EXHIBIT 10.8
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of the 24th day
of January, 2001 by and between Xxxxxx Software, Inc., an Ohio corporation (the
Company"), and Recall Total Information Management, Inc. a Delaware corporation
(the "Purchaser").
WHEREAS, the Purchaser desires to purchase from the Company, and the
Company desires to sell to the Purchaser, 564,845 Common Shares, without par
value (the "Shares"), of the Company for an aggregate purchase price of
$12,000,000 (the "Purchase Price"), payable as set forth herein (the
"Investment"); and
WHEREAS, in connection with the Investment, the Company and Recall
Corporation, the parent corporation of the Purchaser, intend to enter into an
OEM Agreement and an ASP Agreement in the forms attached hereto as Exhibit A
(the "Strategic Alliance Agreements");
ACCORDINGLY, in consideration of the covenants, agreements,
representations and warranties set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the parties hereto, the parties hereby agree as follows:
1. PURCHASE AND SALE OF SHARES.
1.1 SALE AND ISSUANCE OF SHARES.
At the Closing, subject to the terms and conditions of this
Agreement, the Purchaser agrees to purchase and the Company agrees to sell and
issue to the Purchaser the Shares in consideration of the payment of the
Purchase Price.
1.2 CLOSING; DELIVERY; ISSUANCE OF ADDITIONAL SHARES.
(a) Subject to the satisfaction or waiver of the applicable
conditions to closing set forth in Sections 4 and 5, the closing of the purchase
and sale of the Shares (the "Closing") shall take place at the offices of
Xxxxxxxxx, Pembridge & Chriszt Co., L.P.A., in Cleveland, Ohio, at 10:00 a.m.,
on January 31, 2001, or at such other time and place as the parties hereto may
mutually determine (the "Closing Date").
(b) At the Closing, (i) the Company shall deliver to the Purchaser
a certificate representing the Shares, registered in the name of the Purchaser,
against payment of the purchase price therefor by wire transfer to the Company's
bank account and (ii) each of the parties hereto shall deliver to the other
party the respective certificates and other documents required to be delivered
pursuant to Sections 4 and 5.
(c) If accounts receivable of the Company that are reflected in
the books and records of the Company as of December 31, 2000 for which no bad
debt allowance has been made prior to such date (the "Opening Receivables")
aggregating in excess of $200,000 shall be determined by the Company to be
uncollectible or otherwise written off for financial reporting purposes as of
any date on or before December 31, 2001, the Company shall thereafter issue to
the Purchaser for no consideration, as promptly as practicable, additional
Common Shares of the Company equal to the number of shares that is determined
when 15% of the aggregate amount of all such Opening Receivables as are so
determined to be uncollectible or otherwise written off is divided by the sum of
$21.25.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
2.1 STATUS OF THE COMPANY; STATUS OF THE AGREEMENTS. The Company
hereby represents and warrants to the Purchaser that, except as set forth on a
Disclosure Schedule attached hereto as Exhibit B, which exceptions shall be
deemed to be representations and warranties as if made hereunder:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is
duly organized, validly existing and in good standing under the laws of the
State of Ohio. The Company has all requisite corporate power and authority to
carry on its business as presently conducted and as proposed to be conducted
following the Closing (the "Business"). The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure so to qualify would have a material adverse effect on its Business or
properties.
(b) CAPITALIZATION OF THE COMPANY. The capital structure of the
Company immediately after the Closing will consist of 5,000,000 authorized
Common Shares, without par value (the "Common Shares"), of which 3,782,298
Common Shares (including the Shares to be issued and sold to the Purchaser at
the Closing) shall be issued and outstanding, all of which Common Shares will be
duly authorized, validly issued and outstanding, fully paid and nonassessable.
All of the outstanding shares of capital stock of the Company have been issued
pursuant to valid exemptions from the registration requirements of the
Securities Act of 1933, as amended, and any applicable state securities laws and
otherwise in conformity with all applicable federal and state securities laws.
There are no outstanding rights, options, warrants, conversion rights or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock. The Company is not a party or subject to any agreement or
understanding and, to the Company's knowledge, there is no agreement or
understanding between any persons or entities which affects or relates to the
acquisition, disposition, voting or giving of written consents with respect to
any securities of the Company or by a director of the Company. No person has any
right of first refusal, preemptive rights or other similar rights in connection
with the issuance of the Shares.
