Exhibit 2.7
STOCK PURCHASE AGREEMENT
BETWEEN
SYSTEMSOFT CORPORATION
AND
XXXXX ENTERPRISES, INCORPORATED
THIS COMMON STOCK PURCHASE AGREEMENT ("Agreement") is made and
entered as of this 6th day of May, 1997, by and between SYSTEMSOFT
CORPORATION, a Delaware corporation with its principal offices at 0 Xxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000-0000 (the "Company"), and XXXXX
ENTERPRISES, INCORPORATED, a Florida corporation with its principal
offices at 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx 00000 (the
"Purchaser").
ARTICLE I
AUTHORIZATION AND SUBSCRIPTION
1.1 Authorization. Subject to the terms of this Agreement, the
Company has authorized the sale and issuance to the Purchaser of One
Million Sixty-Six Thousand Six Hundred Sixty-Six (1,066,666) shares of
Common Stock, $.01 par value (the "Purchased Shares"), having the rights,
privileges and preferences as set forth in the Company's Certificate of
Incorporation.
1.2 Subscription. The Purchaser hereby subscribes for and purchases
from the Company and the Company hereby sells to the Purchaser the
Purchased Shares for a purchase price of $7.50 per share and an aggregate
price of Eight Million and 00/100 Dollars ($8,000,000) (the "Purchase
Price"). The foregoing subscription is hereby accepted by the Company.
1.3 Delivery.
(a) The parties acknowledge that (i) the Company shall deliver
to the Purchaser a certificate or certificates, registered in the
Purchaser's name, representing the Purchased Shares, and (ii) the
Purchaser shall deliver to the Company the Purchase Price by wire transfer
of immediately available funds.
(b) The following deliveries shall be made immediately upon the
execution herewith, for or on behalf of the Company in connection with the
transactions required pursuant to, or contemporaneously with, this
Agreement:
(i) all certificates representing the Purchased Shares;
(ii) any consents or approvals required pursuant to this
Agreement;
(iii) such other documents as any Purchaser may reasonably
request, in form and substance reasonably satisfactory
to the Purchaser's counsel.
(c) The Purchaser is, contemporaneously with the execution
hereof, delivering to the Company the Purchase Price as set forth in
Section 1.2 hereof.
(d) All transactions contemplated by this Agreement shall be
deemed to be simultaneous and the execution, delivery and closing of each
such transaction shall be a condition of the obligations of the parties to
execute, deliver and to close all other contemplated transactions.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
To induce the Purchaser to enter into this Agreement, the Company
hereby represents and warrants to the Purchaser, as of the date hereof, as
follows:
2.1 Organization and Standing. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the
State of Delaware and is in good standing under such laws. The Company
has the requisite corporate power and authority to own and operate its
properties and assets, and to carry on its business as presently conducted
and as proposed to be conducted. The Company is currently qualified to do
business as a foreign corporation in any jurisdiction in which such
qualification is required, except where the failure to be so qualified
will not have a material adverse effect on the Company's business or
financial condition or results of operations (a "Material Adverse
Effect").
2.2 Corporate Power. The Company has all requisite legal and
corporate power and authority (i) to execute and deliver this Agreement
and any other agreement required or desirable to effectuate the
transactions described herein; (ii) to sell and issue the Purchased
Shares; and (iii) to carry out and perform its obligations under the terms
of this Agreement and any other agreement required to effectuate the
transactions described herein.
2.3 Authorized Capital Stock. As of May 1, 1997, the authorized
capital stock of the Company consists of (i) 1,000,000 shares of Preferred
Stock, par value $.01 per share, none of which were issued and outstanding
or held in the treasury of the Company and (ii) 90,000,000 shares of
Common Stock, of which 25,087,668 shares were issued and outstanding and
159,246 shares were held in the treasury of the Company. As of May 1,
1997, there were reserved for issuance under the Company's various stock
plans and outstanding warrants an aggregate of up to 6,221,986 shares of
Common Stock. Except as provided in the immediately preceding sentence of
this Section 2.3, as of May 1, 1997, there were no outstanding options,
warrants, calls, rights, commitments or agreements to which the Company is
a party or by which the Company is bound obligating the Company to (x)
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock of the company or (y) grant, execute or
enter into any such option, warrant, call, right, commitment or agreement.
When issued and delivered to the Purchaser by the Company against payment
of the consideration set forth herein, the Purchased Shares will be
validly issued, fully paid and non-assessable.
2.4 Authorization and Enforceability. All corporate action on the
part of the Company, its directors and shareholders necessary for: (i) the
authorization, execution, delivery and performance of this Agreement by
the Company; (ii) the authorization, sale, issuance and delivery of the
Purchased Shares; and (iii) the performance of all of the Company's
obligations under this Agreement has been duly and validly taken. This
Agreement, when executed and delivered by the Company, shall constitute a
valid and binding obligation of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except
as enforceability may be subject to the general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or at law) and except as the indemnification agreements of the
Company in this Agreement may be legally unenforceable. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby shall not violate any order, writ, injunction, decree,
statute, regulation or rule applicable to the Company.
