Indemnifying Party shall not be authorized to encumber any of the
assets of the Indemnitee or agree to any restriction that would apply
to any Indemnitee or the conduct of its business; and provided,
further, that a condition to any such settlement shall be a complete
release of Indemnitee and its Affiliates, directors, officers,
employees, representatives and agents with respect to such claim,
including any reasonably foreseeable collateral consequences thereof.
16
Such Indemnitee shall be entitled to participate in (but not control)
the defense of any such action, with its own counsel and at its own
expense. Each Indemnitee shall, and shall cause each of its Affiliates,
directors, officers, employees, representatives and agents to,
cooperate fully with the Indemnifying Party in the defense of any claim
or Proceeding being defended by the Indemnifying Party pursuant to this
Section 8.5. If the Indemnifying Party does not assume the defense of
any claim or Proceeding resulting therefrom in accordance with the
terms of this Section 8.5, such Indemnitee may defend against such
claim or Proceeding in such manner as it may deem appropriate,
including settling such claim or Proceeding after giving notice of the
same to the Indemnifying Party, on such terms as such Indemnitee may
deem appropriate. If any Indemnifying Party seeks to question the
manner in which such Indemnitee defended such claim or Proceeding or
the amount or nature of any such settlement, such Indemnifying Party
shall have the burden to prove by a preponderance of the evidence that
such Indemnitee did not defend such claim or Proceeding in a reasonably
prudent manner.
9. Put Option.
9.1. Nasdaq Delisting. If, at any time prior to or during the one-year
period following the effectiveness date of the Registration Statement
filed by the Company pursuant to Section 5.2 (the "Put Option Period"),
the Company receives notice that its common stock may be delisted from
the Nasdaq National Market, the Company must provide the Purchaser with
a copy of such notice within three business days of the receipt of such
notice by the Company. In addition, if at any time during the Put
Option Period, the Company receives notice that its common stock will
be delisted from the Nasdaq National Market (a "Notice of Delisting"),
the Company must provide the Purchaser with a copy of such Notice of
Delisting within three business days of the receipt of such notice by
the Company. Upon receipt of a Notice of Delisting, the Purchaser shall
have the right to require the Company to repurchase any of the Shares
held by the Purchaser on the date of receipt of such Notice of
Delisting at the purchase price per Share set forth in Section 1
hereof.
9.2. Failure to File Registration Statement. If the Company fails to file a
Registration Statement pursuant to Section 5.2 above within the time
period set forth in such Section, the Purchaser shall have the right to
terminate this Agreement by delivering notice to the Company pursuant
to Section 10.6.
9.3. Failure to Effect Registration. If the Company fails to effect a
Registration Statement pursuant to Section 5.2 above within 90 days
after such Registration Statement is filed, or fails to keep such
Registration Statement effective for the period of time required by the
Holder to sell the Registrable Securities registered pursuant to such
Registration Statement, the Purchaser shall have the right to (i)
require the Company to repurchase any of the Shares held by the
Purchaser on such date at the purchase price per Share set forth in
Section 1 hereof and/or (ii) terminate this Agreement by delivering
notice to the Company pursuant to Section 10.6. Notwithstanding
anything to the contrary in this Section 9.3, Purchaser shall not have
17
the right to require the Company to repurchase any of the shares if at
any time after the Registration Statement has been declared effective,
the Company notifies the Purchaser in writing of the existence of
certain information which would, in the good faith opinion of the Board
of Directors of the Company, require an amendment or supplement to the
Registration Statement (a "Grace Period"). There shall be no more than
two Grace Periods during the period required to keep the Registration
Statement effective pursuant to Section 5.2 of this Agreement and the
aggregate amount of such Grace Periods shall in no event exceed 30
days.
10. Miscellaneous.
10.1. Successors and Assigns. The terms and conditions of this Agreement will
inure to the benefit of and be binding upon the respective successors
and assigns of the parties.
10.2. Governing Law. This Agreement will be governed by and construed under
the laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within
Delaware, without reference to principles of conflict of laws or choice
of law.
10.3. Limitations on Liability. IN NO EVENT SHALL EITHER PARTY HAVE ANY
LIABILITY TO THE OTHER, OR ANY THIRD PARTY, FOR ANY PUNITIVE, INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT, UNDER
ANY CAUSE OF ACTION OR THEORY OF LIABILITY, AND IRRESPECTIVE OF WHETHER
SUCH PARTY HAS ADVANCE NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. THESE
LIMITATIONS SHALL APPLY NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY.
10.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
10.5. Headings. The headings and captions used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to
sections, paragraphs, exhibits and schedules will, unless otherwise
provided, refer to sections and paragraphs hereof and exhibits and
schedules attached hereto, all of which exhibits and schedules are
incorporated herein by this reference.
10.6. Notices. Any notice required or permitted under this Agreement will be
given in writing, shall be effective when received, and shall in any
event be deemed received and effectively given upon personal delivery
to the party to be notified or three business days after deposit with
the United States Post Office, by registered or certified mail, postage
prepaid, or one business day after deposit with a nationally recognized
courier service such as Federal Express for next business day delivery,
18
or one business day after facsimile with copy delivered by registered
or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page
hereof or at such other address as the Purchaser or the Company may
designate by giving at least ten days advance written notice pursuant
to this Section 10.6.