(c) SUBSIDIARIES. The Company does not currently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity.
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(d) AUTHORIZATION. The Company has full power and authority to
enter into this Agreement and each other Agreement (as herein defined) to which
it is a party. The authorization, issuance, sale and delivery of the Shares and
the execution, delivery and performance by the Company of each of this
Agreement, the Shareholders' Agreement in the form attached hereto as Exhibit C
(the "Shareholders' Agreement"), the Registration Rights Agreement in the form
attached hereto as Exhibit D (the "Registration Rights Agreement") and the
Strategic Alliance Agreement (collectively, the "Agreements") have been duly and
validly authorized by all requisite action on the part of the Company and its
shareholders, and each such Agreement, when executed and delivered by the
Company, shall constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms except (i) as may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws of general application affecting
enforcement of creditors' rights generally, and by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies, or (ii) to the extent the indemnification provisions contained in the
Registration Rights Agreement may be limited by applicable federal or state
securities laws.
(e) VALID ISSUANCE OF SECURITIES. The Shares that are being issued
to the Purchaser hereunder, when issued, sold and delivered in accordance with
the terms hereof for the consideration expressed herein, will be duly and
validly issued, fully paid and nonassessable and free of restrictions on
transfer other than restrictions on transfer under the Shareholders' Agreement,
the Registration Rights Agreement and applicable state and federal securities
laws. Based in part upon the representations and warranties of the Purchaser in
this Agreement, and upon the completion of any required filings with the
Securities and Exchange Commission and applicable state governmental authorities
in connection with the offer, sale and issuance of the Shares to the Purchaser,
the Shares will be issued in compliance with all applicable federal and state
securities laws.
(f) GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the execution, delivery and
performance of each Agreement by the Company or the consummation of the
transactions contemplated by this Agreement, including without limitation the
authorization, offer, sale or issuance of the Shares.
2.2 STATUS OF THE BUSINESS. The Company hereby represents and
warrants to the Purchaser that, to the knowledge of the Company, except as set
forth on the Disclosure Schedule attached hereto as Exhibit B, which exceptions
shall be deemed to be representations and warranties as if made hereunder, each
of the following statements is true and correct in all respects; provided,
however, that the Company shall be deemed to have breached any such
representation or warranty only if it has failed to disclose therein or on the
Disclosure Schedule, or has inaccurately disclosed therein or on the Disclosure
Schedule, any facts, conditions, circumstances or other matters which,
considered individually or in the aggregate, are material to the assets,
financial condition or Business of the Company or would otherwise be considered
to be material to a reasonable investor in substantially the same position as
the Purchaser:
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(a) LITIGATION. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company or its
officers, directors or shareholders that questions the validity of any of the
Agreements or the right of the Company to enter into any of the Agreements, or
to consummate the transactions contemplated hereby or thereby, or that might
result either individually or in the aggregate, in any material adverse changes
in the assets, condition or Business of the Company, financially or otherwise,
or any change in the equity ownership of the Company, nor is there any
reasonable basis for the foregoing. The foregoing includes, without limitation,
actions, suits, proceedings or investigations pending or threatened involving
the prior employment of any of the Company's employees, their use in connection
with the Business of any information or techniques allegedly proprietary to any
of their former employers, or their obligations under any agreements with prior
employers. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
(b) INTELLECTUAL PROPERTY.
(i) The Company owns or has the right to use all
Intellectual Property (as defined below) used (A) to manufacture, market and
distribute the products manufactured, marketed, sold or licensed by the Company
and to provide the services provided by the Company to other parties in the
conduct of the Business (together, the "Customer Deliverables") or (B) to
operate the Company's internal systems that are material to the Business,
including, without limitation, computer hardware systems, software applications
and embedded systems (the "Internal Systems"). Intellectual Property owned by
the Company and incorporated in or underlying the Customer Deliverables or the
Internal Systems is referred to herein as the "Company Intellectual Property".
