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EXHIBIT 4.1
SCANSOFT, INC. SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of April 25, 2001, by and among SCANSOFT, INC., a Delaware corporation
(the "Company"), and the purchasers listed on Schedule A attached hereto
(collectively, the "Purchasers" and individually, a "Purchaser").
1. AUTHORIZATION OF SALE OF THE SHARES
Subject to the terms and conditions of this Agreement, the Company has
authorized the sale of up to 4,761,905 shares (the "Shares") of common stock,
par value $0.001 per share (the "Common Stock"), of the Company.
2. AGREEMENT TO SELL AND PURCHASE THE SHARES
2.1 PURCHASE AND SALE
Subject to the terms and conditions of this Agreement, each Purchaser
severally agrees to purchase, and the Company agrees to sell and issue to each
Purchaser, at the Closing (as defined below) that number of Shares set forth
opposite such Purchaser's name on Schedule A attached hereto.
2.2 PURCHASE PRICE
The purchase price of each Share shall be $1.05 (the "Per Share
Price"). The Company shall not, during the period beginning on the date of this
Agreement and ending ninety (90) days after the Closing Date (as defined below),
without adjusting the price per Share hereunder accordingly, sell (i) Shares at
a price per Share of less than the Per Share Price, or (ii) options, warrants or
any other securities that can be converted into, or otherwise exchanged for,
shares of the Company's common stock at a conversion, exchange or exercise price
per Share of less than the Per Share Price (excluding (x) all securities of the
Company outstanding on the date hereof, including outstanding options and
warrants, and (y) option grants to new employees granted in the ordinary course
of business at 100% of the fair market value of the Common Stock). In the event
the Company shall, during the period beginning on the date of this Agreement and
ending ninety (90) days after the Closing Date, sell any such shares of the
Company's common stock at, or any such instruments that can be converted into or
otherwise exchanged for the Company's common stock (the "Subsequent Sale")
exercisable at, a price per Share (the "Subsequent Purchase Price") of less than
the Per Share Price, the Company shall, within ten (10) business days of the
Subsequent Sale, pay to the Purchaser a cash amount equal to the number of
Shares times the difference between the Per Share Price and the Subsequent
Purchase Price.
3. DELIVERY OF THE SHARES AT THE CLOSING
(a) The completion of the purchase and sale of the Shares (the
"Closing") shall occur at the offices of the Company, at 0 Xxxxxxxxxx Xxxxx,
Xxxxxxx, XX 00000 at 9:00 a.m. local
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time on April 26, 2001 or such other time and date as may be agreed by the
parties (the "Closing Date").
(b) At the Closing, the Company shall authorize its transfer agent (the
"Transfer Agent") to issue to each Purchaser one or more stock certificates
registered in the name of such Purchaser, or in such nominee name(s) as
designated by such Purchaser in writing, representing the number of Shares set
forth in Section 2 above and bearing an appropriate legend referring to the fact
that the Shares were sold in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), and Rule 506 under the Securities Act. The Company will
deliver one certificate representing 3,809,524 Shares and one certificate
representing 952,381 Shares (the "Certificates") against delivery of payment for
the Shares by the Purchasers. Prior to the Purchasers' delivery of payment for
the Shares, the Company will deliver via facsimile a copy of the Certificates to
be delivered upon Closing to the office of the Purchasers (at the fax number
indicated on the signature pages attached hereto).
(c) The Company's obligation to complete the purchase and sale of the
Shares shall be subject to the following conditions, any one or more of which
may be waived by the Company:
(i) receipt by the Company from stockholders holding rights to
require the Company to register the sale of any securities owned by such holder
in the Registration Statement (as defined below) of waivers of such rights
(including the waiver of any notice requirements related to such rights);
(ii) receipt by the Company of same-day funds in the full
amount of the purchase price for the Shares being purchased under this
Agreement; and
(iii) the accuracy in all material respects of the
representations and warranties made by the Purchasers and the fulfillment in all
material respects of those undertakings of the Purchasers to be fulfilled before
the Closing.
(d) The Purchasers' obligations to accept delivery of such stock
certificates and to pay for the Shares evidenced by the certificates shall be
subject to the following conditions, any one or more of which may be waived by a
Purchaser with respect to such Purchaser's obligation:
(i) the representations and warranties made by the Company in
this Agreement shall be accurate in all material respects and the undertakings
of the Company shall have been fulfilled in all material respects on or before
the Closing;
(ii) the Company shall have delivered to the Purchasers a
certificate executed by the chairman of the board or president and the chief
financial or accounting officer of the Company, dated the Closing Date, in form
and substance reasonably satisfactory to the Purchasers, to the effect that the
representations and warranties of the Company set forth in Section 4 hereof are
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date, and that the Company has complied with all the
agreements and satisfied all the conditions in this Agreement on its part to be
performed or satisfied on or before the Closing Date; and
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(iii) the Company shall have delivered to Purchasers a legal
opinion in substantially the form attached hereto as Exhibit A.
(iv) the Company shall have obtained gross proceeds of at
least $5,000,000 from the sale of the Shares at the Closing.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit B, the Company hereby represents and warrants to the Purchasers as
follows (which representations and warranties shall be deemed to apply, where
appropriate, to each subsidiary of the Company):
4.1 ORGANIZATION AND QUALIFICATION
The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company has the corporate power and authority to own, lease and operate its
properties and to conduct its business as currently conducted and to enter into
and perform its obligations under this Agreement. The Company is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify would not, singly or in the aggregate, have a material
adverse effect on the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of the Company.
4.2 CAPITALIZATION
(a) The authorized capital stock of the Company consists of 140,000,000
shares of Common Stock and 40,000,000 shares of Preferred Stock.
(b) As of March 31, 2001, the issued and outstanding capital stock of
the Company consists of 46,132,288 shares of Common Stock and 3,562,238 shares
of Preferred Stock. The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and have not been issued in violation of or are not otherwise
subject to any preemptive or other similar rights.
(c) The Company has reserved 1,000,000 shares of Common Stock for
issuance under the Company's employee stock purchase plan and 16,769,553 shares
of Common Stock for issuance upon the exercise of stock options granted or
available for future grant under the Company's stock option plans.
(d) As of March 31, 2001 the Company has reserved 526,919 shares of
Common Stock for issuance upon the exercise of outstanding warrants to purchase
Common Stock.
With the exception of the foregoing, there are no outstanding
subscriptions, options, warrants, convertible or exchangeable securities or
other rights granted to or by the Company to purchase shares of Common Stock or
other securities of the Company and there are no commitments, plans or
arrangements to issue any shares of Common Stock or any security convertible
into or exchangeable for Common Stock.