2.5 SEC Reporting; No Material Adverse Change. The Company has
filed in a timely manner all documents that the Company was required to
file under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") during the 12 months preceding the date of this Agreement. The
Company's Annual Report on Form 10-K for the fiscal year ended January 31,
1997, complied in all material respects with the requirements of the
Exchange Act as of its filing date, and the information contained therein
as of the date thereof did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Since January
31, 1997, there has not been any material adverse change in the assets,
liabilities, financial condition or operations of the Company from that
reflected in the financial statements included in the Company's Annual
Report on Form 10-K, except changes in the ordinary course of business.
2.6 Proprietary Technology. The Company owns, currently licenses,
or otherwise has the legal right to use, all computer software that is
material to the conduct of the business of the Company, and all such
computer software is being used by the Company in compliance, in all
material respects, with any applicable licenses. To the best knowledge
and belief of the Company, there are no claims pending or threatened
against the Company that assert that any of the patents, technology, know-
how or trade-secrets owned by or licensed by the Company infringe the
intellectual property rights of any third parties.
2.7 Warranty Claims. The Company has adequately reserved in
accordance with generally accepted accounting principals against any and
all liabilities under any warranty or extended warranty relating to the
products manufactured, sold, installed or serviced by it.
2.8 Licenses, Permits, Compliance, Etc. The Company has all
material licenses, franchises, permits and government authorizations
(collectively, the "Permits") reasonably necessary for the conduct of the
Company's business as presently conducted, none of which will be
terminated or otherwise materially adversely affected by the consummation
of the transactions contemplated by this Agreement. The Company currently
complies and has complied in all material respects with all laws,
regulations and orders applicable to it and to the Company's business.
2.9 Consents and Approvals. The Company has obtained, in form and
substance acceptable to the Purchaser, the waiver, consent and approval
(i) of all persons or entities whose waiver, consent or approval is
required for the Company to consummate its obligations with respect to the
transactions contemplated by this Agreement; (ii) of any person or entity
that is required by any material agreement, lease, instrument,
arrangement, judgment, decree, order or license to which the Company is a
party or subject as of the date hereof, and that would prohibit or
materially adversely affect such transactions, or require the waiver,
consent or approval of any person to such transactions; or (iii) under any
material agreement, lease, instrument, arrangement, judgment, decree,
order or license under which, without such waiver, consent or approval,
such transactions would constitute an occurrence of a breach or a default,
result in the acceleration of any material obligation thereunder, or give
rise to a right of any party thereto to terminate its obligations
thereunder.
2.10 Compliance with Other Instruments, None Burdensome, etc. The
Company is not in violation of any term of its Certificate of
Incorporation or Bylaws, or, in any material respect, of any term or
provision of any material mortgage, indebtedness, indenture, contract,
agreement, instrument, judgment or decree, and is not in violation of any
order, statute, rule or regulation applicable to the Company where such
violation would have a Material Adverse Effect on the Company. The
execution, delivery and performance of and compliance with this Agreement
has not resulted and will not result in any violation of, or conflict
with, or constitute a default under, the Company's Certificate or Bylaws
or, in any material respect, any of its material agreements or result in
the creation of any mortgage, pledge, lien, encumbrance or charge upon any
of the properties or assets of the Company.
2.11 Litigation, etc. There are no actions, claims, suits,
proceedings or investigations pending against the Company or its
properties before any court, governmental agency, arbitration board or
other tribunal, nor, to the best of the Company's knowledge, is there any
threat thereof which would have a Material Adverse Effect on the Company.
2.12 Offering. Assuming the truth of the Purchasers' representations
in Section 3.2 hereof, the offer, sale and issuance of the Purchased
Shares to be issued in conformity with the terms of this Agreement
constitutes a transaction exempt from the registration requirements of
Section 5 of the Securities Act of 1933, as amended (the "Securities
Act"), and from the qualification requirements of any applicable state
securities or "blue sky" laws.
2.13 Previous Sales of Securities. Since August 1, 1994, all offers
and sales of securities by the Company have been made in compliance with
the requirements of the Securities Act and applicable state securities
laws.
2.14 Investment Company. The Company is not an "investment company",
or an "affiliated person" of an "investment company", or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended, and the Company is not an
"investment advisor" or an "affiliated person" of an "investment adviser"
as such terms are defined in the Investment Advisers Act of 1940, as
amended.
2.15 Brokers or Finders. The Company has not incurred, and will not
incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or
the Transaction Documents.
2.16 Use of Proceeds. The proceeds of the Purchase Price will be
used for working capital and general corporate purposes.
2.17 Knowledge and Belief. In the case of any representation or
warranty set forth in this Section 2 that is stated to be "to the best
knowledge and belief", "to the knowledge and belief", "to the knowledge"
or "to the actual knowledge" of the Company, the Company acknowledges
that, unless otherwise expressly provided herein with respect to the
applicable representation or warranty, the Company shall have made all
reasonable inquiries necessary to determine the truth or falsity of the
representation or warranty so qualified.