The Intellectual Property licensed by the Company and incorporated in or
underlying the Customer Deliverables or the Internal Systems is referred to
herein as the "Licensed Intellectual Property". The Company has taken reasonable
measures to protect the proprietary nature of each item of the Company
Intellectual Property, and no other person or entity is infringing, violating or
misappropriating any of the Company Intellectual Property. For purposes of this
Agreement, "Intellectual Property" means all (1) patents and patent
applications, including all reissues, extensions, renewals, divisions and
continuations (including continuations-in-part and continued prosecution
applications) thereof, (2) copyrights and registrations thereof, including all
renewals, extensions, reversions or restorations, (3) mask works and
registrations and applications for registration thereof, (4) computer software,
data and documentation, (5) trade secrets, whether patentable or unpatentable
and whether or not reduced to practice, know-how, manufacturing and production
processes and techniques, research and development information, copyrightable
works, financial, marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and information,
and (6) trademarks, service marks, trade names, domain names and applications
and registrations therefor (and goodwill associated therewith). Section
2.2(b)(i) of the Disclosure Schedule lists each patent, patent application,
copyright registration or application therefor, mask work registration or
application therefor, and trademark, service xxxx and domain name registration
or application therefor of the Company. Section 2.2(b)(i) of the Disclosure
Schedule identifies each license or other agreement (or type of license or other
agreement) pursuant to which the Company has licensed, distributed or otherwise
granted any rights to any third party
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with respect to, any Company Intellectual Property, except for reseller and
other distribution agreements and end-user license agreements entered into in
the ordinary course of the Business. Section 2.2(b)(i) of the Disclosure
Schedule identifies each item of Licensed Intellectual Property and the license
or agreement pursuant to which the Company uses it (excluding off-the-shelf
software programs licensed by the Company pursuant to "shrink wrap" licenses).
(ii) Excluding any Licensed Intellectual Property
incorporated in or underlying the Customer Deliverables or the Internal Systems,
none of the Customer Deliverables, or the marketing, distribution, provision or
use thereof, infringes or violates, or constitutes a misappropriation of, any
Intellectual Property rights of any person or entity, and none of the Internal
Systems, or the use thereof, infringes or violates, or constitutes a
misappropriation of, any Intellectual Property rights of any person or entity.
Section 2.2(b)(ii) of the Disclosure Schedule lists any complaint, claim, or
notice, or written threat thereof, received by the Company alleging any such
infringement, violation or misappropriation, and the Company has provided to the
Purchaser complete and accurate copies of all written documentation in the
possession of the Company relating to any such complaint, claim, notice or
threat. The Company has provided to the Purchaser complete and accurate copies
of all written documentation in the Company's possession relating to claims or
disputes concerning any Company Intellectual Property or any Licensed
Intellectual Property.
(iii) The Company has not disclosed the source code for any of
the software included in the Company Intellectual Property (the "Software") or
other confidential information constituting, embodied in or pertaining to the
Software to any person or entity, except pursuant to the agreements listed in
Section 2.2(b)(iii) of the Disclosure Schedule, and the Company has taken
reasonable measures to prevent disclosure of such source code.
(iv) All of the materials (including Software) incorporated
in or bundled with the Company Intellectual Property have been created by
employees of the Company within the scope of their employment by the Company, or
by independent contractors of the Company who have executed agreements expressly
assigning and agreeing to take such steps as are necessary to assign, all right,
title and interest in such materials to the Company.
(c) COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any provisions of its Amended Articles of Incorporation
(its "Articles of Incorporation") or its Code of Regulations. The Company is not
in violation or default of any provision of any instrument, judgment, order,
writ or decree to which it is a party or by which it is bound or of any
provision of federal or state statute, rule or regulation applicable to the
Company, except where such violation or default would not have a material
adverse effect on the Business or the properties or financial condition of the
Company. The execution, delivery and performance of the Agreements and the
consummation of the transactions contemplated hereby or thereby will not (A)
result in any such violation or default of any provisions of any contract or
agreement to which the Company is a party or by which it is bound, (B) be in
conflict with or constitute, with or without the passage of time and giving of
notice, a default under any such instrument, judgment, order, writ, decree or
contract or (C) result in the creation of any lien, charge or encumbrance upon
any assets of the Company. The Company has avoided every condition, and has not
performed any act, the occurrence of which would result in the Company's
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loss of any right granted under any license, distribution agreement or other
agreement and would materially and adversely affect the Business or the
properties or financial condition of the Company.