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4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES
(a) The Shares have been duly authorized for issuance and sale to the
Purchasers pursuant to this Agreement and, when issued and delivered by the
Company pursuant to this Agreement against payment of the consideration set
forth in this Agreement, will be validly issued and fully paid and nonassessable
and free and clear of all pledges, liens and encumbrances. The certificates
evidencing the Shares are in due and proper form under Delaware law.
(b) The issuance of the Shares is not subject to preemptive or other
similar rights. No further approval or authority of the shareholders or the
Board of Directors of the Company will be required for the issuance and sale of
the Shares to be sold by the Company as contemplated in this Agreement.
(c) Subject to the accuracy of the Purchasers' representations and
warranties in Section 5 of this Agreement, the offer, sale, and issuance of the
Shares in conformity with the terms of this Agreement constitute transactions
exempt from the registration requirements of Section 5 of the Securities Act and
from the registration or qualification requirements of the laws of any
applicable state or United States jurisdiction.
4.4 FINANCIAL STATEMENTS
The financial statements included (as exhibits or otherwise) in the
Company Documents (as defined below) present fairly the financial position of
the Company as of the dates indicated and the results of their operations for
the periods specified. Except as otherwise stated in such Company Documents,
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis, and any supporting
schedules included with the financial statements present fairly the information
stated in the financial statements. The financial and statistical data set forth
in the Company Documents were prepared on an accounting basis consistent with
such financial statements.
4.5 NO MATERIAL CHANGE
Since March 31, 2001,
(a) there has been no material adverse change or any development
involving a prospective material adverse change in or affecting the condition,
financial or otherwise, or in the earnings, assets, business affairs or business
prospects of the Company, whether or not arising in the ordinary course of
business;
(b) there have been no transactions entered into by the Company other
than those in the ordinary course of business, which are material with respect
to the Company; 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.
The Company has no material contingent obligations.
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4.6 ENVIRONMENTAL
Except as would not, singly or in the aggregate, reasonably be expected
to have a material adverse effect on the condition, financial or otherwise, or
the earnings, assets, business affairs or business prospects of the Company,
(a) the Company is in compliance with all applicable Environmental Laws
(as defined below);
(b) the Company has all permits, authorizations and approvals required
under any applicable Environmental Laws and is in compliance with the
requirements of such permits authorizations and approvals;
(c) there are no pending or, to the best knowledge of the Company,
threatened Environmental Claims (as defined below) against the Company; and
(d) under applicable law, there are no circumstances with respect to
any property or operations of the Company that are reasonably likely to form the
basis of an Environmental Claim against the Company.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) Federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority. "Environmental
Claims" means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental Law.
4.7 NO DEFAULTS
The Company is not in violation of its certificate of incorporation or
bylaws or in material default in the performance or observance of any
obligation, agreement, covenant or condition contained in any material contract,
indenture, mortgage, loan agreement, deed, trust, note, lease, sublease, voting
agreement, voting trust, or other instrument or material agreement to which the
Company is a party or by which it may be bound, or to which any of the property
or assets of the Company is subject.
4.8 LABOR MATTERS
No labor dispute with the employees of the Company exists or, to the
best knowledge of the Company, is imminent.
4.9 NO ACTIONS
There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened,
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against or affecting the Company which, singly or in the aggregate, might result
in any material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company, or which,
singly or in the aggregate, might materially and adversely affect the properties
or assets thereof or which might materially and adversely affect the
consummation of this Agreement, nor, to the best knowledge of the Company, is
there any reasonable basis therefor. The Company is not in default with respect
to any judgment, order or decree of any court or governmental agency or
instrumentality which, singly or in the aggregate, would have a material adverse
effect on the assets, properties or business of the Company.
4.10 INTELLECTUAL PROPERTY
(a) The Company, to the best of its knowledge, owns or is licensed to
use all patents, patent applications, inventions, trademarks, trade names,
applications for registration of trademarks, service marks, service xxxx
applications, copyrights, know-how, manufacturing processes, formulae, trade
secrets, licenses and rights in any thereof and any other intangible property
and assets that are material to the business of the Company as now conducted and
as proposed to be conducted (in this Agreement called the "Proprietary Rights"),
or is seeking, or will seek, to obtain rights to use such Proprietary Rights
that are material to the business of the Company as proposed to be conducted.
(b) The Company does not have any knowledge of, and the Company has not
given or received any notice of, any pending conflicts with or infringement of
the rights of others with respect to any Proprietary Rights or with respect to
any license of Proprietary Rights which are material to the business of the
Company.
(c) No action, suit, arbitration, or legal, administrative or other
proceeding, or investigation is pending, or, to the best knowledge of the
Company, threatened, which involves any Proprietary Rights, nor, to the best
knowledge of the Company, is there any reasonable basis therefor.
(d) The Company is not subject to any judgment, order, writ, injunction
or decree of any court or any Federal, state, local, foreign or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or any arbitrator, and has not entered into or is not a
party to any contract which restricts or impairs the use of any such Proprietary
Rights in a manner which would have a material adverse effect on the use of any
of the Proprietary Rights.
(e) The Company has not received written notice of any pending conflict
with or infringement upon such third-party proprietary rights.
(f) The Company has not entered into any consent, indemnification,
forbearance to xxx or settlement agreement with respect to Proprietary Rights
other than in the ordinary course of business. No claims have been asserted by
any person with respect to the validity of the Company's ownership or right to
use the Proprietary Rights and, to the best knowledge of the Company, there is
no reasonable basis for any such claim to be successful.
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(g) The Company has complied, in all material respects, with its
obligations relating to the protection of the Proprietary Rights which are
material to the business of the Company used pursuant to licenses.
(h) To the best knowledge of the Company, no person is infringing on or
violating the Proprietary Rights.
4.11 PERMITS
The Company possesses and is operating in compliance with all material
licenses, certificates, consents, authorities, approvals and permits from all
state, federal, foreign and other regulatory agencies or bodies necessary to
conduct the businesses now operated by it, and the Company has not received any
notice of proceedings relating to the revocation or modification of any such
permit or any circumstance which would lead it to believe that such proceedings
are reasonably likely which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the condition, financial or otherwise, or the earnings, assets, business affairs
or business prospects of the Company.