2.18 Listing. As soon as practicable after the date hereof, the
Company shall comply with all requirements of the National Association of
Securities Dealers, Inc. with respect to the issuance of the Purchased
Shares and the listing thereof on the NASDAQ National Market.
2.19 Observation Rights. The Company covenants and agrees that as
long as the Purchaser is the record or beneficial holder of at least
250,000 shares of the Purchased Shares (as adjusted for any stock split,
subdivision, reclassification or similar event), it shall permit the
Purchaser to have one representative, who shall be Xxxx Xxxxx unless
otherwise agreed to by the Company (the "Representative"), to attend each
meeting of the Board of Directors of the Company and to participate in all
discussions during each such meeting. The Purchaser shall bear the
expenses of the Representative traveling to and attending such meetings.
The Purchaser agrees that such Representative shall be bound by the
confidentiality, non-disclosure and limitations on use provision contained
in that certain Mutual Non-Disclosure Agreement dated April 30, 1997, by
and between the Company and the Purchaser with respect to any information
received at such meetings and that the Purchaser and the Representative
shall be bound by the Company's xxxxxxx xxxxxxx policy to the same extent
as if such Representative were a director of the Company. Specifically,
the Purchaser acknowledges that the Company is currently in a black-out
period which will not expire until forty-eight (48) hours after the
release of financial results for the Company's quarter ended April 30,
1997. The Company reserves the right to exclude the Representative from
any meeting or portion thereof if a determination has been made by legal
counsel to the Company that attendance by such Representative could
adversely affect the attorney-client privilege between the Company and its
counsel. The Company shall send to the Representative the notice of the
time and place of such meetings in the same manner and at the same time as
it shall send such notice to its directors.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company with
respect to its purchase of the Purchased Shares, as follows:
3.1 No Conflict. The execution, delivery and performance of and
compliance with this Agreement by the Purchaser (i) will not result in any
violation of, or conflict with, or constitute a default, in any material
respects, of any of the Purchaser's material agreements or instruments to
which it is a party, and (ii) will not violate any order, writ,
injunction, decree, statute, regulation or rule applicable to the
Purchaser.
3.2 Representations, Warranties and Covenants of the Purchaser. The
Purchaser represents and warrants to, and covenants with, the Company
that: (i) the Purchaser is an "accredited investor" as defined in
Regulation D under the Securities Act of 1933, as amended (the "Securities
Act") and the Purchaser is also knowledgeable, sophisticated and
experienced in making, and is qualified to make decisions with respect to
investments in shares presenting an investment decision like that involved
in the purchase of the Stock, including investments in securities issued
by the Company and investments in comparable companies, and has requested,
received, reviewed and considered all information it deemed relevant in
making an informed decision to purchase the Purchase Shares; (ii) the
Purchaser is acquiring the Purchased Shares in the ordinary course of its
business and for its own account for investments only and with no present
intention of distributing any of such shares of Purchase Shares or any
arrangement or understanding with any other persons regarding the
distribution of such shares of Purchased Shares; (iii) the Purchaser will
not, directly or indirectly, offer, sell, pledge, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise acquire or
take a pledge of) any of the shares of Purchased Shares except in
compliance with the Securities Act, applicable state securities laws and
the respective rules and regulations promulgated thereunder; (iv) the
Purchaser has, in connection with its decision to purchase the Purchased
Shares set forth herein, relied only upon the representations and
warranties of the Company contained herein and in Reports filed pursuant
to the Securities Exchange Act of 1934, as well as the terms of that
certain Joint Integration, Marketing and Distribution Agreement dated May
5, 1997 by and between the Company and the Purchaser; and (v) the Investor
understands that the certificate representing the Purchased Shares will
bear a legend to ensure compliance with the Securities Act and the
Purchaser agrees to comply with the requirements of such legend.
3.3 Authority; Binding Effect. The Purchaser further represents and
warrants to, and covenants with, the Company that (i) the Purchaser has
full right, power, authority and capacity to enter into this Agreement and
to consummate the transactions contemplated hereby and has taken all
necessary action to authorize the execution, delivery and performance of
this Agreement, and (ii) upon the execution and delivery of this
Agreement, this Agreement shall constitute a valid and binding obligation
of the Purchaser enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and
except as the indemnification agreement of the Purchaser herein may be
legally unenforceable.
ARTICLE IV
AFFIRMATIVE AND NEGATIVE COVENANTS OF THE COMPANY
So long as the Purchaser shall own any shares of Common Stock, the
Company shall comply with the following covenants and agreements:
4.1 Compliance. The Company shall comply with all applicable
statutes and governmental regulations, including, but not limited to,
applicable federal and state securities laws, and shall pay and discharge,
before any penalty attaches thereto for non-payment thereof, all taxes,
assessments and governmental charges of any kind levied upon or assessed
against the Company; provided, however, that the Company shall not be
required to pay any such taxes, assessments or other governmental charges
so long as it shall be in good faith contesting the validity thereof, and
shall have reserved for the payment of the taxes, assessments or other
governmental in a manner satisfactory to the Purchaser.