(d) AGREEMENTS; ACTION.
(i) There are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors or
shareholders, in each case except as contemplated by the Agreements.
(ii) Except for agreements explicitly contemplated by the
Agreements, there are no agreements, understandings, instruments, contracts or
proposed transactions to which the Company is a party or by which it is bound
that have been entered into outside of the ordinary course of the Business, that
involve obligations (contingent or otherwise) of, or payments to, the Company in
excess of $25,000 and that have not been provided to the Purchaser in response
to Purchaser's due diligence request.
(iii) The Company has not engaged in the past three (3) months
in any serious discussion (a) with any representative of any corporation or
corporations regarding the merger of the Company with or into any such
corporation or corporations, (b) with any representative of any corporation,
partnership, association or other business entity or any individual regarding
the sale, conveyance or disposition of all or substantially all of the assets of
the Company or a transaction or series of related transactions in which more
than fifty percent (50%) of the voting power of the Company would be disposed
of, or (c) regarding any other form of liquidation, dissolution or winding up of
the Company.
(iv) The Company is not in material default under any
contract or agreement to which it is a party or is bound, nor does any condition
exist that, upon the giving of notice or passage of time, or both, could result
in any such default. No other party to any such contract or agreement is in
material default thereunder.
(e) NO CONFLICT OF INTEREST. Immediately after the consummation of
the transactions contemplated by the Agreements, the Company will not be
indebted, directly or indirectly, to any of its officers or directors or to
their respective spouses or children, in any amount whatsoever other than in
connection with expenses or advances of expenses incurred in the ordinary course
of business. None of the Company's officers, directors, or any of their
respective spouses or children, are or will be, immediately after consummation
of the transactions contemplated by the Agreements and except as contemplated
thereby, directly or indirectly indebted to the Company or have any direct or
indirect ownership interest in any firm or corporation with which the Company is
Affiliated or with which the Company has a business relationship, or any firm or
corporation which competes with the Company, except that officers and directors
of the Company may own stock in (but not exceeding two percent of the
outstanding capital stock of) any publicly traded companies that may have a
business relationship with the Company or may compete with the Company. None of
the Company's officers or directors or any of their respective spouses or
children are or will be, immediately after the consummation of the transactions
contemplated by the Agreements, directly or indirectly
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interested in any material contract with the Company. The Company is not and
will not be, immediately after the consummation of the transactions contemplated
by the Agreements, a guarantor of any indebtedness of any other person, firm or
corporation.
(f) RIGHTS OF REGISTRATION AND VOTING RIGHTS. Except as
contemplated in the Registration Rights Agreement, the Company has not granted
or agreed to grant any registration rights, including piggyback rights, to any
person or entity in respect of any securities of the Company.
(g) TITLE TO PROPERTY AND ASSETS. Immediately after the
consummation of the transactions contemplated by the Agreements, (i) the Company
will own its property and assets free and clear of all mortgages, liens, loans
and encumbrances, and (ii) with respect to the property and assets it leases,
the Company will be in compliance with all such leases in all material respects
and will hold a valid leasehold interest free of any liens, claims or
encumbrances. Such property and assets constitute all of the property and assets
reasonably required in order to conduct the Business, on a basis consistent with
prior practices, following the Closing.
(h) FINANCIAL STATEMENTS. The Company has provided to the
Purchaser its audited financial statements (including balance sheet, income
statement and statement of cash flows) as of and for the years ended December
31, 1999 and 1998, and the Company's unaudited financial statements as of and
for the ten months ended October 31, 2000 (the "Financial Statements"). The
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the period
indicated, except that the Financial Statements as of and for the ten months
ended October 31, 2000 (the "Interim Financial Statements") do not contain the
footnotes required by generally accepted accounting principles and do not
reflect normal year-end adjustments. The Financial Statements fairly present the
financial condition and operating results of the Company as of the dates and for
the periods indicated therein, subject, in the case of the Interim Financial
Statements, to normal year-end adjustments. Except as set forth in the Financial
Statements, the Company has and, immediately after the Closing, the Company will
have, no material liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to October
31, 2000 and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted accounting
principles to be reflected in the Financial Statements.