4.12 DUE EXECUTION, DELIVERY AND PERFORMANCE
(a) This Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement, including the sale, issuance and
delivery of the Shares, (i) have been duly authorized by all necessary corporate
action on the part of the Company, its directors and stockholders; (ii) will not
conflict with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to, any contract, indenture, mortgage, loan
agreement, deed, trust, note, lease, sublease, voting agreement, voting trust or
other instrument or agreement to which the Company is a party or by which it may
be bound, or to which any of the property or assets of the Company is subject;
(iii) will not trigger anti-dilution rights or other rights to acquire
additional equity securities of the Company; and (iv) will not result in any
violation of the provisions of the articles of incorporation or bylaws of the
Company or any applicable statute, law, rule, regulation, ordinance, decision,
directive or order.
4.13 PROPERTIES
The Company has good and marketable title to its properties, free and
clear of all material security interests, mortgages, pledges, liens, charges,
encumbrances and claims of record. The properties of the Company are, in the
aggregate, in good repair (reasonable wear and tear excepted), and suitable for
their respective uses. Any real property held under lease by the Company is held
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the conduct of the business of the Company.
The Company owns or leases all such properties as are necessary to its business
or operations as now conducted.
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4.14 COMPLIANCE
The Company has conducted and is conducting its business in compliance
with all applicable Federal, state, local and foreign statutes, laws, rules,
regulations, ordinances, codes, decisions, decrees, directives and orders,
except where the failure to do so would not, singly or in the aggregate, have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, assets, business affairs or business prospects of the Company.
4.15 SECURITY MEASURES
The Company takes security measures designed to enable the Company to
assert trade secret protection in its non-patented technology.
4.16 CONTRIBUTIONS
To the best of the Company's knowledge, neither the Company nor any
employee or agent of the Company has made any payment of funds of the Company or
received or retained any funds in violation of any law, rule or regulation.
4.17 USE OF PROCEEDS; INVESTMENT COMPANY
The Company intends to use the proceeds from the sale of the Shares for
working capital and other general corporate purposes. The Company is not now,
and after the sale of the Shares under this Agreement and under all other
agreements and the application of the net proceeds from the sale of the Shares
described in the proceeding sentence will not be, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
4.18 PRIOR OFFERINGS
All offers and sales of capital stock of the Company before the date of
this Agreement were at all relevant times duly registered or exempt from the
registration requirements of the Securities Act and were duly registered or
subject to an available exemption from the registration requirements of the
applicable state securities or Blue Sky laws.
4.19 TAXES
The Company has filed all material tax returns required to be filed,
which returns are true and correct in all material respects, and the Company is
not in default in the payment of any taxes, including penalties and interest,
assessments, fees and other charges, shown thereon due or otherwise assessed,
other than those being contested in good faith and for which adequate reserves
have been provided or those currently payable without interest which were
payable pursuant to said returns or any assessments with respect thereto.
4.20 OTHER GOVERNMENTAL PROCEEDINGS
To the Company's knowledge, there are no rulemaking or similar
proceedings before any Federal, state, local or foreign government bodies that
involve or affect the Company, which, if the subject of an action unfavorable to
the Company, could involve a prospective material
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adverse change in or effect on the condition, financial or otherwise, or in the
earnings, assets, business affairs or business prospects of the Company.
4.21 NON-COMPETITION AGREEMENTS
To the knowledge of the Company, any full-time employee who has entered
into any non-competition, non-disclosure, confidentiality or other similar
agreement with any party other than the Company is neither in violation of nor
is expected to be in violation of that agreement as a result of the business
currently conducted or expected to be conducted by the Company or such person's
performance of his or her obligations to the Company. The Company has not
received written notice that any consultant or scientific advisor of the Company
is in violation of any non-competition, non-disclosure, confidentiality or
similar agreement.
4.22 TRANSFER TAXES
On the Closing Date, all stock transfer or other taxes (other than
income taxes) that are required to be paid in connection with the sale and
transfer of the Shares to be sold to the Purchasers under this Agreement will
be, or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been fully complied with.
4.23 INSURANCE
The Company maintains insurance of the type and in the amount that the
Company reasonably believes is adequate for its business, including, but not
limited to, insurance covering all real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against by similarly situated companies, all of which
insurance is in full force and effect.
4.24 GOVERNMENTAL/REGULATORY CONSENTS
No registration, authorization, approval, qualification or consent with
or required by any court or governmental/regulatory authority or agency is
necessary in connection with the execution and delivery of this Agreement or the
offering, issuance or sale of the Shares under this Agreement.
4.25 SECURITIES AND EXCHANGE COMMISSION FILINGS
The Company has timely filed with the Securities and Exchange
Commission (the "Commission") all documents required to be filed by the Company
under the Securities Exchange Act of 1934, as amended (the "Exchange Act.")
4.26 ADDITIONAL INFORMATION
The Company represents and warrants that the information contained in
the following documents (the "Company Documents"), which will be provided to
Purchaser before the Closing, is or will be true and correct in all material
respects as of their respective final dates:
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(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000;
(b) the Company's Proxy Statement for its 2000 Annual Meeting of
Shareholders; and
(c) all other documents, if any, filed by the Company with the
Commission since December 31, 2000 pursuant to the reporting requirements of the
Securities Exchange Act.
4.27 CONTRACTS
The contracts described in the Company Documents or incorporated by
reference therein are in full force and effect on the date hereof, except for
contracts the termination or expiration of which would not, singly or in the
aggregate, have a material adverse effect on the business, properties or assets
of the Company. Neither the Company nor, to the best knowledge of the Company,
any other party is in material breach of or default under any such contracts.
4.28 NO INTEGRATED OFFERING
Neither the Company, nor any of its affiliates, nor any person acting
on its or their behalf, has directly or indirectly made any offers or sales in
any security or solicited any offers to buy any security under circumstances
that would require registration under the Securities Act of the issuance of the
Shares to the Purchasers. The issuance of the Shares to the Purchasers will not
be integrated with any other issuance of the Company's securities (past, current
or future) for purposes of the Securities Act or any applicable rules of Nasdaq
(or of any national securities exchange on which the Company's Common Stock is
then traded). The Company will not make any offers or sales of any security
(other than the Shares) that would cause the offering of the Shares to be
integrated with any other offering of securities by the Company for purposes of
any registration requirement under the Securities Act or any applicable rules of
Nasdaq (or of any national securities exchange on which the Company's Common
Stock is then traded).
4.29 LISTING OF SHARES
The Company agrees to promptly secure the listing of the Shares upon
each national securities exchange or automated quotation system upon which
shares of Common Stock are then listed and, so long as any Purchaser owns any of
the Shares, shall maintain such listing of all Shares. The Company has taken no
action designed to delist, or which is likely to have the effect of delisting,
the Common Stock from any of the national securities exchange or automated
quotation system upon which the shares of Common Stock are then listed.