4.2 Cooperation. The Company shall cooperate with the Purchaser,
take such actions, and execute such documents and provide such information
as the Purchaser may from time to time reasonably request to effect the
transactions contemplated by, and the purposes of, this Agreement and any
agreements executed pursuant to or in connection with this Agreement.
4.3 Rule 144 Reporting. With a view to making available to the
Purchaser the benefits of certain rules and regulations of the Securities
and Exchange Commission which may permit the sale of the Purchased Shares
to the public without registration, the Company agrees to use its best
efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) Use its best efforts to file with the Securities and
Exchange Commission in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) So long as the Purchaser owns any Restricted Securities (as
defined in Section 5.1 hereof), cooperate with the Purchaser in providing
information necessary to effect a sale, including furnishing to the
Purchaser forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144, and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company filed with the Securities and Exchange
Commission.
ARTICLE V
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; COMPLIANCE WITH
SECURITIES ACT; REGISTRATION RIGHTS
5.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the
Securities Act.
(b) "Holder" shall mean any person who holds Registrable
Securities and any person holding Registrable Securities to whom the
rights under this Section 5 have been transferred in accordance with
Section 5.13 hereof.
(c) "Initiating Holder" shall mean the Purchaser or any persons
who in the aggregate are Holders of at least forty percent (40%) of the
Registrable Securities.
(d) "Register," "registered" and "registration" refer to a
registration effected by preparing and filing with the Commission a
registration statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration
statement.
(e) "Registrable Securities" means (i) the Purchased Shares and
(ii) any other securities issued or issuable in connection with the
Purchased Shares, upon any stock split, stock dividend, recapitalization,
or similar event, provided, however, that any such shares of stock that as
of the date of the determination (i) have previously been sold,
transferred or assigned by the Investor or (ii) may be sold either without
limitation pursuant to Rule 144(k) under the Securities Act or within the
volume limitations of Rule 144 under the Securities Act, shall not be
deemed Registrable Shares or entitled to benefits of the registration
rights granted hereunder.
(f) "Registration Expenses" shall mean all expenses, except
Selling Expenses as defined below, incurred by the Company in complying
with Sections 5.5 and 5.6 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company, blue sky fees and
expenses, the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of
the Company which shall be paid in any event by the Company) and the
reasonable fees and disbursements of one counsel for all Holders.
(g) "Restricted Securities" shall mean the securities of the
Company required to bear the legend set forth in Section 5.3 hereof.
(h) "Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and, except as set forth in the definition of
Registration Expenses, all reasonable fees and disbursements of counsel
for any Holder.
5.2 Restrictions on Transferability. Any shares of Common Stock
purchased under the terms hereof shall not be sold, assigned, pledged or
in any way transferred except (i) upon satisfaction of the conditions
specified in this Section 5, which conditions are intended to ensure
compliance with the provisions of the Securities Act or (ii) otherwise in
accordance with the Securities Act. The Purchaser will cause any proposed
purchaser, assignee, pledgee or transferee of the Purchased Shares held by
the Purchaser to agree to take and hold such securities subject to the
provisions and conditions of this Section 5.
5.3 Restrictive Legend. Each certificate representing (i) the
Purchased Shares and (ii) any other securities issued in respect of the
shares of Purchased Shares upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted by the provisions of Section 5.4 below) be stamped or
otherwise imprinted with a legend substantially in the form described in
Section 6 hereof.
5.4 Reserved.
5.5 Requested Registration.
(a) Request for Registration. In the event the Company shall
receive within two (2) years from the date of this Agreement from
Initiating Holders a written request that the Company effect a
registration under the Securities Act with respect to at least twenty
percent (20%) (or any lesser percentage if the anticipated aggregate
offering price would exceed Eight Million Dollars ($8,000,000) of the
Registrable Securities), the Company shall:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all
Holders; and
(ii) as soon as practicable, but not later than sixty (60)
days from receipt of request, file such registration
and use its best efforts to have the same declared
effective (including, without limitation, appropriate
qualification under applicable blue sky or other state
securities laws and appropriate compliance with
applicable regulations issued under the Securities Act
and any other governmental requirements or
regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all
or such portion of such Registrable Securities as are
specified in such request, together with all or such
portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a
written request received by the Company within twenty
(20) days after receipt of such written notice from
the Company; and
provided, however, that the Company shall not be obligated to take any
action to effect any such registration, qualification or compliance
pursuant to this Section 5.5:
(A) In any particular jurisdiction in which the Company would
be required to execute a general consent to service of
process in effecting such registration, qualification or
compliance unless the Company is already subject to service
in such jurisdiction and except as may be required by the
Securities Act; or
(B) Until a date which is One Hundred and Twenty (120) days
following the date hereof; or
(C) After the Company has effected one (1) such registration
pursuant to this Section 5.5(a), and such registration has
been declared or ordered effective.