(i) CHANGES. Since October 31, 2000, there has not been:
(i) any change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of business that
have not been, in the aggregate, materially adverse;
(ii) any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the Business or the properties
or financial condition of the Company;
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(iii) any waiver or compromise by the Company of a valuable
right or of a material debt owed to it;
(iv) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the Business or to the properties
or financial condition of the Company;
(v) any material change to a material contract or agreement
by which the Company or any of their respective assets is bound or subject;
(vi) any material change in any compensation arrangement or
agreement with any employee, officer or director of the Company;
(vii) any sale, assignment or transfer of any Company
Intellectual Property;
(viii) any resignation or termination of employment of any
officer or key employee of the Company; and any impending resignation or
termination of employment of any such officer or key employee;
(ix) any loans or guarantees made by the Company to or for
the benefit of the Company's employees, officers or directors, or any members of
their immediate families, other than travel advances and other advances made in
the ordinary course of its business;
(x) any declaration, setting aside or payment of any
dividend or other distribution in respect to any of the Company's capital stock,
or any direct or indirect redemption, purchase, or other acquisition of any of
such stock by the Company;
(xi) any other event or condition of any character that might
materially and adversely affect the Business or the properties or financial
condition of the Company; or
(xii) any agreement or commitment by the Company to do any of
the things described in this Section 2.2(i).
(j) EMPLOYEE BENEFIT PLANS. The Company does not have any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974.
(k) TAX RETURNS AND PAYMENTS. The Company has filed all tax
returns and reports as required by law. These returns and reports are complete
and correct in all material respects. The Company has paid all taxes and other
assessments due. There is no pending dispute with any taxing authority relating
to any of such returns and there is no proposed liability for any tax to be
imposed upon the properties or assets of the Company. The Company has withheld
or collected from each payment made to each of its employees the amount of all
taxes, including, but not limited to, federal income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes, required to be
withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositories.
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(1) INSURANCE. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, as is customary for
companies in its area and industry.
(m) LABOR AGREEMENTS AND ACTIONS. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or has sought to represent any
of the employees, representatives or agents of the Company. There is no strike
or other labor dispute involving the Company pending or threatened which could
have a material adverse effect on the properties, financial condition or
Business of the Company, nor is the Company aware of any labor organization
activity involving any of the Company's respective employees.
(n) CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENTS.
Each employee and officer of the Company has executed an agreement with the
Company regarding confidentiality and proprietary information substantially in
the form or forms delivered to the Purchaser. None of the Company's employees or
officers is in violation thereof.
(o) PERMITS. The Company has all franchises, permits, licenses and
any similar authority necessary for the conduct of the Business, the lack of
which could materially and adversely affect the Business, properties, or
financial condition of the Company. The Company is not in default in any
material respect under any of such franchises, permits, licenses or other
similar authority.
(p) CORPORATE DOCUMENTS. The Purchaser has been furnished with
correct and complete copies of the Articles of Incorporation and Code of
Regulations of the Company, each as amended and as in effect on the date hereof.
The copies of the corporate minutes of the Company included in the Due Diligence
Materials included minutes of all meetings of the directors and stockholders and
all actions by written consent without a meeting by the directors and
stockholders since the date of incorporation and reflect all actions by the
directors (and any committee of directors) and stockholders with respect to all
transactions referred to in such minutes accurately in all material respects.
(q) ENVIRONMENTAL AND SAFETY LAWS. No material expenditures are
required by the Company in order to comply with any existing statute, law or
regulation relating to the environment or occupational health and safety.
2.3 DISCLOSURE. The Company has provided the Purchaser with all of the
material information that the Purchaser has requested in connection with its due
diligence investigation of the Company and its decision to invest in the Company
and all information that the Company believes is reasonably necessary to enable
the Purchaser to make such a decision. To the knowledge of the Company, no
representation or warranty of the Company contained in this Agreement and the
exhibits attached hereto or any certificate furnished or to be furnished to
Purchaser at the Closing (when read together) contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made.
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3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants to the Company that:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Purchaser
is duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Purchaser has all requisite corporate power and authority
to carry on its business as presently conducted and as proposed to be conducted
by the Purchaser following the Closing. The Purchaser is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure so to qualify would have a material adverse effect on its business or
properties. The Purchaser is a wholly-owned subsidiary of Recall Corporation.