4.30 NO MANIPULATION OF STOCK
The Company has not taken and will not, in violation of applicable law,
take any action outside the ordinary course of business designed to or that
might reasonably be expected to cause or result in unlawful manipulation of the
price of the Common Stock to facilitate the sale or resale of the Shares.
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5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS
5.1 SECURITIES LAW REPRESENTATIONS AND WARRANTIES
Each Purchaser represents, warrants and covenants to the Company as
follows:
(a) The Purchaser is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
shares representing an investment decision like that involved in the purchase of
the Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares.
(b) The Purchaser is acquiring the number of Shares set forth in
Section 2 above in the ordinary course of its business and for its own account
for investment (as defined for purposes of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvement Act of 1976 and the regulations thereunder) only, and has no present
intention of distributing any of the Shares nor any arrangement or understanding
with any other persons regarding the distribution of such Shares within the
meaning of Section 2(11) of the Securities Act, other than as contemplated in
Section 7 of this Agreement.
(c) 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 except in compliance
with the Securities Act and the rules and regulations promulgated thereunder
(the "Rules and Regulations").
(d) The Purchaser has completed or caused to be completed the Stock
Certificate Questionnaire and the Registration Statement Questionnaire, attached
to this Agreement as Appendices I and II, for use in preparation of the
Registration Statement (as defined in Section 7.3 below), and the answers to the
Questionnaires are true and correct as of the date of this Agreement and will be
true and correct as of the effective date of the Registration Statement;
provided that the Purchasers shall be entitled to update such information by
providing notice thereof to the Company before the effective date of such
Registration Statement.
(e) The Purchaser has, in connection with its decision to purchase the
number of Shares set forth in Section 2 above, relied solely upon the Company
Documents and the representations and warranties of the Company contained in
this Agreement.
(f) The Purchaser is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act.
5.2 RESALES OF SHARES
(a) The Purchaser hereby covenants with the Company not to make any
sale of the Shares without satisfying the requirements of the Securities Act and
the Rules and Regulations, including, in the event of any resale under the
Registration Statement, the prospectus delivery requirements under the
Securities Act, and the Purchaser acknowledges and agrees that such Shares are
not transferable on the books of the Company pursuant to a resale under the
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Registration Statement unless the certificate submitted to the transfer agent
evidencing the Shares is accompanied by a separate officer's certificate
(i) in the form of Appendix III to this Agreement;
(ii) executed by an officer of, or other authorized person
designated by, the Purchaser; and
(iii) to the effect that (A) the Shares have been sold in
accordance with the Registration Statement and (B) the requirement of delivering
a current prospectus has been satisfied.
(b) The Purchaser acknowledges that there may occasionally be times
when the Company determines, in good faith following consultation with its Board
of Directors or a committee thereof, the use of the prospectus forming a part of
the Registration Statement (the "Prospectus," as further defined in Section
7.3.1 below) should be suspended until such time as an amendment or supplement
to the Registration Statement or the Prospectus has been filed by the Company
and any such amendment to the Registration Statement is declared effective by
the Commission, or until such time as the Company has filed an appropriate
report with the Commission pursuant to the Exchange Act. The Purchaser hereby
covenants that it will not sell any Shares pursuant to the Prospectus during the
period commencing at the time at which the Company gives the Purchaser written
notice of the suspension of the use of the Prospectus and ending at the time the
Company gives the Purchaser written notice that the Purchaser may thereafter
effect sales pursuant to the Prospectus. The Company may, upon written notice to
the Purchasers, suspend the use of the Prospectus for up to thirty (30) days in
any 365-day period based on the reasonable determination of the Company's Board
of Directors that there is a significant business purpose for such
determination, such as pending corporate developments, public filings with the
SEC or similar events. The Company shall in no event be required to disclose the
business purpose for which it has suspended the use of the Prospectus if the
Company determines in its good faith judgment that the business purpose should
remain confidential. In addition, the Company shall notify each Purchaser (i) of
any request by the SEC for an amendment or any supplement to such Registration
Statement or any related prospectus, or any other information request by any
other governmental agency directly relating to the offering, and (ii) of the
issuance by the SEC of any stop order suspending the effectiveness of such
Registration Statement or of any order preventing or suspending the use of any
related prospectus or the initiation or threat of any proceeding for that
purpose.
(c) The Purchaser further covenants to notify the Company promptly of
the sale of any of its Shares, other than sales pursuant to a Registration
Statement contemplated in Section 7 of this Agreement or sales upon termination
of the transfer restrictions pursuant to Section 7.4 of this Agreement.
5.3 DUE EXECUTION, DELIVERY AND PERFORMANCE
(a) This Agreement has been duly executed and delivered by the
Purchaser and constitutes a valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms.
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(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Purchaser pursuant to, any
contract, indenture, mortgage, loan agreement, deed, trust, note, lease,
sublease, voting agreement, voting trust or other instrument or agreement to
which the Purchaser is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Purchaser is subject, nor will such
action result in any violation of the provisions of the charter or bylaws of the
Purchaser or any applicable statute, law, rule, regulation, ordinance, decision,
directive or order.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations and warranties made by the Company
and the Purchasers in this Agreement and in the certificates for the Shares
delivered pursuant to this Agreement shall survive the execution of this
Agreement, the delivery to the Purchasers of the Shares being purchased and the
payment therefor.
7. FORM D FILING; REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT;
COVENANTS
7.1 FORM D FILING; REGISTRATION OF SHARES
7.1.1 REGISTRATION STATEMENT; EXPENSES
The Company shall:
(a) file in a timely manner a Form D relating to the sale of the Shares
under this Agreement, pursuant to Securities and Exchange Commission Regulation
D.