10.7. No Finders Fees. Each party represents that it neither is nor will be
obligated for any finder's or broker's fee or commission in connection
with the transactions contemplated by this Agreement. The Purchaser
will indemnify and hold harmless the Company from any liability for any
commission or compensation in the nature of a finder's or broker's fee
for which the Purchaser or any of its officers, partners, employees,
consultants or representatives is responsible. The Company will
indemnify and hold harmless the Purchaser from any liability for any
commission or compensation in the nature of a finder's or broker's fee
for which the Company or any of its officers, employees, consultants or
representatives is responsible.
10.8. Amendments and Waivers. 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
Purchaser. Any amendment or waiver effected in accordance with this
Section 10.8 will be binding upon the Purchaser, the Company and their
respective successors and assigns.
10.9. Severability. If any provision of this Agreement is held to be
unenforceable under applicable law, such provision will be excluded
from this Agreement and the balance of the Agreement will be
interpreted as if such provision were so excluded and will be
enforceable in accordance with its terms. Regardless of which party may
have drafted this Agreement or any portion hereof, no rule of strict
construction shall be applied against either party.
10.10. Entire Agreement. This Agreement and all exhibits and schedules hereto,
constitutes the entire agreement and understanding of the parties with
respect to the subject matter hereof and supersedes any and all prior
or contemporaneous negotiations, correspondence, agreements,
understandings, duties or obligations between the parties with respect
to the subject matter hereof.
10.11. Further Assurances. From and after the date of this Agreement upon
request of the Company or the Purchaser, the Company and the Purchaser
will execute and deliver such instruments, documents or other writings
as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
10.12. Fees, Costs and Expenses. All fees, costs and expenses (including
attorneys' fees and expenses) incurred by either party in connection
19
with the preparation, negotiation and execution of this Agreement and
the consummation of the transactions contemplated hereby shall be the
sole and exclusive responsibility of such party.
10.13. Confidentiality. Confidential or proprietary information disclosed by
either party under this Agreement, as well as the existence and terms
of this Agreement and the transactions contemplated hereby, shall be
considered confidential information ("Confidential Information") and
shall not be disclosed by the Company to any third party. The Company
or the Purchaser shall immediately notify the other party of any
information that comes to its attention which might indicate that there
has been a loss of confidentiality with respect to the Confidential
Information. In the event that the Company or the Purchaser is
requested or becomes legally compelled (by statute or regulation or by
oral questions, interrogatories, request for information or documents,
subpoena, criminal or civil investigative demand or similar process,
including, without limitation, in connection with any public or private
offering of the Company's securities) to disclose any of the
Confidential Information, such party (the "Disclosing Party") shall
provide the other party (the "Non-disclosing Party") with prompt
written notice of that fact so that the other party may seek (with the
cooperation and reasonable efforts of the Disclosing Party) a
protective order, confidential treatment or other appropriate remedy.
In such event, the Disclosing Party shall furnish only that portion of
the Confidential Information which is legally required and shall
exercise reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded the Confidential Information to
the extent reasonably requested by the Non-disclosing Party. The
provisions of this Section 10.13 shall be in addition to, and not in
substitution for, the provisions of any separate nondisclosure
agreement executed by the parties hereto with respect to the
transactions contemplated hereby.
10.14. Public Announcements. Notwithstanding the provisions of Section 10.13
above, from and after the Closing, the Company may disclose the
existence and terms of this Agreement and the Purchaser's purchase of
the Shares, solely to the Company's investment bankers, lenders,
accountants, legal counsel and employees, in each case only where such
persons or entities have executed appropriate nondisclosure agreements
with the Company. The Company shall not issue any press release or make
any other announcement to the general public or in any professional or
trade publication regarding the Purchaser, the existence and terms of
this Agreement, the Shares and the Purchaser's purchase of the Shares,
without the prior written consent of the Purchaser, which consent may
be withheld at the sole discretion of the Purchaser. Notwithstanding
the foregoing, the Purchaser may disclose the existence and terms of
this Agreement, the Shares and the Purchaser's purchase of the Shares,
to third parties or to the public at its discretion, and the Company
shall have the right to disclose to third parties any such information
disclosed by the Purchaser in a press release or other public
announcement. If the Company or the Purchaser determines that any
disclosure not otherwise authorized by this Agreement is required by
20
law or regulation, then the provisions of Section 10.13 regarding
disclosure of Confidential Information by a Disclosing Party shall
govern.
10.15. Confidential Treatment of this Agreement. If, at any time, the Company
files this Agreement or any portion hereof with the Securities and
Exchange Commission, the Company shall be required to cooperate with
the Purchaser to apply for, and use reasonable efforts to obtain in
advance of such filing, confidential treatment for such portions of the
Agreement specified by Purchaser.
[The remainder of this page is intentionally left blank.]
21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
VITECH AMERICA, INC. INTEL CORPORATION
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxxx Xxxxxxxxx
------------------------------ ------------------------------
Name: Xxxxxx Xxxxx Name: Xxxxx Xxxxxxxxx
------------------------------ ------------------------------
Title CFO Title Credit Manager
------------------------------ ------------------------------
Date Signed: May 25, 2000 Date Signed: May 25, 2000
------------------------------ ------------------------------
Address: 0000 XX 00 Xxxxx Address: 1900 Praire City Rd
------------------------------ ------------------------------
Xxxxx, XX 00000 Xxxxxx, XX 00000
------------------------------ ------------------------------
Telephone: 000-000-0000 Telephone: 000-000-0000
------------------------------ ------------------------------
Facsimile: 000-000-0000 Facsimile: 000-000-0000
------------------------------ ------------------------------
SIGNATURE PAGE TO DEBT CANCELLATION AND STOCK PURCHASE AGREEMENT
22