3.2 AUTHORIZATION; CONFLICTS; CONSENTS. The Purchaser has full
power and authority to enter into this Agreement and each other Agreement to
which it is a party. The execution, delivery and performance by the Purchaser of
each of the Agreements to which it is a party have been duly and validly
authorized by all requisite action on the part of the Purchaser. The Agreements
to which it is a party, when executed and delivered by the Purchaser, shall
constitute valid and legally binding obligations of the Purchaser, enforceable
against the Purchaser in accordance with their terms, except (i) as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws of general application affecting
enforcement of creditors' rights generally, and by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies, or (ii) to the extent the indemnification provisions contained in the
Registration Rights Agreement may be limited by applicable federal or state
securities laws. The execution, delivery and performance of the Agreements and
the consummation by the Purchaser of the transactions contemplated hereby or
thereby will not (A) result in any violation or default of (i) the Certificate
of Incorporation or Bylaws of the Purchaser, (ii) any instrument, judgment,
order, writ or decree to which the Purchaser is a party or by which it is bound,
(iii) any provision of federal or state statute, rule or regulation applicable
to the Purchaser, or (iv) any provisions of any contract or agreement to which
the Purchaser is a party or by which it is bound, (B) be in conflict with or
constitute, with or without the passage of time and giving of notice, a default
under any such instrument, judgment, order, writ, decree or contract or (C)
result in the creation of any lien, charge or encumbrance upon any assets of the
Purchaser. No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the part of the Purchaser is required in
connection with the execution, delivery and performance of each Agreement by the
Company or the consummation of the transactions contemplated by this Agreement.
3.3 INVESTMENT SOPHISTICATION; PURCHASE ENTIRELY FOR OWN ACCOUNT.
This Agreement is made by the Company with the Purchaser in reliance upon the
Purchaser's representations and warranties to the Company, which by the
Purchaser's execution of this Agreement the Purchaser hereby confirms, that the
Purchaser (i) is a sophisticated investor under the Securities Act of 1933, as
amended (the "Securities Act"), and applicable state securities laws and has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its investment in the Company,
(ii) is an "Accredited Investor" for purposes of Regulation D promulgated under
the Securities Act, and (iii) is acquiring the Shares for investment for the
Purchaser's own account, not as a nominee or agent, and not with a
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view to the resale or distribution of all or any part thereof, and has no
present intention of selling, granting any participation in, or otherwise
distributing the Shares. The Purchaser has not been formed for the specific
purpose of acquiring the Shares.
3.4 DISCLOSURE OF INFORMATION. The Purchaser has had an
opportunity to discuss the Business and the Company's management and financial
affairs and the terms and conditions of the offering of the Shares with the
Company's management and has had an opportunity to review the Company's
facilities. The Purchaser understands that such discussions were intended to
describe the aspects of the Company's Business that the Company believes to be
material. The foregoing, however, does not limit or modify the representations
and warranties of the Company in Section 2 of this Agreement or the right of the
Purchaser to rely thereon, except that information or documents provided to the
Purchaser in the course of its due diligence investigation of the Company shall
be deemed to have been disclosed to the Purchaser for all purposes, including
for purposes of the above described representations and warranties.
3.5 RESTRICTED SECURITIES. The Purchaser understands that the
Shares have not been, and will not be, registered under the Securities Act or
applicable state securities laws by reason of specific exemptions from the
registration provisions of the Securities Act and such state securities laws
that depend upon, among other things, the bonafide nature of the investment
intent and the accuracy of the Purchaser's representations and warranties as
expressed in this Agreement. The Purchaser understands that the Shares are
"restricted securities" under applicable U.S. federal and state securities laws
and that, pursuant to these laws, the Purchaser must hold the Shares
indefinitely unless they are registered with the Securities and Exchange
Commission and qualified by state authorities, or an exemption from such
registration and qualification requirements is available. The Purchaser
acknowledges that the Company has no obligation to register or qualify the
Shares for resale except as set forth in the Registration Rights Agreement, The
Purchaser further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Shares, and on requirements relating to the Company which are outside of
the Purchaser's control, and which the Company may not be able to satisfy. The
Purchaser understands that the Shares are subject to additional transfer
restrictions under the Shareholders' Agreement.