(b) as soon as practicable after the Closing Date, but in no event
later than the 20th day following the Closing Date, prepare and file with the
Commission a Registration Statement on Form S-3 (or, if the Company is
ineligible to use Form S-3, then on Form S-1) relating to the sale of the Shares
by the Purchasers from time to time on the Nasdaq National Market (or the
facilities of any national securities exchange on which the Company's Common
Stock is then traded) or in privately negotiated transactions (the "Registration
Statement");
(c) provide to Purchasers any information required to permit the sale
of the Shares under Rule 144A of the Securities Act;
(d) subject to receipt of necessary information from the Purchasers,
use its best efforts to cause the Commission to notify the Company of the
Commission's willingness to declare the Registration Statement effective on or
before 90 days after the Closing Date;
(e) notify Purchasers promptly upon the Registration Statement, and any
post-effective amendment thereto, being declared effective by the Commission;
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(f) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the Prospectus (as defined in
Section 7.3.1 below) and take such other action, if any, as may be necessary to
keep the Registration Statement effective until the earlier of (i) the date on
which the Shares may be resold by the Purchasers without registration and
without regard to any volume limitations by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect or (ii) all of the Shares
have been sold pursuant to the Registration Statement or Rule 144 under the
Securities Act or any other rule of similar effect;
(g) promptly furnish to the Purchasers with respect to the Shares
registered under the Registration Statement such reasonable number of copies of
the Prospectus, including any supplements to or amendments of the Prospectus, in
order to facilitate the public sale or other disposition of all or any of the
Shares by the Purchasers;
(h) during the period when copies of the Prospectus are required to be
delivered under the Securities Act or the Exchange Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act and the rules
and regulations promulgated thereunder;
(i) file documents required of the Company for customary Blue Sky
clearance in all states requiring Blue Sky clearance; provided, however, that
the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented; and
(j) bear all expenses in connection with the procedures in paragraphs
(a) through (i) of this Section 7.1.1 and the registration of the Shares
pursuant to the Registration Statement.
7.1.2 DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT
In the event that the Registration Statement is not declared effective
on or before the 90th day following the Closing Date (the "Penalty Date"), the
Company shall pay to each Purchaser liquidated damages in an amount equal to
0.25% of the total purchase price of the Shares purchased by such Purchaser
pursuant to this Agreement for each week after the Penalty Date that the
Registration Statement is not declared effective.
7.2 TRANSFER OF SHARES AFTER REGISTRATION
Each Purchaser agrees that it will not effect any disposition of the
Shares or its right to purchase the Shares that would constitute a sale within
the meaning of the Securities Act, except as contemplated in the Registration
Statement referred to in Section 7.1 or as otherwise permitted by law, and that
it will promptly notify the Company of any changes in the information set forth
in the Registration Statement regarding the Purchaser or its plan of
distribution.
7.3 INDEMNIFICATION
For the purpose of this Section 7.3, the term "Registration Statement"
shall include any preliminary or final prospectus, exhibit, supplement or
amendment included in or relating to the Registration Statement referred to in
Section 7.1.
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7.3.1 INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify and hold harmless each of the
Purchasers and each person, if any, who controls any Purchaser within the
meaning of the Securities Act, against any losses, claims, damages, liabilities
or expenses, joint or several, to which such Purchasers or such controlling
person may become subject, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company, which consent shall not be
unreasonably withheld), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, including the Prospectus,
financial statements and schedules, and all other documents filed as a part
thereof, as amended at the time of effectiveness of the Registration Statement,
including any information deemed to be a part thereof as of the time of
effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434,
of the Rules and Regulations, or the Prospectus, in the form first filed with
the Commission pursuant to Rule 424(b) of the Regulations, or filed as part of
the Registration Statement at the time of effectiveness if no Rule 424(b) filing
is required (the "Prospectus"), or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in any of
them a material fact required to be stated therein or necessary to make the
statements in any of them, in light of the circumstances under which they were
made, not misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company contained in
this Agreement, or any failure of the Company to perform its obligations under
this Agreement or under law, and will reimburse each Purchaser and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Purchaser or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon (i) an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Prospectus or any amendment or supplement of the
Registration Statement or Prospectus in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Purchaser
expressly for use in the Registration Statement or the Prospectus, or (ii) the
failure of such Purchaser to comply with the covenants and agreements contained
in Sections 5.2 or 7.2 of this Agreement respecting resale of the Shares, or
(iii) the inaccuracy of any representations made by such Purchaser in this
Agreement or (iv) any untrue statement or omission of a material fact required
to make such statement not misleading in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Purchaser before the pertinent
sale or sales by the Purchaser.
7.3.2 INDEMNIFICATION BY THE PURCHASER
Each Purchaser will severally and not jointly indemnify and hold
harmless the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act, against any losses, claims, damages,
liabilities or expenses to which the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person may become
subject, under
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the Securities Act, the Exchange Act, or any other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Purchaser, which consent shall not be unreasonably withheld) insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof
as contemplated below) arise out of or are based upon (i) any failure on the
part of such Purchaser to comply with the covenants and agreements contained in
Sections 5.2 or 7.2 of this Agreement respecting the sale of the Shares or (ii)
the inaccuracy of any representation made by such Purchaser in this Agreement or
(iii) any untrue or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement to
the Registration Statement or Prospectus, or arise out of or are based upon 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, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Purchaser expressly for use therein; provided,
however, that the Purchaser shall not be liable for any such untrue or alleged
untrue statement or omission or alleged omission of which the Purchaser has
delivered to the Company in writing a correction before the occurrence of the
transaction from which such loss was incurred, and the Purchaser will reimburse
the Company, each of its directors, each of its officers who signed the
Registration Statement or controlling person for any legal and other expense
reasonably incurred by the Company, each of its directors, each of its officers
who signed the Registration Statement or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action.
7.3.3 INDEMNIFICATION PROCEDURE
(a) Promptly after receipt by an indemnified party under this Section
7.3 of notice of the threat or commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party under this Section 7.3, promptly notify the indemnifying party in writing
of the claim; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party for
contribution or otherwise under the indemnity agreement contained in this
Section 7.3 or to the extent it is not prejudiced as a result of such failure.
(b) In case any such action is brought against any indemnified party
and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with all other indemnifying parties
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be a
conflict between the positions of the indemnifying party and the indemnified
party in conducting the defense of any such action or that there may be legal
defenses available to it or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon
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receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7.3 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
unless:
(i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel,
approved by such indemnifying party representing all of the indemnified parties
who are parties to such action) or
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of action, in each
of which cases the reasonable fees and expenses of counsel shall be at the
expense of the indemnifying party. Notwithstanding the provisions of this
Section 7.3, the Purchaser shall not be liable for any indemnification
obligation under this Agreement in excess of the amount of gross proceeds
received by the Purchaser from the sale of the Shares.
7.3.4 CONTRIBUTION
If the indemnification provided for in this Section 7.3 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under this Section 7.3 in
respect to any losses, claims, damages, liabilities or expenses referred to in
this Agreement, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to in this Agreement
(a) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Purchaser from the placement of Common
Stock or
(b) if the allocation provided by clause (a) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (a) above but the relative fault of the
Company and the Purchaser in connection with the statements or omissions or
inaccuracies in the representations and warranties in this Agreement that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations.
The respective relative benefits received by the Company on the one
hand and each Purchaser on the other shall be deemed to be in the same
proportion as the amount paid by such Purchaser to the Company pursuant to this
Agreement for the Shares purchased by such Purchaser that were sold pursuant to
the Registration Statement bears to the difference (the "Difference") between
the amount such Purchaser paid for the Shares that were sold pursuant to the
Registration Statement and the amount received by such Purchaser from such sale.
The relative fault of the Company and each Purchaser shall be determined by
reference to, among other things, whether the untrue or alleged statement of a
material fact or the omission or alleged
17.
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omission to state a material fact or the inaccurate or the alleged inaccurate
representation or warranty relates to information supplied by the Company or by
such Purchaser and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 7.3.3, any legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any action or claim. The provisions set forth in Section 7.3.3 with
respect to the notice of the threat or commencement of any threat or action
shall apply if a claim for contribution is to be made under this Section 7.3.4;
provided, however, that no additional notice shall be required with respect to
any threat or action for which notice has been given under Section 7.3 for
purposes of indemnification. The Company and each Purchaser agree that it would
not be just and equitable if contribution pursuant to this Section 7.3 were
determined solely by pro rata allocation (even if the Purchaser were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this paragraph.
Notwithstanding the provisions of this Section 7.3, no Purchaser shall be
required to contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages that such Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Purchasers' obligations to contribute pursuant to this
Section 7.3 are several and not joint.
7.4 TERMINATION OF CONDITIONS AND OBLIGATIONS
The restrictions imposed by Section 5 or this Section 7 upon the
transferability of the Shares shall cease and terminate as to any particular
number of the Shares upon the passage of two years from the Closing Date or at
such time as an opinion of counsel satisfactory in form and substance to the
Company shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.
7.5 INFORMATION AVAILABLE
From the date of this Agreement through the date the Registration
Statement covering the resale of Shares owned by any Purchaser is no longer
effective, the Company will furnish to such Purchaser:
(a) as soon as practicable after available (but in the case of the
Company's Annual Report to Shareholders, within 90 days after the end of each
fiscal year of the Company), one copy of
(i) its Annual Report to Shareholders (which Annual Report
shall contain financial statements audited in accordance with generally accepted
accounting principles by a national firm of certified public accountants);
(ii) if not included in substance in the Annual Report to
Shareholders, its Annual Report on Form 10-K;
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(iii) if not included in substance in its Quarterly Reports to
Shareholders, its quarterly reports on Form 10-Q; and
(iv) a full copy of the particular Registration Statement
covering the Shares (the foregoing, in each case, excluding exhibits);
(b) upon the request of the Purchaser, a reasonable number of copies of
the Prospectus to supply to any other party requiring the Prospectus.
7.6 RULE 144 INFORMATION
Until the earlier of (i) the date on which the Shares may be resold by
the Purchasers without registration and without regard to any volume limitations
by reason of Rule 144(k) under the Securities Act or any other rule of similar
effect or (ii) all of the Shares have been sold pursuant to the Registration
Statement or Rule 144 under the Securities Act or any other rule of similar
effect, the Company shall file all reports required to be filed by it under the
Securities Act, the Rules and Regulations and the Exchange Act and shall take
such further action to the extent required to enable the Purchasers to sell the
Shares pursuant to Rule 144 under the Securities Act (as such rule may be
amended from time to time).
7.7 STOCK OPTION MATTERS AND PROHIBITION ON TOXICS
The Company shall, within thirty (30) days of the Closing Date, adopt
such amendments to, with respect to (i) and (ii) below, the Company's stock
option plans and By-laws, and, with respect to (iii) and (iv) below, the
Company's By-laws (together, the "Stock Option Plan and By-law Amendments") to
provide that, unless approved by the holders of a majority of the shares present
and entitled to vote at a duly convened meeting of shareholders, the company
shall not:
(i) grant any stock options with an exercise price that is
less than 100% of the fair market value of the underlying stock on the date of
grant;
(ii) reduce the exercise price of any stock option granted
under any existing or future stock option plan;
(iii) sell or issue any security of the Company convertible,
exercisable or exchangeable into shares of Common Stock, having a conversion,
exercise or exchange price per share which is subject to downward adjustment
based on the market price of the Common Stock at the time of conversion,
exercise or exchange of such security into Common Stock (except for appropriate
adjustments made to give effect to any stock splits or stock dividends); or
(iv) enter into (a) any equity line or similar agreement or
arrangement; or (b) any agreement to sell Common Stock (or any security
convertible, exercisable or exchangeable into shares of Common Stock ("Common
Stock Equivalent")) at a per share price (or, with respect to a Common Stock
Equivalent, at a conversion, exercise or exchange price, as the case may be
("Equivalent Price")) that is fixed after the execution date of the agreement,
whether or not based on any predetermined price-setting formula or calculation
method. Notwithstanding the foregoing, however, a price protection clause shall
be permitted in an agreement for sale of Common Stock or Common Stock
Equivalent, if such clause provides for an adjustment to the
19.
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price per share of Common Stock or, with respect to a Common Stock Equivalent,
to the Equivalent Price (provided that such price or Equivalent Price is fixed
on or before the execution date of the agreement)(the "Fixed Price") in the
event that the Company, during the period beginning on the date of the agreement
and ending no later than 90 days after the closing date of the transaction,
sells shares of Common Stock or Common Stock Equivalent to another investor at a
price or Equivalent Price, as the case may be, below the Fixed Price.
The Stock Option Plan and By-law Amendments may not be further amended
or repealed without the affirmative vote of the holders of a majority of the
shares present and entitled to vote at a duly convened meeting of shareholders.
Upon the adoption of the Stock Option Plan and By-law Amendments, the Company
shall promptly furnish a copy of such amendments to the Purchasers. The Company
agrees that, prior to the adoption of the Stock Option Plan and By-law
Amendments by all necessary corporate action of the Company as described above,
the Company shall not conduct any of the actions specified in (i), (ii), (iii)
or (iv) above of this Section 7.7.
8. LEGAL FEES AND OTHER TRANSACTION EXPENSES
At the Closing, the Company agrees to pay a flat fee of $5,000 to the
State of Wisconsin Investment Board for their legal and other transaction
expenses (whether internal or external) arising in connection with the
transactions contemplated by this Agreement.
9. BROKER'S FEE
Each of the parties to this Agreement hereby represents that, on the
basis of any actions and agreements by it, there are no brokers or finders
entitled to compensation in connection with the sale of the Shares to the
Purchasers. The Company shall indemnify and hold harmless the Purchasers from
and against all fees, commissions or other payments owing by the Company to any
other person or firm acting on behalf of the Company hereunder.
10. NOTICES
All notices, requests, consents and other communications under this
Agreement shall be in writing, shall be mailed by first-class registered or
certified airmail, confirmed facsimile or nationally recognized overnight
express courier postage prepaid, and shall be delivered as addressed as follows:
(a) if to the Company, to:
ScanSoft, Inc.
0 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
20.
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(b) if to a Purchaser, at its address as set forth on the signature
page to this Agreement, or at such other address or addresses as may have been
furnished to the Company in writing.
Such notice shall be deemed effectively given upon confirmation of
receipt by facsimile, one business day after deposit with such overnight courier
or three days after deposit of such registered or certified airmail with the
U.S. Postal Service, as applicable.
11. MODIFICATION; AMENDMENT
This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and each of the Purchasers.
12. TERMINATION
This Agreement may be terminated as to any Purchaser, at the option of
such Purchaser, if the Closing has not occurred on or before thirty (30) days
from the date of this Agreement.
13. HEADINGS
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
14. SEVERABILITY
If any provision contained in this Agreement should be held to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained in this Agreement shall not
in any way be affected or impaired thereby.
15. GOVERNING LAW; JURISDICTION
This Agreement shall be governed by and construed in accordance with
the laws of the state of Delaware and the federal law of the United States of
America. The parties hereto hereby submit to the jurisdiction of the courts of
the State of Wisconsin, or of the United States of America sitting in the State
of Wisconsin, over any action, suit, or proceeding arising out of or relating to
this Agreement. Nothing herein shall affect the right of the Purchaser to serve
process in any manner permitted by law or limit the right of the Purchaser to
bring proceedings against the Company in the competent courts of any other
jurisdiction or jurisdictions.
16. NO CONFLICTS OF INTEREST.
The Company represents, warrants, and covenants that, to the best of
its knowledge, no trustee or employee of the State of Wisconsin Investment Board
identified on the attached list, either directly or indirectly (a) currently
holds, except as may be specifically set forth below, a personal interest in the
Company or any of its affiliates (together, the "Entity") or the Entity's
property or securities, or (b) will, in connection with the investment made
pursuant to this Agreement, receive (i) a personal interest in the Entity or the
Entity's property or securities or (ii) anything of substantial economic value
for his or her private benefit from the Entity or anyone
21.
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acting on its behalf. As to ownership of an interest in the Entity's publicly
traded securities, "knowledge" hereunder is based on an examination of record
holders of the Entity's securities and actual knowledge of the undersigned.
17. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, when taken together, shall
constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party to this Agreement and delivered to
the other parties.
[Signature pages follow]
22.
23
SHARE PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
SCANSOFT, INC.
By: /s/ Xxxx Xxxxx
-------------------------------------
Name: Xxxx Xxxxx
------------------------------------
Its: CEO & Chairman
------------------------------------
STATE OF WISCONSIN INVESTMENT BOARD
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
------------------------------------
Title: Investment Director
----------------------------------
Address:
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
SHARE PURCHASE AGREEMENT
SIGNATURE PAGE
24
SCHEDULE A
PURCHASERS
State of Wisconsin Investment Board
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
25
EXHIBIT A
April ____, 2001
To the Purchasers of
Common Stock of ScanSoft, Inc.
listed on Exhibit A attached hereto
Ladies and Gentlemen:
I am General Counsel of ScanSoft, Inc., a Delaware corporation (the "Company")
and rendering this opinion in connection with the issuance and sale to you of
4,761,905 shares of the Company's Common Stock (the "Shares") pursuant to the
Share Purchase Agreement dated as of April ____, 2001 between the Company and
each of the Purchasers listed on Exhibit A hereto (the "Agreement"). I am
rendering this opinion pursuant to Section 3(d)(iii) of the Agreement. Except as
otherwise defined herein, capitalized terms used but not defined herein have the
respective meanings given to them in the Agreement.
In connection with this opinion, I have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Agreement by the various parties and originals or copies
certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. Where I render
an opinion "to the best of my knowledge" or concerning an item "known to me" or
my opinion otherwise refers to my knowledge, it is based solely upon
investigation, if any, that I specifically set forth herein.
In rendering this opinion, I have assumed: the genuineness and authenticity of
all signatures on original documents; the authenticity of all documents
submitted to me as originals; the conformity to originals of all documents
submitted to me as copies; the accuracy, completeness and authenticity of
certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Agreement), where authorization, execution and delivery
are prerequisites to the effectiveness of such documents. I have also assumed:
that all individuals executing and delivering documents on behalf of the
Purchasers had the legal capacity to so execute and deliver; that you have
received all documents you were to receive under the Agreement; and that the
Agreement is an obligation binding upon you. In rendering this opinion I have
also assumed that there are no extrinsic agreements or understandings among the
parties to the Agreement that would modify or interpret the terms of the
Agreement or the respective rights or obligations of the parties thereunder.
My opinion is expressed only with respect to the federal laws of the United
States of America, the laws of the State of Delaware and the General Corporation
Law of the State of Delaware. I express no opinion as to whether the laws of any
particular jurisdiction apply, and no opinion to the extent that the laws of any
jurisdiction other than those identified above are applicable to the
26
subject matter hereof. I am not rendering any opinion as to compliance with any
antifraud law, rule or regulation relating to securities, or to the sale or
issuance thereof.
On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, I am of the opinion that:
1. The Company has been duly incorporated and is validly existing in good
standing under the laws of the State of Delaware. The Company is duly qualified
or licensed as a foreign corporation to do business, and is in good standing
(with respect to jurisdictions that recognize such concept), in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, be
material to the Company. The Company has the requisite corporate power to own or
lease its property and assets and to conduct its business as currently
conducted.
2. The execution, delivery and performance of the Agreement have been duly
authorized by all necessary corporate action on the part of the Company, its
directors and stockholders. The Agreement has been duly executed and delivered
on behalf of the Company and constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms except (i)
as limited by applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium and other laws of general applicability relating to or affecting
creditors' rights, and (ii) as limited by equitable principles generally and
limitations on the availability of equitable remedies, whether such
enforceability is considered in a proceeding in equity or at law.
3. As of the date hereof, the authorized capital stock of the Company consists
of 180,000,000 shares. The issued and outstanding capital stock of the Company
consists of 140,000,000 shares of Common Stock, of which 46,132,287 shares are
issued and outstanding, and 40,000,000 shares of Preferred Stock, of which
3,562,238 are issued and outstanding.
4. The sale, issuance and delivery of the Shares have been duly authorized all
necessary corporate action on the part of the Company, its directors and
stockholders. When issued, delivered and paid for in accordance with the terms
of the Agreement, the Shares will be validly issued, fully paid and
non-assessable and free of any pre-emptive or similar rights.