(b) If at the time of any request to register Registrable
Shares pursuant to this Section 5.5 (i) the Company is engaged or has
fixed plans to engage within sixty (60) days of the time of the request in
a registered public offering of its securities, (ii) the Company is in
possession of material information that it deems advisable not to disclose
in a registration statement, (iii) the Company shall have delivered to the
Purchaser a certificate of an officer of the Company to the effect that,
on the advice of counsel, the Company believes such delay is necessary to
comply with Regulation M under the Exchange Act, (iv) the Company is
prohibited (pursuant to the terms of an underwriting agreement in
connection with a public offering of its securities or otherwise) from
filing such registration statement or (v) the Company is engaged in any
other activity which, in the good faith determination of the Company's
Board of Directors, would be adversely affected by the requested
registration to the material detriment of the Company, then the Company
may at its option direct that such request be delayed for a reasonable
period not in excess of sixty (60) days from the time such event,
situation or activity no longer exists.
(c) Underwriting. If the Initiating Holders intend to
distribute the Registrable Securities covered by its request by means of
an underwriting, they shall so advise the Company as a part of their
request made pursuant to Section 5.5(a) hereof and the Company shall
include such information in the written notice to Holders referred to in
Section 5.5(a) hereof. In such event, any Holder desiring to exercise its
right to registration pursuant to this Section 5.5 shall include within
its registration request a statement as to whether such Holder desires to
(i) participate in such underwriting and include such Holder's Registrable
Securities in such underwriting or (ii) register such Holder's Registrable
Securities without participating in such underwriting (in which event the
Holder shall inform the Company, as part of such request, of the method by
which the Holder intends to distribute such Registrable Securities). All
Holders proposing to distribute their Registrable Securities through such
underwriting shall (together with the Company and any other shareholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter(s)
selected for such underwriting by a majority in interest of the Initiating
Holders but subject to the Company's reasonable approval. If any Holder
disapproves of the terms of the underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company, the managing
underwriter and the Initiating Holder, in which event the Registrable
Securities so withdrawn from the underwriting may nonetheless, at the
option of the Holder, be included in the registration. All Holders
proposing to distribute their Registrable Securities other than through
such underwriting shall, if the managing underwriter determines that
marketing factors so require and so advises the Company in writing, agree
to refrain from distributing such Registrable Securities for One Hundred
Twenty (120) days after the effective date of the applicable registration
statement, on the condition that all other shareholders proposing to
distribute shares of their Common Stock other than through such
underwriting who own or have rights to acquire a number of shares of
Common Stock equal to five percent (5%) or more of the outstanding shares
of Common Stock also agree to so refrain.
Notwithstanding any other provision of this Section 5.5, if the
managing underwriter determines that marketing factors require a
limitation on the number of shares to be underwritten and so advises the
Company in writing, and if, as a result of such limitation, the number of
Registrable Securities included in the underwriting must be limited, the
Holders' right to participate in the underwriting shall be limited in
proportion to the number of Registrable Securities required to be
registered by each Holder. Any Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation may
nonetheless, at the option of the Holder, be included in the registration.
All Holders of Registrable Securities included in the registration but not
included in such underwriting pursuant to this Section 6.5(b) shall notify
the Company of the intended method of distribution of such shares and
shall, if the managing underwriter determines that marketing factors so
require and so advises the Company in writing, agree to refrain from
distributing such shares for One Hundred Twenty (120) days after the
effective date of the applicable registration statement, on the condition
that all other shareholders proposing to distribute shares of their Common
Stock other than through such underwriting who own or have rights to
acquire a number of shares of Common Stock equal to five percent (5%) or
more of the outstanding shares of Common Stock also agree to so refrain.
To facilitate the allocation of shares in accordance with the above
provisions, the Company or the underwriters may round the number of shares
allocated to any Holder to the nearest one hundred (100) shares.
Notwithstanding any other provision of this Section 5.5, if the
managing underwriter determines that marketing factors require that the
registration be limited to shares included in the underwriting and so
advises the Company in writing, the Holders will have no right to register
their Registrable Securities without participating in the underwriting.
In such event, (i) any Registrable Securities excluded from the
underwriting by reason of Section 5.5(b) hereof shall also be excluded
from the registration, and (ii) any Registrable Securities withdrawn from
the underwriting as provided in Section 5.5(b) hereof shall also be
withdrawn from the registration.
(d) Inclusion of Company and Other Shares. The Company may
include shares of Common Stock for its own account in any registration and
underwriting pursuant to Sections 5.5 and 5.6; provided, however, that the
Company may include shares for its own account in an underwritten offering
only if the managing underwriter so agrees and if the amount of
Registrable Securities which would otherwise have been included in the
underwriting will not thereby be diminished. The Company may include
shares of Common Stock held by shareholders other than Holders in a
registration statement pursuant to Section 5.5 or 5.6 if, and to the
extent that, the amount of Registrable Securities otherwise includable in
such registration statement would not thereby be diminished.