3.6 NO PUBLIC MARKET. The Purchaser understands that no public
market now exists for the Shares or any of the other securities issued by the
Company, and that the Company has made no assurances that a public market for
the Shares or any of such other securities will ever exist.
3.7 LEGENDS. The Purchaser understands that the certificate(s)
representing the Shares may bear one or ail of the following legends:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS IT IS FIRST
ESTABLISHED TO THE REASONABLE SATISFACTION OF
11
THE COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE FOR SUCH SALE
OR TRANSFER,"
(b) Any legend set forth in the other Agreements.
(c) Any legend requited by the Blue Sky laws of any state to
the extent such laws are applicable to the Shares represented by the certificate
so legended.
4. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT CLOSING. The
obligations of the Purchaser under this Agreement are subject to the
satisfaction or waiver by the Purchaser, on or before the Closing Date, of each
of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true and correct in
all material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date.
4.2 PERFORMANCE. The Company shall have performed and complied
with all covenants, agreements, obligations and conditions contained in this
Agreement mat are required to be performed or complied with by it at or before
the Closing.
4.3 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required to be obtained by the Company in connection with the
lawful issuance and sale of the Shares pursuant to this Agreement shall be
obtained and effective as of the Closing Date.
4.4 COMPLIANCE CERTIFICATE. The President of the Company shall
deliver to the Purchaser at the Closing a certificate certifying that the
conditions specified in Sections 4.1, 4,2 and 4.3 have been fulfilled.
4.5 EXECUTION AND DELIVERY OF AGREEMENTS. Each party other than
the Purchaser shall have executed and delivered to the Purchaser each of the
Agreements to which the Purchaser shall be a party, and each such agreement
shall be in full force and effect subject only to the consummation of the
Closing.
4.6 COMPLETION OF DUE DILIGENCE. The Purchaser shall have
completed to its reasonable satisfaction its due diligence investigation of the
Company.
4.7 LEGAL OPINION. Xxxxxxxxx, Pembridge & Chriszt Co., L.P.A.,
counsel to the Company, shall have delivered a legal opinion to the Purchaser in
form and substance reasonably satisfactory to the Purchaser.
4.8 NO LEGAL ACTIONS. No suit, action or other proceeding shall be
pending or threatened before any court or before any governmental agency in
which it is sought to restrain, prohibit, invalidate or set aside in whole or in
part the consummation of the transactions contemplated by the Agreements.
12
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company under this Agreement are subject to the satisfaction or waiver by
the Company, on or before the Closing Date, of each of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained in Section 3 shall be true and correct in
all material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date.
5.2 PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed by the Purchaser on at prior to the
Closing shall have been performed or complied with in all material respects.
5.3 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required to be obtained by the Purchaser in connection with
the lawful issuance and sale of the Shares pursuant to this Agreement shall be
obtained and effective as of the Closing.
5.4 COMPLIANCE CERTIFICATE. The President of the Purchaser shall
deliver to the Company at the Closing a certificate certifying that the
conditions specified in Sections 4.1, 4.2 and 4.3 have been fulfilled.
5.5 EXECUTION AND DELIVERY OF AGREEMENTS. The Purchaser and Recall
Corporation shall have executed and delivered each Agreement to which each is a
party, and each such agreement shall be in full force and effect subject only to
the consummation of the Closing.
5.6 NO LEGAL ACTIONS. No suit, action or other proceeding shall be
pending or threatened before any court or before any governmental agency in
which it is sought to restrain, prohibit, invalidate or set aside in whole or in
part the consummation of the transactions contemplated by the Agreements.
6. TERMINATION.
This Agreement may be terminated and the transaction hereby provided for
may be abandoned at any time, but not later than the Closing:
(a) by mutual consent of the parties hereto; or
(b) by the Purchaser, if any of the conditions precedent provided
for in Section 4 of this Agreement has not been met on or prior to February 15,
2001, and has not been waived by the Purchaser in writing; or
(c) by the Company, if any of the conditions provided for in
Section 5 of this Agreement has not been met on or prior to February 15, 2001,
and has not been waived by the Seller in writing.