5. Except as set forth in the Agreement, to our knowledge there is no action,
proceeding or investigation pending or overtly threatened in writing against the
Company which could reasonably be anticipated to result, either individually or
in the aggregate, in any material adverse change in the assets, financial
condition or operations of the Company, or which questions the validity or
enforceability of, or seeks to enjoin or invalidate, the Agreement or any action
to be taken by the Company in connection therewith.
6. The offer and sale of the Shares by the Company to the Purchasers is exempt
from the registration requirements of the Securities Act of 1933, as amended,
subject to timely filing of a Form D pursuant to Securities and Exchange
Commission Regulation D, and the qualification and registration requirements of
all applicable state securities and "blue sky" laws.
27
7. The execution, delivery and performance of the Agreement by the Company and
the consummation of the sale, issuance and delivery of the Shares by the Company
as contemplated therein do not conflict with or violate any provisions of the
Company's Certificate of Incorporation or By-laws; or any provision of any
applicable federal or state law, statute, rule or regulation; or any material
agreements to which the Company is a party.
8. All consents, approvals, authorizations, or orders of, and filings,
registrations and qualifications with or required by any regulatory or
governmental body or authority in the United States necessary for the issuance
by the Company of the Shares as contemplated by the Agreements, have been made
or obtained, except for (i) the filing of a Form D pursuant to Securities and
Exchange Commission Regulation D, and (ii) the filing of a Form D with the
Securities Commissioners of the state of Wisconsin.
This opinion is intended solely for your benefit and is not to be made available
to or be relied upon by any other person, firm, or entity without my prior
written consent. I disclaim any obligation to advise you of any change of law
that occurs, or any facts of which I become aware, after the date of this
opinion.
Very truly yours,
Xx-Xxxx Xxxxxxxx
General Counsel
28
EXHIBIT B
SCHEDULE OF EXCEPTIONS
Section numbers correspond to those in the Agreement.
SECTION 4.10(f)
On December 17, 1999, Caere Corporation entered into a Release and Settlement
Agreement and License Agreement with Xxxxx Froessl in connection with a claim of
patent infringement. In connection therewith, Caere Corporation paid Mr. Froessl
$1,500,000.
In September 1999, ScanSoft, Inc. entered into a Mutual Release and Settlement
Agreement with Vivid Details, Inc. in connection with a claim of patent
infringement regarding the Kai products purchased from MetaCreations, Inc. In
connection therewith, ScanSoft, Inc. paid Vivid Details $45,000.
SECTION 4.13
Fleet Bank has a general security interest in all of the Company's assets.
29
EXHIBIT C
TRUSTEES OF THE STATE OF WISCONSIN INVESTMENT BOARD
Xxx X. Xxxxxx Xxxxx XxXxxxxxx
Xxxx Xxxxxxxx III Xxxxxx X. Xxxxxxxxxx
Xxxx X. Xxxxxxxxxxx Xxxxx X. Xxxxxx
Xxxxxx Xxxxx Xxxxxxxx Xxxxxxx X. Xxxxx
Xxxxx X. Xxxxx
RELEVANT EMPLOYEES OF THE STATE OF WISCONSIN INVESTMENT BOARD
All Transactions
Xxxxxxxx Xxxxxx Executive Director
Xxxxxx Xxxxxx Chief Investment Officer - Equities
Xxxxx Xxxxxxx Chief Legal Counsel
Xxxxxx Xxx Assistant Legal Counsel
Xxxxxxx Xxxxxxx Assistant Legal Counsel
Xxx Xxxxxx Chief Investment Officer - Fixed Income
For Real Estate Transactions
Xxxxxx Xxxxxxxxx Investment Director
Xxxxx Xxxxxxxxx Assistant Investment Director
Xxxx Xxxxxxxxxxx Investment Officer
Xxxxx Xxxxxxxxxx Investment Officer
For Private Placement Loans
Xxx Xxxxxx Investment Director
Xxx Xxxxxxxxx Portfolio Manager
Xxxxxx Xxxxxxx Portfolio Manager
For Private Placement Funds & Equity Investments
Xxx Xxxxxx Investment Director
Xxx Xxxxxxxxxxx Portfolio Manager
Xxxxxx Xxxxx Assistant Portfolio Manager
Xxx Xxxxx Investment Officer
For Non-traditional Investments
Xxxx Xxxxxx Investment Director
Xxx Xxxxx Securities Analyst
For Small Cap Portfolio Direct Placements
Xxxx Xxxxxx Investment Director
Xxxx Xxxxxxx Assistant Portfolio Manager
Xxxxxx Xxxxxx Securities Analyst
Xxxx Xxxxxxx Securities Analyst
Xxx Xxxx Securities Analyst
30
APPENDIX I
[COMPANY]
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be registered in (this is the
name that will appear on your stock certificate(s)). You may use a
nominee name if appropriate:
----------------------------------
2. The relationship between the Purchaser of the Shares and the Registered
Holder listed in response to item 1 above:
----------------------------------
3. The mailing address of the Registered Holder listed in response to item
1 above:
----------------------------------
----------------------------------
----------------------------------
----------------------------------
4. The Social Security Number or Tax Identification Number of the
Registered Holder listed in response to item 1 above:
-----------------------------------
31
APPENDIX II
[COMPANY]
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement,
please provide us with the following information:
5. Pursuant to the "Selling Shareholder" section of the Registration
Statement, please state your or your organization's name exactly as it
should appear in the Registration Statement:
-------------------------------------------------------
6. Please provide the number of shares that you or your organization will
own immediately after Closing, including those Shares purchased by you
or your organization pursuant to this Purchase Agreement and those
shares purchased by you or your organization through other
transactions:
-------------------------------------------------------
7. Have you or your organization had any position, office or other
material relationship within the past three years with the Company or
its affiliates?
_____ Yes _____ No
If yes, please indicate the nature of any such relationships below:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
32
APPENDIX III
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, an officer of, or other person duly authorized by
--------------------------------------------------------------------------------
[fill in official name of individual or institution]
hereby certifies that he/she/it is the Purchaser of the shares evidenced by the
attached certificate, and as such, sold such shares on ________________, 200__
in accordance with Registration Statement number 333-________________, and
complied with the requirement of delivering a current prospectus in connection
with such sale.
PRINT OR TYPE:
Name of Purchaser (Individual or Institution):
--------------------------------------------------------------------------------
Name of Individual representing Purchaser (if an Institution)
--------------------------------------------------------------------------------
Title of Individual representing Purchaser (if an Institution):
--------------------------------------------------------------------------------
SIGNATURE:
Individual Purchaser or Individual representing Purchaser:
--------------------------------------------------------------------------------