5.6 Company Registration.
(a) Notice of Registration. If at any time or from time to
time the Company shall determine to register any of its securities, either
for its own account or for the account of a security holder or holders,
other than (1) a registration relating solely to employee benefit plans on
Form S-8 (or any successor form to Form S-8); (2) a registration relating
solely to a business combination transaction on Form S-4 (or any successor
form to Form S-4); or (3) any other registration which is not appropriate
for the registration for the Registrable Securities for sale to the
public, then the Company will:
(i) promptly give to each Holder thirty (30) days written
notice thereof (which notice shall include, to the
extent available, a list of jurisdictions in which the
Company intends to attempt to qualify such securities
under applicable blue sky or other state securities
laws); and
(ii) include in such registration (and any related
qualification under blue sky laws or other
compliance), and in any underwriting involved therein,
all the Registrable Securities specified in written
request or requests, made within twenty (20) days
after receipt of such written notice from the Company,
by any Holder.
(b) Underwriting. If the registration of which the Company
gives notice is for a public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 5.6(a)(i) hereof. In such event, any Holder desiring
to exercise its right to registration pursuant to this Section 5.6 shall
include within its registration request a statement as to whether such
Holder desires to (i) participate in such underwriting or (ii) register
their Registrable Securities without participating in such underwriting
(in which event the Holder shall inform the Company, as part of such
request, of the method by which the Holder intends to distribute such
shares). All Holders proposing to distribute their Registrable Securities
through such underwriting shall (together with the Company and the other
shareholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the managing
underwriter, in which event Registrable Securities so withdrawn from the
underwriting may, nonetheless, at the option of the Holder, be included in
the registration. All Holders proposing to distribute their Registrable
Securities other than through such underwriting shall, if the managing
underwriter determines that marketing factors so require and so advises
the Company in writing, agree to refrain from distributing such
Registrable Shares for One Hundred Twenty (120) days after the effective
date of the applicable registration statement, on the condition that all
other shareholders proposing to distribute shares of their Common Stock
other than through such underwriting who own or have rights to acquire a
number of shares of Common Stock equal to five percent (5%) or more of the
outstanding shares of Common Stock also agree to so refrain.
Notwithstanding any other provision of this Section 5.6, if the
managing underwriter determines that marketing factors require a
limitation on the number of outstanding shares to be underwritten and so
advises the Company in writing, the number of Registrable Securities
included in the underwriting may be limited, in which case the Holders'
rights to participate in the underwriting and the rights of all other
shareholders of the Company desiring to participate in the underwriting
(other than, if the registration was demanded by another shareholder
pursuant to such other shareholder's right to a demand registration) shall
be limited in proportion to the number of Registrable Securities requested
to be registered by each such Holder. To facilitate the allocation of
shares in accordance with the above provisions, the Company may round the
number of shares allocated to any Holder or other shareholder to the
nearest One Hundred (100) shares. Any Registrable Securities excluded
from the underwriting by reason of the underwriter's marketing limitation
may nonetheless, at the option of the Holder, be included in the
registration. All Holders of Registrable Securities included in the
registration but excluded from such underwriting pursuant to this Section
5.6(b) shall inform the Company of the intended method of distribution of
such Registrable Securities and shall, if the managing underwriter
determines that marketing factors so require and so advises the Company in
writing, agree to refrain from distributing such Registrable Securities
for One Hundred Twenty (120) days after the effective date of the
applicable registration statement, on the condition that all other
shareholders proposing to distribute shares of their Common Stock other
than through such underwriting who own or have rights to acquire a number
of shares of Common Stock equal to five percent (5%) or more of the
outstanding shares of Common Stock also agree to so refrain.
Notwithstanding any other provision of this Section 5.6, if the
managing underwriter determines that marketing factors require that the
registration be limited to shares included in the underwriting and so
advises the Company in writing, the Holders will have no right to register
Registrable Securities without participating in the underwriting. In such
event, (i) any Registrable Securities excluded from the underwriting by
reason of Section 5.6(b) hereof shall also be excluded from the
registration, and (ii) any Registrable Securities withdrawn from the
underwriting as provided in Section 5.6(b) hereof shall also be withdrawn
from the registration.
The Company may include shares of Common Stock held by shareholders
other than Holders in a registration statement pursuant to Section 5.5 or
5.6 if, and to the extent that, the amount of Registrable Securities
otherwise includable in such registration statement would not thereby be
diminished.
(c) No Requirement to File and Right to Terminate Registration.
The Company shall not be required by this Section 5.6 to file a
registration statement at any time or to prosecute a filing to
effectiveness. The Company shall have the right to terminate or withdraw
any registration initiated by it under this Section 5.6 prior to the
effectiveness of such registration whether or not any Holder has elected
to include securities in such registration.
5.7 Reserved.
5.8 Limitations on Subsequent Registration Rights. The Company
shall not enter into any agreement granting any holder or prospective
holder of any securities of the Company registration rights with respect
to such securities unless such rights are fully subordinate to the rights
of the Purchaser contained in this Section 5, or are approved by the
Purchaser, which approval shall not be unreasonably withheld or delayed.