13
In the event of termination or abandonment by the Purchaser as above provided in
clause (b) of this Section 6, or by the Company as provided in clause (c) of
this Section 6, written notice shall forthwith be given to the other party. In
the event of termination and abandonment of this transaction, no party hereto
shall have any liability or further obligation to any other party under this
Agreement, except for such party's breach of any provision of this Agreement
prior to such termination.
7. MISCELLANEOUS.
7.1 SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of the Company and the Purchaser contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing.
7.2 TRANSFER; SUCCESSORS AND ASSIGNS. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. Neither party shall assign this
Agreement, or any of its rights, benefits, obligations or burdens hereunder, to
any third party without the prior written consent of the other party. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
7.3 GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Ohio, without giving effect to principles of conflicts of law thereof.
7.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
7.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by telegram or fax, or forty-eight
(48) hours after being deposited in the US, mail, as certified or registered
mail, with postage prepaid, addressed to the party to be notified at such
party's address as set forth on the signature page hereof or as subsequently
modified by written notice to the other party hereto, with copies as follows:
14
If to the Purchaser,
with a copy to: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxxxxx Xxxxxxxx LLP
2400 Monarch Tower
0000 Xxxxxxxxx Xxxx, X.X,
Xxxxxxx, Xxxxxxx 00000
Fax: (000)000-0000
If to the Company,
with a copy to: D. Xxxxxxx Xxxxxxxxx, Esq.
Xxxxxxxxx, Pembridge & Chriszt Co. L.P. A.
Cort Shoe Building
4th Floor
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
7.7 FINDER'S FEE. Each party represents that it neither is nor
will be obligated for any finder's fee or commission in connection with the
transactions contemplated by the Agreements.
7.8 FEES AND EXPENSES. Each party shall pay its own fees and
expenses in connection with the transactions contemplated by the Agreements.
7.9 ATTORNEY'S FEES. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of any of the
Agreements, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
7.10 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived only with the written consent of each of the parties hereto.
Any amendment or waiver effected in accordance with this Section 7.10 shall be
binding upon the Purchaser and each transferee of the Shares and each future
holder of all such securities, and the Company.
7.11 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
7.12 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall
15
any waiver 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 party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and signed
by the party against which such waiver, permit, consent or approval is sought to
be enforced, 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 party, shall be cumulative and not alternative.
7.13 ENTIRE AGREEMENT. This Agreement and the other Agreements
referred to herein constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof, and any and all other written or oral
agreements relating to the subject matter hereof existing between the parties
hereto are expressly canceled.
7.14 DEFINITION OF "KNOWLEDGE". For purposes of the representations
and warranties of Section 2 of this Agreement, the term "knowledge of the
Company" shall be deemed to mean and include the actual knowledge of each of J.
Xxxxxxx Xxxxxx, Jr. (Chairman), Xxxxxxxxxxx X. Xxxxxx (Chief Financial Officer),
Xxxxxx Xxxxxxxxxxx (Chief Technology Officer), X.X. Xxxxxx (President) and J.
Xxxxxxx Xxxxxx, Sr. (Secretary and Treasurer) and such facts, conditions or
circumstances as a person occupying the position of any such named officer of
the Company would reasonably be expected to be aware of in the ordinary conduct
of such person's duties and the exercise of reasonable care.
[Signatures appear on following page.]
16
The parties have executed this Stock Purchase Agreement as of the date
first written above.
COMPANY:
Xxxxxx Software, Inc.
By: /s/ J. Xxxxx Xxxxxx
------------------------------------
Name: J. Xxxxx Xxxxxx, Xx.
Title: Chief Executive Officer
Address:
00000 Xxxx Xxxx
Xxxxx Xxxxx, Xxxx 00000
Fax: 000-000-0000
PURCHASER:
Recall Total Information Management, Inc.
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
Title: President
Address:
000 Xxxxx Xxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Fax: 000-000-0000
17
EXHIBITS
Exhibit A - Form of Strategic Alliance Agreements
Exhibit B - Schedule of Exceptions to Representations and Warranties
Exhibit C - Form of Shareholders' Agreement
Exhibit D - Form of Registration Rights Agreement