5.9 Expenses of Registration. All Registration Expenses incurred in
connection with registration(s) pursuant to Sections 5.5 and 5.6 shall be
borne by the Company. Unless otherwise stated, all Selling Expenses
relating to securities registered on behalf of the Holders shall be borne
by the Holders of such securities pro rata on the basis of the number of
shares so registered.
5.10 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this
Section 5, the Company will keep each Holder advised in writing as to the
initiation of each registration, qualification and compliance and as to
the completion thereof. At its expense the Company shall:
(a) Keep such registration, qualification or compliance
pursuant to this Section 5 effective until May 6, 1999 or until the Holder
or Holders have completed the distribution described in the registration
statement relating thereto, whichever occurs first; provided, however,
that, notwithstanding anything to the contrary in this Agreement, if at
any time and from time to time after the first date of effectiveness of
the registration of Registrable Shares pursuant to Section 5.5 the Company
notifies the Purchaser in writing of the existence of a Potential Material
Event, the Purchaser and any other persons who hold shares of stock
registered pursuant to this Section 5.5 shall not offer or sell any of
their shares of stock from the time of the giving of such notice to the
earliest to occur of (a) the public disclosure by the Company of the
Potential Material Event, (b) receipt of written notice from the Company
that such Potential Material Event no longer exists, or (c) the date
twenty (20) days after the date of the notice of such Potential Material
Event. The Company may exercise its right to notify the Investor of the
existence of a Potential Material Event only twice. The term, "Potential
Material Event" shall mean any of the following: (i) the possession by the
Company of material information not ripe for disclosure in a registration
statement, which shall be evidenced by determinations in good faith by the
Board of Directors of the Company that disclosure of such information
would be detrimental to the business and affairs of the Company and that
the registration statement would be materially misleading absent the
inclusion of such information; or (ii) any material engagement or activity
by the Company which would, in the good faith, determination of the Board
of Directors of the Company, be adversely affected by disclosure in a
registration by the Board of Directors of the Company that the
registration statement would be materially misleading absent the inclusion
of such information; and
(b) Furnish such number of prospectuses and such other
documents incident thereto as the Holder from time to time may reasonably
request.
5.11 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall promptly furnish the Company
such information regarding such Holder or Holders, the Registrable
Securities held by them and the distribution proposed by such Holder or
Holders as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to
in this Section 5.
5.12 Indemnification.
(a) The Company will indemnify and hold harmless each Holder,
each of its officers, directors and partners, and each person controlling
such Holder within the meaning of Section 15 of the Securities Act, with
respect to which registration, qualification or compliance has been
effected pursuant to this Section 5, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15
of the Securities Act, against all expenses, claims, losses, damages or
liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading, or any violation by the Company
of the Securities Act or any rule or regulation promulgated under the
Securities Act applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse
each such Holder, each of its officers and directors, and each person
controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, provided that
the Company will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based
on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder,
controlling person or underwriter and stated to be specifically for use
therein. Such indemnification and reimbursement of expenses shall remain
in full force and effect regardless of any investigation made by or on
behalf of such Holder, its directors or officers, such underwriter, its
directors or officers, or such controlling person, and shall survive the
transfer of any or all Registrable Securities by such Holder.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify and hold harmless
the Company, each of its directors and officers, each underwriter, if any,
of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, and each other such Holder, each of its
officers and directors and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or action in respect thereof) arising out of or
based on (i) any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus,
offering circular or other document, or any omission (or alleged omission)
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will
reimburse the Company, such Holders, such directors, officers, persons,
underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance
upon and in conformity with written information furnished to the Company
by an instrument duly executed by such Holder and stated to be
specifically for use therein; or (ii) any violation by such Holder of the
Securities Act or any rule or regulation promulgated under the Securities
Act applicable to Holder in connection with any such registration,
qualification or compliance. Notwithstanding the foregoing, (i) the
liability of each Holder under this subsection (b) shall be limited to an
amount equal to the public offering price of the shares sold by such
Holder, unless such liability arises out of or is based on willful conduct
by such Holder; and (ii) the indemnity agreement contained in this
subsection (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 such Holder. Such indemnification and
reimbursement of expenses shall remain in full force and effect regardless
of any investigation made by or on behalf of the Company, its officers or
directors, any such other Holder, its officers or directors, or any such
controlling person, and shall survive the transfer of any or all
Registrable Securities by any such other Holder.
(c) Each party entitled to indemnification under this Section
5.12 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the defense of
such claim or litigation, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified
Party may participate in such defense at such party's expense, and
provided further that the failure of any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 5 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such
action and provided further, that the Indemnifying Party shall not assume
the defense for matters as to which there is a conflict of interest or
separate and different defenses. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect to such claim or litigation.
5.13 Transfer of Registration Rights. The rights granted to the
Holders under this Section 5 may be assigned at any time without the prior
written consent of the Company to a transferee or assignee in connection
with any transfer or assignment of Registrable Securities by the Holders;
provided that such transferee or assignee is an affiliate of the Holders,
without any requirement as to minimum holding by such transferee or
assignee. In addition to the foregoing, such rights may be assigned to
any other transferee or assignee with the written consent of the Company,
which consent shall not be unreasonably delayed or withheld, in connection
with any transfer or assignment of Registrable Securities by the Holders;
provided that such transfer may otherwise be effected in accordance with
applicable securities laws.
ARTICLE VI
LEGEND
Each certificate representing the Purchased Shares shall be endorsed
as soon as reasonably possible with a legend in substantially the
following form (in addition to any legends required under applicable state
securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE
COMPANY RECEIVES AN OPINION OF COUNSEL STATING THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT.
The above legend may be removed, and the Company shall issue a share
or shares of Common Stock, without a securities legend to the holder of
such share or shares of capital stock of the Company (i) if such stock is
registered under the Securities Act and a prospectus meeting the
requirements of Section 10 of the Securities Act is available for use by
such holder, or (ii) if such holder provides the Company with an opinion
of counsel experienced in Securities Act matters for such holder, to the
effect that the proposed sale, transfer or assignment of such stock may be
made without registration under the Securities Act or any state securities
law.
ARTICLE VII
SURVIVAL
Any implication in this Agreement to the contrary notwithstanding,
all written statements contained in any document, certificate, memorandum
or other instrument delivered by or on behalf of the Company, pursuant
hereto, or in connection with the transactions contemplated hereby, shall
be deemed representations and warranties hereunder by the Company. The
representations, warranties, covenants and agreements made herein by the
parties hereto shall survive any investigation made by the Purchaser and
the consummation of the transactions contemplated hereby for a period of
two years from the date hereof.
ARTICLE VIII
MISCELLANEOUS
8.1 Governing Law. This Agreement shall be governed in all respects
by the internal laws of the State of Delaware (excluding its conflict of
law provisions).
8.2 Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon
the successors, assigns, heirs, executors and administrators of the
parties hereto, provided, however, that the rights of the Purchaser to
purchase the Purchased Shares shall not be assignable without the written
consent of the Company.
8.3 Entire Agreement; Amendment. This Agreement and the other
documents delivered pursuant hereto at the closing, Agreement constitute
the full and entire understanding and agreement between the parties with
regard to the subjects hereof and thereof, 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. Except
as expressly provided herein, neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
8.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by hand delivery, by
facsimile or telex or by overnight delivery service of a reputable
delivery company to the respective parties addressed as provided below or
shall be deemed to have been duly given four (4) business days after being
mailed by registered or certified mail (return receipt requested) to the
respective parties addressed as follows:
If to the Purchaser:
Xxxxx Enterprises, Incorporated
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx, Senior Vice President
Xxxx Xxxxxx, Vice President, General Counsel
Fax Number: (000) 000-0000
With a copy to:
Xxxxx & Lardner
000 Xxxxx Xxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax Number: (000) 000-0000
If to the Company, at such address as set forth opposite or below its
name as it appears on the signature page hereof:
SystemSoft Corporation
0 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, Chief Financial Officer
Fax Number: (000) 000-0000
With a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
High Street Tower
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Fax No.: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth
above.
8.5 Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any
holder of any Purchased Shares, upon any breach or default of the Company
under this Agreement, shall impair any such right, power or remedy of such
holder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or a waiver of or acquiescence in any
similar breach or default thereafter occurring; nor shall any wavier of
any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent
or approval of any kind or character on the part of any holder of
Purchased Shares of any breach or default under this Agreement, or any
waiver on the part of any holder of Purchased Shares of any provisions or
conditions of this agreement, must be in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies,
either under this Agreement or by law or otherwise afforded to any holder
of Purchased Shares, shall be cumulative and not alternative.
8.6 Expenses. The Company and the Purchaser shall each bear its own
expenses in connection with negotiation, due diligence and entering into
of this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the
parties, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute
one instrument.
8.8 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and
effect without said provisions; provided that no such severability shall
be effective if it materially changes the economic benefit of this
Agreement to any party.
8.9 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in
construing or interpreting this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
SYSTEMSOFT CORPORATION
By:
Xxxxxx X. Xxxxxx, President,
Chief Executive Officer
PURCHASER SIGNATURE PAGE
The undersigned Purchaser hereby executes the Stock Purchase
Agreement with SystemSoft Corporation (the "Company") and hereby
authorizes this signature page to be attached to a counterpart of such
document executed by a duly authorized officer of the Company.
No. of Shares to be
Purchased: 1,066,667 XXXXX ENTERPRISES, INCORPORATED
By:___________________
Xxxx X. Xxxxxx, Xx., Vice
President and General Counsel
Name in which Shares of Stock
are to be registered: XXXXX ENTERPRISES, INCORPORATED
Address of registered holder: 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Social Security or Tax ID No. of 00-0000000
registered holder:
_________________________
Xxxx X. Xxxxxx, Xx., Vice President
Contact name and and General Counsel
telephone number (000) 000-0000
regarding settlement
and registration:
