Exhibit 10.16
STOCK PURCHASE AGREEMENT
DATED SEPTEMBER 4, 1991
BETWEEN
INFORMATION MANAGEMENT ASSOCIATES, INC.
AND
WAND/IMA INVESTMENTS, L.P.
STOCK PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT dated as of September 4, 1991 by and among
WAND/IMA INVESTMENTS, L.P. (the "Purchaser"), and INFORMATION MANAGEMENT
ASSOCIATES, INC. (the "Company").
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto hereby agree as follows:
ARTICLE 1. TRANSFER OF SHARES AND RELATED MATTERS
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1.1 The Sale. Subject to the terms and conditions of this Agreement,
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the Company hereby agrees to issue and sell to the Purchaser, and the Purchaser
hereby agrees to purchase from the Company, on the date of the Closing (as
hereinafter defined), 13,228 newly issued shares (the "Shares") of the common
stock, no par value, of the Company ("Common Stock") free and clear of all
liens, claims, liabilities, restrictions or other encumbrances at a purchase
price of $45.36 per share (the "Purchase Price").
1.2 Delivery of Shares. On the Closing Date (as hereinafter
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defined), the Company will deliver to the Purchaser, against payment of the
Purchase Price, certificates representing the Shares.
ARTICLE 2. CLOSING
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The closing for the consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of LeBoeuf, Lamb,
Xxxxx & XxxXxx, 000 Xxxxx Xxxxxxxx, 00xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, on
April 29, 1991 or at such other time or place as the parties hereto shall
mutually agree (the "Closing Date").
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company hereby represents and warrants to the Purchaser as
follows:
3.1 Authority and Validity. The execution, delivery and performance
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of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on the
part of the Company. This Agreement has been duly and validly executed and
delivered by the Company and is the valid and binding obligation of the Company,
enforceable in accordance with its terms, except as such enforcement may be
affected or limited by bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by applicable
principles of equitable remedies. Neither the execution, delivery and
performance of this Agreement, nor the consummation of the
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transactions contemplated hereby or compliance by the Company with any of the
provisions hereof will (i) conflict with or result in a breach of any material
provision of its Charter or By-laws; (ii) violate or conflict with the terms of
any material agreement to which the Company is a party or by which it is bound;
or (iii) violate any law, statute, rule or regulation or judgement, order, writ,
injunction or decree of any court, administrative agency or governmental body
applicable to Company.
3.2 Organization and Standing; Certificate of Incorporation and
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Bylaws. The Company is a corporation duly organized and existing under the laws
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of the State of Connecticut and is in good standing under such laws. The Company
has requisite corporate power and authority to own, lease and operate its
properties and assets, and to carry on its business as presently conducted. The
Company has all requisite corporate power and authority to enter into and
perform all of its obligations under this Agreement.
3.3 Subsidiaries. On the date hereof, the Company has no
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subsidiaries.
3.4 Qualification. Attached as Schedule 3.4 is a true and complete
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list of all jurisdictions in which the Company is duly qualified as a foreign
corporation authorized to do business, or has a pending application for such
qualification. The Company is in good standing in each such jurisdiction in
which it is so qualified. The jurisdictions identified in Exhibit 3.4 are the
only jurisdictions in which the nature of the Company's activities or the
character of the properties it owns or leases makes such qualification
necessary, other than those jurisdictions in which the failure to be so
qualified would not have a material adverse effect on the financial condition,
assets, liabilities (absolute, accrued, contingent or otherwise), reserves,
business, operations or prospects of the Company.
3.5 Capitalization. The authorized capital stock of the Company is
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500,000 shares of common stock, of which 100,000 shares are issued and
outstanding. Except for such outstanding shares, the Common Stock to be issued
pursuant to this Agreement and shares of common stock issuable upon exercise of
outstanding common stock purchase warrants held by Purchaser and Xxxxxx X. Xxxx,
the Company has no issued or outstanding shares of capital stock or securities
convertible or exchangeable into, or outstanding stock purchase warrants or
other options or rights to purchase shares of its capital stock or other equity
securities. All issued and outstanding shares have been duly authorized and
validly issued, are fully paid and non-assessable. When authorized and issued,
the Shares will not be subject to any pre-emptive rights or rights of first
refusal. The Shares, when issued in compliance with the
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provisions of this Agreement, will be validly issued, fully paid and non-
assessable and will be free of any liens or encumbrances; provided, however,
that the Shares will be subject to restrictions on transfer imposed under
applicable state and federal securities laws.
3.6 Capital Stock and Related Matters. At the time of the Closing
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and after giving effect to the transactions contemplated by this Agreement, the
authorized capital stock of the Company will consist of 500,000 shares of common
stock, of which 113,228 shares will be outstanding and 50,000 shares will be
reserved for issuance upon exercise of the Warrants. Attached as EXHIBIT A is a
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true and correct list identifying each stockholder of the Company and the number
of shares of Common Stock owned by each such stockholder. All of the outstanding
shares of Common Stock will be validly issued and outstanding, fully paid and
non-assessable. Except for the Warrants, the Company has no outstanding
securities convertible into or exchangeable for any shares of its Capital Stock,
or any outstanding rights (either preemptive or other) to subscribe for or to
purchase, or any outstanding options for the purchase of, or any agreements
providing for the issuance (contingent or otherwise) of, or any outstanding
calls, commitments or claims of any character relating to, any Capital Stock or
any stock or securities convertible into or exchangeable for any Capital Stock
of the Company. Except as provided in the Warrants, the Company is not subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its Capital Stock or any convertible securities, rights
or options of the type described in the preceding sentence. The Company is not a
party to, and does not have knowledge of, any agreement (except as set forth in
this Agreement, the Letter Agreement, the Warrants, the Shareholders' Agreement
[as defined in a certain Note and Warrant Purchase Agreement dated December 21,
1990 by and between Purchaser and the Company] and Restricted Stock Award
Agreements dated December 21, 1990 between the Company and Xxxxxx XxXxx and the
Company and Xxxx Xxxxxxx and the Company) restricting the voting or transfer of
any shares of the Company's Capital Stock. The Company is not required to file,
nor has it filed, pursuant to Section 12 of the Exchange Act, a registration
statement relating to any class of equity securities, provided, however, that
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under the Shareholders' Agreement, certain shareholders of the Company have been
granted "piggy-back" registration rights.
3.7 Indebtedness of the Company. EXHIBIT B correctly describes all
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secured and unsecured Indebtedness of the Company outstanding, or for which the
Company has commitments, on the date of this Agreement. The Company is not in
default with respect to any Indebtedness or any instrument or agreement relating
thereto.
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3.8 Disclosure. Neither this Agreement, the Exhibits hereto, nor
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the officers' certificates delivered in connection with the Closing contains (in
each case, as of its date) 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.
3.9 Intellectual Property. The Company owns or has valid rights to
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use all Intellectual Property Rights used in or necessary to conduct the
Company's business as heretofore conducted or planned to be conducted in the
foreseeable future, including, without limitation, all Intellectual Property
Rights in or relating to the so called "Telemar" software and all integrated
software modules in connection therewith, e.g., Voice Modules ("Simple Dial",
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Intellectual Dial", "Call Router" and "Call Manager"), Base Modules ("Account
Management" and "Scripting"), Data Modules ("Order Entry", "Mail Management",
"Lead Management", "Sales Management", "Application Generation" and "Telemar
PC"), and Common Features ("Telewriter", "Teleprompt" and "Teletext"). EXHIBIT C
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sets forth a complete and accurate list of all registered trademarks and
copyrights which the Company owns or is licensed to use and all material License
Agreements. The Company owns no Patents. The Company is the sole and exclusive
legal, beneficial and record owner of all Copyrights and Trademarks specified on
EXHIBIT C as well as all other material Intellectual Property Rights used in or
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necessary to conduct the Company's business, free and clear of all liens,
claims, charges and encumbrances and free and clear of all licenses to third
parties other than licenses to customers in the ordinary course of business. To
the knowledge of the Company, all License Agreements are valid and binding
obligations of the parties thereto. The Copyright listed on EXHIBIT C relating
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to the TELEMAR computer software, and the Copyright in the documentation related
thereto, is a valid and subsisting United States Copyright and is registered in
the United States Copyright Office. To the Company's knowledge, all the
Company's material intellectual property rights (including those relating to the
computer programs, data bases and related documentation) are valid and
enforceable, are subsisting, none are subject to any interference, opposition,
office action, cancellation or other similar proceeding and all fees have been
timely paid. There are no claims pending or, to the best of the Company's
knowledge, threatened, before any court or governmental agency relating to the
validity, enforceability, or the Company's rights to own or use any Intellectual
Property Rights (including, without limitation, those relating to any of the
computer programs, data bases or related documentation) or alleging that the
conduct of the Company's business infringes upon or constitutes an unauthorized
use of the Intellectual Property Rights of any third party and, to the best of
the Company's knowledge, there is no valid basis for any such claims. To the
best of the Company's
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knowledge, there are no material infringements or unauthorized uses of any
Intellectual Property Rights owned by or licensed to the Company (including,
without limitation, those in the programs, data bases and related documentation)
and no material breaches of any License Agreements. The Company has taken
reasonable security measures to protect the secrecy and confidentiality of the
source code, proprietary screen displays and documentation relating to the
TELEMAR computer programs and databases and in all other material proprietary
Know-How and Technical Information owned by or licensed to the Company. Except
as set forth on EXHIBIT C, the Company customarily employs proper statutory
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notice of registration in connection with registered Trademarks owned by or
licensed to the Company and places appropriate copyright notices on all material
computer programs, data bases, related documentation, and other material
Copyrights owned by the Company. The Company has not entered into any consent,
forbearance to xxx, or settlement agreement with any Person relating to any
Intellectual Property Rights (including but not limited to those in the computer
programs, data bases and documentation related thereto) or to those of any third
party, except as set forth on EXHIBIT C. The consummation of the transactions
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contemplated by this Agreement will not result in the loss or impairment of any
material Intellectual Property Rights (including but not limited to those in any
computer programs, data bases and documentation related thereto) or the
Company's ownership or right to use the same or result in a breach of any
License Agreement.
3.10 Environmental Matters. The Company is in compliance with the
----------------------
provisions of all federal, state and local laws relating to pollution or
protection of the environment applicable to it or to real property owned or
leased by it or to the ownership, use, operation or occupancy thereof, except
for violations or liabilities which individually or in the aggregate could not
reasonably be expected to have a material adverse effect on the Company. Neither
the Company nor any Person has engaged in any activity in violation of any
provision of any federal, state or local law relating to pollution or protection
of the environment, which violation could reasonably be expected to have a
material adverse effect on the Company. The Company has no liability, absolute
or contingent, under any federal, state or local law relating to pollution or
protection of the environment, except for liabilities which individually or in
the aggregate could not reasonably be expected to have a material adverse effect
on the Company.
3.11 Financial Statements. The unaudited balance sheet and related
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statement of operations of the Company as of December 31, 1990 and the unaudited
balance sheet and related statement of operations of the Company as of June 30,
1991 (collectively, the "Financial Statements") fairly present the Company's
assets,
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liabilities, financial position and results of operations as of the respective
dates of such statements and for the periods then ended, and were prepared in
accordance with generally accepted accounting principles, consistently applied
(subject, in the case of interim statements, to normal year-end adjustments). As
of the date of this Agreement, there is no fact (other than any matters of a
general economic or political nature which do not affect the Company uniquely)
known to the Company which materially adversely affects or in the future may (so
far as the Company can now reasonably foresee) materially adversely affect the
financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business operations or prospects of the Company which has
not been set forth in this Agreement or the Exhibits hereto.
3.12 Changes. Except as set forth in Schedule 3.12 hereto, since June
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30, 1991, there has not been:
(a) any change in the Company's assets, liabilities, condition
(financial or otherwise) or business which individually or in the aggregate is
materially adverse to the Company, or which is not in the ordinary course of
business;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the Company's business or assets
or other properties;
(c) any issuance or sale by the Company of any shares of its capital
stock or other securities; and
(d) any other event or condition which has materially and adversely
affected the Company's business.
3.13 Litigation, Etc. There is no litigation or government
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investigation or proceeding either existing, pending or, to the Company's
knowledge, threatened against the Company or affecting any of the Company's
properties or assets, in any court or before or by any federal, state, municipal
or other governmental authority, or which affects this Agreement or any action
taken or to be taken by the Company hereunder.
3.14 Compliance with Other Instruments, etc. The Company is not in
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violation of any term of its Certificate of Incorporation or By-Laws, and the
Company is not in violation of any term of any agreement or instrument to which
it is a party or by which it is bound or any term of any applicable law,
ordinance, rule or regulation of any governmental authority or any term of any
applicable order, judgment or decree of any court, arbitrator or governmental
authority, the consequences of which violation could reasonably be expected to
have a material adverse effect on the
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financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business, operations or prospects of the Company.
3.15 Use of Proceeds. The Company will use the proceeds from the sale
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of the Common Stock to fund a term loan in an amount up to $600,000 to Xxxxxxx
Systems, Inc. and Consumer Relations Technology, Inc. The Company will use any
remaining portion of such proceeds for general corporate purposes.
3.16 No Violations of Securities Laws. Subject to the accuracy of the
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Purchaser's representations in Section 4 hereof, the offer and sale of the
Shares hereunder is and will be exempt from the registration and prospectus
delivery requirements of the Securities Act of 1933 (the "Act") and is and will
be exempt from the registration, permit or qualification requirements of all
applicable state securities laws or such requirements have been or will be
satisfied. The Company has not offered or sold the Shares to anyone other than
the Purchaser. Neither the Company nor any person acting on its behalf has taken
any action which would require the registration of the Shares under Section 5 of
the Act, including, without limitation, engaging in any form of general
solicitation.
3.17 Brokers or Finders Fees, Etc. No agent, broker, investment
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banker, person or firm acting on behalf of the Company or under its authority is
or will be entitled to any broker's or finder's fee or any other commission or
similar fee in connection with the sale of the Shares contemplated hereby.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
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The Purchaser hereby represents and warrants to the Company as
follows:
4.1 Investment. The Purchaser is acquiring the Shares for investment
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for its own account and not with a view to, or for resale in connection with,
any distribution thereof. The Purchaser understands that the Shares have not
been registered under the Securities Act of 1933, as amended (the "Act") by
reason of a specific exemption from the registration provisions of the Act which
depends upon, among other things, the bona fide nature of the Purchaser's
investment intent as expressed herein.
4.2 Resale. The Purchaser acknowledges that the Shares must be held
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indefinitely unless the Shares are subsequently registered under the Act or an
exemption from such registration is available. Each certificate representing (i)
the Shares, and (ii) any other securities issued in respect of the Shares upon
any stock split, stock dividend, recapitalization, merger,
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consolidation or similar event, shall (unless otherwise permitted by law) be
stamped or otherwise imprinted with a legend in the following form (in addition
to any legend required under applicable state securities laws, rules or
regulations):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT EXCEPT PURSUANT TO AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
4.3 Accredited Investor. The Purchaser is an "accredited investor"
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as that term is used in Rule 501 promulgated under the Act.
ARTICLE 5. CONDITIONS TO OBLIGATIONS OF THE PURCHASER
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The obligations of the Purchaser to perform this Agreement are subject
to the satisfaction of the following conditions unless waived by the Purchaser:
5.1 Opinion of Counsel. You shall have received a favorable opinion,
-------------------
addressed to you, dated the date of Closing and satisfactory in substance and
form to you, from LeBoeuf, Lamb, Xxxxx & XxxXxx, special counsel for the
Company, substantially in the form set forth in EXHIBIT D and covering such
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matters incident to the transactions contemplated by this Agreement as you or
your counsel may reasonably request.
5.2 Representations. The representations made by the Company in
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Section 3 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date with the same force and effect as if they had been
made on and as of said date.
5.3 Authorization. All action necessary to authorize the execution,
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delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by the
Company and the Company shall have full power and right to consummate the
transactions contemplated hereby.
5.4 Acceptance by Counsel to the Purchaser. The form and substance
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of all legal matters contemplated hereby and of all papers delivered hereunder
shall be acceptable to counsel to the Purchaser.
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5.5 Government Consents, Authorizations, Etc. All consents,
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authorizations, orders or approvals of, and filings or registrations with, any
federal, state, local or foreign governmental commission, board or other
regulatory body which are required for or in connection with the execution,
delivery and performance of this Agreement by the Company, and the consummation
of the transactions contemplated hereby shall have been duly obtained or made.
5.6 No Litigation or Legislation. No federal, state, local or
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foreign statute, rule or regulation shall have been enacted or litigation,
proceeding, government inquiry or investigation commenced or threatened which
prohibits, restricts or delays the consummation of the transactions contemplated
by this Agreement or any of the conditions to the consummation of such
transactions or adversely affects the desirability of consummating the
transactions contemplated hereby.
5.7 No Material Adverse Change. In the judgment of Purchaser, (a) no
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material adverse change shall have occurred in the financial condition, assets,
liabilities (absolute, accrued, contingent or otherwise), reserves, business,
operations or prospects of the Company since December 31, 1990, and (b) on the
Closing Date the financial condition, assets, liabilities (absolute, accrued,
contingent or otherwise), other than (x) changes which have not been, either in
any case or in the aggregate, materially adverse to the Company, and (y) any
matters of a general economic or political nature which do not affect the
Company uniquely.
5.8 Consents and Permits. The Company shall have received all
---------------------
consents, permits and other authorizations, and made all such filings and
declarations, as may be required pursuant to any law, statute, regulation or
rule (federal, state, local or foreign) in connection with the transactions
contemplated by this Agreement, or as may be required pursuant to any agreement,
order or decree to which the Company is a party or to which it is subject, in
connection with the transactions contemplated by this Agreement. The Company
shall have provided copies to you of all such consents, permits, authorizations,
filings and declarations.
ARTICLE 6. CONDITIONS TO OBLIGATIONS OF THE COMPANY
---------- ----------------------------------------
The obligations of the Company to perform this Agreement are subject
to the satisfaction of the following conditions unless waived by the Company:
6.1 Representations. The representations made by Purchaser in
----------------
Section 4 hereof shall be true and correct when made,
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and shall be true and correct on the Closing Date with the same force and effect
as if they had been made on and as of said date.
6.2 Legality. At the time of Closing the sale of the Shares to the
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Purchaser shall be legally permitted by all laws and regulations to which the
Purchaser and the Company are subject.
6.3 Acceptance by Counsel to the Company. The form and substance of
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all legal matters contemplated herein and of all papers delivered hereunder
shall be acceptable to counsel to the Company.
ARTICLE 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION, ETC.
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7.1 Survival. All representations and warranties made by any party
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to this Agreement, including, without limitation, all representations and
warranties made on any Schedule or Exhibit attached hereto or document delivered
hereunder, shall survive the Closing and the consummation of the transactions
contemplated hereby.
7.2 Company's Agreement to Indemnify. The Company hereby agrees to
---------------------------------
indemnify and save the Purchaser harmless from and against, for and in respect
of, any and all damages, losses, obligations, liabilities, claims, actions or
causes of action, encumbrances, costs, and expenses (including, without
limitation, reasonable attorneys' fees) arising from the untruth, inaccuracy or
breach or nonfulfillment of any representation, warranty, covenant or agreement
of the Company, contained in or made pursuant to this Agreement, including any
Exhibit or Schedule attached hereto or certificate delivered hereunder.
ARTICLE 8. RESTRICTION ON TRANSFERABILITY
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8.1 Restriction; Procedure for Transfer. The Shares shall not be
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transferable except upon the conditions specified in this Section 8, which
conditions are intended to ensure compliance with the Securities Act of 1933, as
amended and applicable state securities laws.
8.2 Notice of Proposed Transfer. Prior to any proposed transfer of
----------------------------
any of the Shares (other than a transfer pursuant to registration under the
Act), the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer. Each such notice shall describe the
manner and circumstances of the proposed transfer in sufficient detail, and
shall be accompanied by a written opinion of legal counsel who shall be
reasonably satisfactory to the Company, addressed to the
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Company, to the effect that the proposed transfer of the Shares may be effected
without registration under the Act.
ARTICLE 9. REGISTRATION UNDER SECURITIES ACT, ETC.
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9.1 Registration on Request.
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(a) Request. At any time or from time to time on the earlier
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of (x) December 21, 1995 or (y) the occurrence of an Initial Public
Offering, upon the written request of one or more Initiating Holders,
requesting that the Company effect the registration under the Securities
Act of all or part of such Initiating Holders' Registrable Securities and
specifying the intended method of disposition thereof, the Company will
promptly give written notice of such requested registration to all holders
of Registrable Securities, and thereupon the Company will use its best
efforts to effect the registration under the Securities Act of
(i) the Registrable Securities which the Company has been so
requested to register by such Initiating Holders for disposition in
accordance with the intended method of disposition stated in such
request, and
(ii) all other Registrable Securities the holders of which shall
have made a written request to the Company for registration thereof
within 30 days after the giving of such written notice by the Company
(which request shall specify the intended method of disposition of such
Registrable Securities), and
(iii) subject to the priority provisions of section 9.1(f), all
shares of Common Stock which the Company may elect to register in
connection with the offering of Registrable Securities pursuant to this
Section 9.1; and
(iv) subject to the priority provisions of section 9.1(f), shares of
Common Stock held by other Persons having registration rights.
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities and the
additional shares of Common Stock, if any so to be registered, provided that the
provisions of this section 9.1(a) shall not require the Company to effect more
than two registrations of Registrable Securities. The registration rights
granted in this Agreement are intended to be coincident with the registration
rights granted to the holders of the Warrants. In no event, however, shall the
total number of registrations which
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the Company is required to effect on request hereunder and under the Warrants
exceed two.
(b) Registration Statement Form. Registrations under this
----------------------------
Section 9.1 shall be on such appropriate registration form of the
Commission (i) as shall be selected by the Company and, as shall be
-
reasonably acceptable to the holders of more than 50% (by number of shares)
of the Registrable Securities so to be registered and (ii) as shall permit
--
the disposition of such Registrable Securities in accordance with the
intended method or methods of disposition specified in their request for
such registration. The Company agrees to include in any such registration
statement all information which holders of Registrable Securities being
registered shall reasonably request.
(c) Expenses. The Company will pay all Registration Expenses in
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connection with the first registration requested pursuant to this section
9.1 and the holders will pay all Registration Expenses in connection with
the second registration pursuant to this section 9.1. Registration Expenses
(and underwriting discounts and commissions and transfer taxes, if any) in
connection with the second registration statement shall be allocated pro
rata among all Persons on whose behalf securities of the Company are
included in such registration, on the basis of the respective amounts of
the securities then being registered on their behalf.
(d) Effective Registration Statement. A registration requested
---------------------------------
pursuant to this section 9.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has become
-
effective, provided that a registration which does not become effective
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after the Company has filed a registration statement with respect thereto
solely by reason of the refusal to proceed of the Initiating Holders (other
than a refusal to proceed based upon the advice of counsel relating to a
matter with respect to the Company) shall be deemed to have been effected
by the Company at the request of such Initiating Holders unless the
Initiating Holders shall have elected to pay all Registration Expenses in
connection with such registration, (ii) if, after it has become effective,
--
such registration is interfered with by any stop order, injunction or other
order or requirement of the Commission or other governmental agency or
court for any reason, or (iii) the conditions to closing specified in the
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purchase agreement or underwriting agreement entered into in connection
with such registration are not satisfied, other than by reason of some act
or omission by such Initiating Holders.
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(e) Selection of Underwriters. If a requested registration pursuant
-------------------------
to this section 9.1 involves an underwritten offering, the underwriter or
underwriters thereof shall be selected by the holders of at least a
majority (by number of shares) of the Registrable Securities as to which
registration has been requested and shall be acceptable to the Company,
which shall not unreasonably withhold its acceptance of such underwriters.
(f) Priority in Requested Registrations. If a requested registration
-----------------------------------
pursuant to this section 9.1 involves an underwritten offering, and the
managing underwriter shall advise the Company in writing (with a copy to
each holder of Registrable Securities requesting registration) that, in its
opinion, the number of securities requested to be included in such
registration (including securities of the Company which are not Registrable
Securities) exceeds the number which can be sold in such offering within a
price range acceptable to the holders of a majority of the Registrable
Securities requested to be included in such registration, the Company will
include in such registration, to the extent of the number which the Company
is so advised can be sold in such offering, (i) first Registrable
-
Securities requested to be included in such registration, pro rata among
the holders thereof requesting such securities requested to be included by
such holders and (ii) second, securities the Company proposes to sell and
--
other securities of the Company included in such registration by the
holders thereof.
9.2 Incidental Registration.
-----------------------
(a) Right to Include Registrable Securities. If the Company at any
---------------------------------------
time proposes to register any of its securities under the Securities Act
(other than by a registration on Form S-4 or S-8, or any successor or
similar forms and other than pursuant to section 9.1), whether or not for
sale for its own account, it will each such time give prompt written notice
to all holders of Registrable Securities of its intention to do so and of
such holders' rights under this section 9.2. Upon the written request of
any such holder made within 30 days after the receipt of any such notice
(which request shall specify the Registrable Securities intended to be
disposed of by such holder and the intended method of disposition thereof),
the Company will use its best efforts to effect the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the holders thereof, to the extent requisite to
permit the disposition (in accordance with the intended methods thereof as
aforesaid) of the Registrable Securities so to be registered, by inclusion
of such Registrable Securities in the
-14-
registration statement which covers the securities which the Company
proposes to register, provided that if, at any time after giving written
--------
notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason either not to
register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to each holder of
Registrable Securities and, thereupon, (i) in the case of a determination
-
not to register, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not from
its obligation to pay the Registration Expenses in connection therewith),
without prejudice, however, to the rights of any holder or holders of
Registrable Securities entitled to do so to request that such registration
be effected as a registration under section 9.1, and (ii) in the case of a
--
determination to delay registering, shall be permitted to delay registering
any Registrable Securities, for the same period as the delay in registering
such other securities. No registration effected under this section 9.2
shall relieve the Company of its obligation to effect any registration upon
request under section 9.1. The Company will pay all Registration Expenses
in connection with each registration of Registrable Securities requested
pursuant to this section 9.2.
(b) Priority in Incidental Registrations. If (i) a registration
------------------------------------ -
pursuant to this section 9.2 involves an underwritten offering of the
securities so being registered, whether or not for sale for the account of
the Company, to be distributed (on a firm commitment basis) by or through
one or more underwriters of recognized standing under underwriting terms
appropriate for such a transaction, (ii) the Registrable Securities so
--
requested to be registered for sale for the account of holders of
Registrable Securities are not also to be included in such underwritten
offering (either because the Company has not been requested so to include
such Registrable Securities pursuant to section 9.4(b) or, if requested to
do so, is not obligated to do so under section 9.4(b), and (iii) the
---
managing underwriter of such underwritten offering shall inform the Company
and holders of the Registrable Securities requesting such registration by
letter of its belief that the distribution of all or a specified number of
such Registrable Securities concurrently with the securities being
distributed by such underwriters would interfere with the successful
marketing of the securities being distributed by such underwriters (such
writing to state the basis of such belief and the approximate number of
such Registrable Securities which may be distributed without such effect),
then the Company may, upon written notice to all holders of such
-15-
Registrable Securities, reduce pro rata (if and to the extent stated by
such managing underwriter to be necessary to eliminate such effect) the
number of such Registrable Securities so that the resultant aggregate
number of such registrable Securities so included in such registration
shall be equal to the number of shares stated in such managing
underwriter's letter.
9.3 Registration Procedures. If and whenever the Company is required
-----------------------
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in sections 9.1 and 9.2 the Company shall,
as expeditiously as possible:
(i) prepare and (within 90 days after the end of the period within
which requests for registration may be given to the Company or in any event
as soon thereafter as possible) file with the Commission the requisite
registration statement to effect such registration (including such audited
financial statements as may be required by the Securities Act or the rules
and regulations promulgated thereunder) and thereafter use its reasonable
best efforts to cause such registration statement to become and remain
effective for the time period required by this Agreement, provided, that
--------
before filing such registration statement or any amendments thereto the
Company will furnish to the counsel selected by the holders of Registrable
Securities which are to be included in such registration copies of all such
documents proposed to be filed, which documents will be subject to the
review of such counsel;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement until the earlier of such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement or (i) in the case of a registration pursuant to section 9.1, the
-
expiration of 180 days after such registration statement becomes effective,
or (ii) in the case of a registration pursuant to section 9.2, the
--
expiration of 90 days after such registration statement becomes effective,
it being understood that following the expiration of the relevant time
period, the Company shall have no further obligation
-16-
to maintain the effectiveness of such registration statement;
(iii) furnish to each seller of Registrable Securities covered by such
registration statement such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies
of the prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request in order to
facilitate the public sale or other disposition of the Registrable
Securities owned by such seller;
(iv) use its reasonable best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities laws or blue sky
laws of such jurisdictions as any seller thereof and any underwriter
of the securities being sold by such seller shall reasonably request,
to keep such registrations or qualifications in effect for so long as
such registration statement remains in effect, and take any other
action which may be reasonably necessary or advisable to enable such
seller and underwriter to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that the
Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this subdivision (iv)
be obligated to be so qualified, or to consent to general service of
process in any such jurisdiction;
(v) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of
such Registrable Securities;
(vi) furnish to each seller of Registrable Securities a signed
counterpart, addressed to such seller (and the underwriters, if any)
of
(x) an opinion of counsel for the Company, dated the effective date of
such registration statement (and, if such registration includes an
underwritten public offering, an
-17-
opinion dated the date of the closing under the underwriting agreement),
reasonably satisfactory in form and substance to such seller, and
(y) a "comfort" letter, dated the effective date of such registration
statement (and, if such registration includes an underwritten public offering, a
letter dated the date of the closing under the underwriting agreement), signed
by the independent public accountants who have certified the Company's financial
statements included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, in the case of the accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
the underwriters in underwritten public offerings of securities and, in the case
of the accountants' letter, such other financial matters, and, in the case of
the legal opinion, such other legal matters, as such seller (or the
underwriters, if any) may reasonably request;
(vii) notify each seller of Registrable Securities covered by
such registration statement at any time when a prospectus relating to
a registered offering thereof is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any
event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which
they were made, and at the request of any such seller promptly prepare
and furnish to such seller and each underwriter, if any, a reasonable
number of copies of a supplement to or an amendment of such prospectus
as may be necessary so that, as thereafter delivered to the purchasers
of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made;
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an
earnings statement covering
-18-
the period of at least twelve months, but not more than eighteen
months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act, and will furnish to each such seller at least five
business days prior to the filing thereof a copy of any amendment or
supplement to such registration statement or prospectus and shall not
file any thereof to which any such seller shall have reasonably
objected on the grounds that such amendment or supplement does not
comply in all material respects with the requirements of the
Securities Act or of the rules or regulations thereunder;
(ix) enter into such agreements and take such other actions as
sellers of such Registrable Securities holding 51% of the shares so to
be sold shall reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities;
(x) use its reasonable best efforts to list all Company's equity
securities covered by such registration statement on any securities
exchange on which any of the Company's equity securities are then
listed.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
occurrence of any event of the kind described in subdivision (vii) of this
section 9.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
section 9.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the periods mentioned in paragraph (ii) of
this section 9.3 shall be extended by the length of the period from and
including the date when each seller of any Registrable Securities covered by
such registration statement shall have received such notice to the date on which
each such seller has received the copies of the
-19-
supplemented or amended prospectus contemplated by paragraph (vii) of this
section 9.3.
If any such registration or comparable statement refers to any holder
of Registrable Securities by name or otherwise as the holder of any securities
of the Company then such holder shall have the right to require (i) the
insertion therein of language, in form and substance satisfactory to such
holder, to the effect that the holding by such holder of such securities is not
to be construed as a recommendation by such holder of the investment quality of
the Company's securities covered thereby and that such holding does not imply
that such holder will assist in meeting any future financial requirements of the
Company, or (ii) in the event that such reference to such holder by name or
otherwise is not required by the Securities Act or any similar federal statute
or the rules and regulations promulgated thereunder then in force, the deletion
of the reference to such holder.
9.4 Underwritten Offerings.
----------------------
(a) Requested Underwritten Offerings. If requested by the
--------------------------------
underwriters for any underwritten offering by holders of Registrable
Securities pursuant to a registration requested under section 9.1, the
Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to be satisfactory in
substance and form to the Company, each such holder and the
underwriters, and to contain such representations and warranties by
the Company and such other terms as are generally prevailing in
agreements of this type, including, without limitation, indemnities to
the effect and to the extent provided in section 9.7. The holders of
the Registrable Securities will cooperate with the Company in the
negotiation of the underwriting agreement and will give consideration
to the reasonable suggestions of the Company regarding the form
thereof, provided that nothing herein contained shall diminish the
--------
foregoing obligations of the Company. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to
such underwriting agreement and may, at their option, require that any
or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders
of Registrable Securities and that any or all of the conditions
precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of
such holders of Registrable Securities. Any such holder of Registrable
Securities shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters other
than representations, warranties or agreements regarding such
-20-
holder, such holder's Registrable Securities and such holder's
intended method of distribution and any other representation required
by law.
(b) Incidental Underwritten Offerings. If the Company at any time
---------------------------------
proposes to register any of its securities under the Securities Act as
contemplated by section 9.2 and such securities are to be distributed
by or through one or more underwriters, the Company will, if requested
by any holder of Registrable Securities as provided in section 9.2 and
subject to the provisions of section 9.2(b), use its best efforts to
arrange for such underwriters to include all the Registrable
Securities to be offered and sold by such holder among the securities
to be distributed by such underwriters, provided that if the managing
--------
underwriter of such underwritten offering shall inform the holders of
the Registrable Securities requesting such registration and the
holders of any other shares or securities which shall have exercised,
in respect of such underwritten offering, registration rights
comparable to the rights under section 9.2 by letter of its belief
that inclusion in such underwritten distribution of all or a specified
number of such Registrable Securities or of such other shares or
securities so requested to be included would interfere with the
successful marketing of the securities (other than such Registrable
Securities and other shares or securities so requested to be included)
by the underwriters (such writing to state the basis of such belief
and approximate number of such Registrable Securities and shares or
other securities so requested to be included which may be included in
such underwritten offering without such effect), then the Company may,
upon written notice to all holders of such Registrable Securities and
of such other shares or securities so requested to be included,
exclude pro rata from such underwritten offering (if and to the extent
stated by such managing underwriter to be necessary to eliminate such
effect) the number of such Registrable Securities and shares or such
other securities so requested to be included the registration of which
shall have been requested by each holder of Registrable Securities and
by the holders of such other securities, so that the resultant
aggregate number of such Registrable Securities and of such other
shares or securities so requested to be included which are included in
such underwritten offering shall be equal to the approximate number of
shares stated in such managing underwriter's letter. The holders of
Registrable Securities to be distributed by such underwriters shall be
parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of such underwriters shall
also
-21-
be made to and for the benefit of such holders of Registrable
Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holders of Registrable
Securities. Any such holder of Registrable Securities shall not be
required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations,
warranties or agreements regarding such holder, such holder's
Registrable Securities and such holder's intended method of
distribution and any other representation required by law.
(c) Holdback Agreements.
-------------------
(i) Each holder of Registrable Securities agrees by
acquisition of such Registrable Securities, if so required by the
managing underwriter, not to effect any public sale or
distribution of any equity securities of the Company, during the
seven days prior to and the 90 days after any underwritten
registration pursuant to section 9.1 or 9.2 has become effective,
except as part of such underwritten registration, whether or not
such holder participates in such registration.
(ii) The Company agrees (x) if so required by the managing
underwriter not to effect any public sale or distribution of its
equity securities or securities convertible into or exchangeable
or exercisable for any of such securities during the seven days
prior to and the 90 days after any underwritten registration
pursuant to section 9.1 or 9.2 has become effective, except as
part of such underwritten registration and except pursuant to
registrations on Form S-4 and S-8, or any successor or similar
forms thereto, and (y) to cause each holder of its equity
securities or any securities convertible into or exchangeable or
exercisable for any of such securities, in each case purchased
from the Company at any time after the date of this Agreement
(other than in a public offering) to agree not to effect any such
public sale or distribution of such securities during such
period.
9.5 Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, their underwriters, if
any, and their respective counsel and accountants, the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each
-22-
amendment thereof or supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss the business of the
Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of such
holders' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
9.6 Indemnification.
---------------
(a) Indemnification by the Company. In the event of any
------------------------------
registration of any securities of the Company under the Securities Act
pursuant to this Section 9, the Company will indemnify and hold
harmless the holder of any Registrable Securities covered by such
registration statement, its directors, officers, agents, employees,
general partners, limited partners, each other Person who participates
as an underwriter in the offering or sale of such securities and each
other Person, if any, who controls such holder or any such underwriter
within the meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which such holder or
Requesting Holder or any such underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which such holder or Requesting Holder or any
such director, officer, agent, employee, general partner, limited
partner or underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities
were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the
Company will reimburse such holder, and each such director, officer,
agent, employee, general partner, limited partner, underwriter and
controlling person for any reasonable legal or any other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding;
provided that the Company shall not be liable in any such case to the
--------
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such
-23-
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument
duly executed by such holder specifically stating that it is for use
in the preparation thereof and, provided further that the Company
----------------
shall not be liable to any Person who participates as an underwriter,
in the offering or sale of Registrable Securities or to any other
Person who participates as an underwriter, in the offering or sale of
Registrable Securities or to any other Person, if any, who controls
such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of such
Person's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, within the time required
by the Securities Act to the Person asserting an untrue statement or
alleged untrue statement or omission or alleged omission at or prior
to the written confirmation of the sale of Registrable Securities to
such Person if such statement or omission was corrected in such final
prospectus. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such holder or
such Requesting Holder or any such director, officer, agent, employee,
general partner, limited partner, underwriter or controlling person
and shall survive the transfer of such securities by such holder.
(b) Indemnification by the Sellers. In the event of any
------------------------------
registration of Registrable Securities under the Securities Act
pursuant to this Section 9, each seller of Registrable Securities will
(severally and not jointly) indemnify and hold harmless (in the same
manner and to the same extent as set forth in subdivision (a) of this
section 9.7) the Company, each director of the Company, each officer
of the Company and each other person, if any, who controls the Company
within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged omission from
such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment
or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through
an instrument duly executed by such seller specifically stating that
it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the
Company or any
-24-
such director, officer or controlling person and shall survive the
transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
----------------------
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subdivisions
of this section 9.7, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action,
provided that the failure of any indemnified party to give notice as
--------
provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this section 9.7,
except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying
party similarly notified, to the extent that the indemnifying party
may wish, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof,
the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement of any such action which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect to
such claim or litigation. No indemnified party shall consent to entry
of any judgment or enter into any settlement of any such action the
defense of which has been assumed by an indemnifying party without the
consent of such indemnifying party.
(d) Other Indemnification. Indemnification similar to that
---------------------
specified in the preceding subdivisions of this section 9.7 (with
appropriate modifications) shall be given by the Company and each
seller of Registrable Securities with respect to any required
registration or other qualification of securities under any Federal or
state law or regulation of any governmental authority, other than the
Securities Act.
(e) Indemnification Payments. The indemnification required by
------------------------
this section 9.7 shall be made by periodic
-25-
payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or expense, loss, damage or
liability is incurred.
(f) Contribution. If for any reason the indemnification provided
------------
for in the preceding paragraphs of this Section 9 is unavailable to an
indemnified party or is insufficient to hold it harmless as
contemplated by the preceding clauses (a) and (b), then the
indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified
party as a result of such, claim, damage, liability or expense in such
proportion as is appropriate to reflect not only the relative benefits
received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and indemnifying party in
connection with the actions which resulted in such loss, claim,
damage, liability or expense, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other
things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. 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
any legal or other fees or expenses reasonably incurred by such party
in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 9(f) were determined by pro
rata allocation or by any other method of allocation which does not
take into account the equitable considerations referred to in the
immediately preceding paragraph. 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. No holder of
Registrable Securities shall be required to contribute in an amount
greater than the dollar amount of proceeds received by such holder
with respect to the sale of such holder's Registrable Securities.
ARTICLE 10. DEFINITIONS
----------- ----------
As used herein, unless the context otherwise requires, the following
terms have the following meanings:
-26-
Affiliate: With respect to the Company and its Subsidiaries, (a) any
---------
Person (other than the Company or another of its Subsidiaries) which, directly
or indirectly, is in Control of, is Controlled by, or is under common Control
with, the Company, or (b) any Person who is a director, officer or beneficial
owner of at least 10% of the common equity (i) of the Company, (ii) of any
Subsidiary of the Company or (iii) of any Person described in clause (a) above
other than a Subsidiary of the Company. "Affiliate" shall include Xx. Xxxx X.
Xxxxxxx, Mr. Xxxxxx Poludnewycz, Xx. Xxxxxx X. Xxxxxxxx and the Partnership and
any Person which is, directly or indirectly, controlled by any of the foregoing.
"Affiliate" shall not include Wand/IMA Investments, L.P. or any of its partners.
Base Warrant: The Common Stock Purchase Warrant, dated December 21,
------------
1990, No. W-1, issued by the Company to the Purchaser, initially covering 16,667
shares of Common Stock.
Business Day: Any day other than a Saturday or a Sunday or a day on
------------
which commercial banking institutions in the City of New York or the State of
Connecticut are authorized by law to be closed. Any reference to "days" (unless
Business Days are specified) shall mean calendar days.
Commission: The Securities and Exchange Commission or any other
----------
federal agency at the time administering the Securities Act.
Common Stock: As defined in Section 1.1 hereof, such term to include
------------
any stock into which such Common Stock shall have been changed or any stock
resulting from any reclassification of such Common Stock, and all other stock of
any class or classes (however designated) of the Company the holders of which
have the right, without limitation as to amount, either to all or to a share of
the balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference.
Company: As defined in the introduction to this Agreement, such term
-------
to include any corporation which shall succeed to or assume the obligations of
the Company hereunder.
Control: The possession, directly or indirectly, of the power, whether
-------
or not exercised, to direct or cause the direction of the management or policies
of any Person, whether through the ownership of voting securities, by contract
or otherwise; "Controlling" and "Controlling" shall have meanings correlative to
the foregoing.
-27-
Copyrights: Registered or unregistered United States or foreign
----------
copyrights (including but not limited to copyrights in computer programs,
related documentation, and data bases) and United States and foreign copyright
registrations, and applications for registration and all renewals and extensions
thereof.
Exchange Act: The Securities Exchange Act of 1934, or any similar
------------
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
Governmental Authority: Any nation or government, any state or other
----------------------
political subdivision thereof any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
Initial Public Offering: An Initial Public Offering shall mean the
-----------------------
first time a registration statement filed under the Securities Act with the
Securities Exchange Commission (other than a registration statement on Form S-8,
or any successor form thereto, with respect to the issuance of Common Stock (or
securities convertible into or exchangeable for Common Stock or rights to
acquire Common Stock) granted or to be granted to employees, officers or
directors of the Company pursuant to any employee stock option plan, unless as a
result thereof the Company would be required to file reports with respect to any
of its equity securities with the Securities Exchange Commission) respecting an
offering, whether primary or secondary, of Common Stock is declared effective by
the Securities Exchange Commission.
Initiating Holders: Any holder or holders of Registrable Securities
------------------
holding at 66 2/3% of the Registrable Securities (by number of shares or, in the
case of any debt securities which may be Other Securities, 66 2/3% of the
outstanding principal amount of such securities) and initiating a request
pursuant to section 9.1 for the registration of all or part of such holder's or
holders' Registrable Securities.
Intellectual Property Rights: All Trademarks, Patents, Copyrights, and
----------------------------
Know-How and Technical Information.
NASD: The National Association of Securities Dealers, Inc.
----
Know-How and Technical Information: Data, plans, trade secrets,
----------------------------------
technologies, processes, specifications, know-how, operating experience and
information (business, economic and technical) relating to the foregoing.
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Note Purchase Agreement: As defined in the introduction to the Base
-----------------------
Warrant.
Notes: As defined in the Base Warrant.
-----
Other Securities: Any stock (other than Common Stock) and other
----------------
securities of the Company or any other Person (corporate or otherwise) which the
holders of the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 3 of the Warrants.
Partnership: Information Management Associates, a Connecticut general
-----------
partnership having its principal place of business in Trumbull, Connecticut.
Patents: United States and foreign patents and patent applications,
-------
certificates of invention, utility models, and all renewals, extensions,
reissues, divisions, continuations and continuations-in-part thereof.
Person: An individual, a partnership, a joint venture, a corporation,
------
a trust, an unincorporated organization, an association or any other entity or a
government or any department or agency thereof.
Purchaser: As defined in the introduction to the Base Warrant.
---------
Registrable Securities: (a) any shares of Common Stock or Other
----------------------
Securities issued or issuable upon exercise of the Warrants originally issued in
connection with the issue and sale by the Company of the Notes pursuant to the
Note Purchase Agreement; (b) the shares of Common Stock purchased pursuant to
this Agreement; and (c) any securities issued or issuable with respect to any
securities referred to in the foregoing subdivisions by way of stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such certificates shall cease to be
Registrable Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been distributed to the public pursuant to Rule
144 (or any successor or similar provision) under the Securities Act, (c) they
shall have been otherwise transferred, new certificates for them not bearing a
legend restricting further transfer shall
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have been delivered by the Company and subsequent disposition of them
immediately thereafter shall not require registration or qualification of them
(other than by the issuer, an underwriter or an affiliate [as such term is
defined in the Securities Act and the regulations promulgated thereunder] of the
issuer) under the Securities Act or any similar state law then in force, or (d)
they shall have ceased to be outstanding.
Registration Expenses: All expenses incident to the Company's
---------------------
performance of or compliance with Section 9, including, without limitation, all
registration, filing and NASD fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees and disbursements of counsel
for the Company and of its independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, the reasonable fees and disbursements of any
counsel and accountants retained by the holder or holders of more than 51% of
the Registrable Securities being registered, premiums and other costs of
policies of insurance (if any) against liabilities arising out of the public
offering of the Registrable Securities being registered or officers and
directors insurance and any fees and disbursements of underwriters customarily
paid by issuers or sellers of securities, but excluding underwriting discounts
and commissions and transfer taxes, if any.
Securities Act: The Securities Act of 1933, or any similar federal
--------------
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
Subsidiary: With respect to any Person, any corporation with respect
----------
to which more than 50% of the outstanding shares of stock of each class having
ordinary voting power (other than stock having such power only by reason of the
happening of a contingency) is at the time owned by such Person or by one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person.
Trademarks: All registered and unregistered trademarks, service marks,
----------
corporate names, tradenames, logos, designs, product or business identifiers and
trade dress together, in each case, wit the good will of the business symbolized
thereby, and United States, state and foreign trademark or servicemark
registrations or applications for registration and all amendments, renewals and
extensions thereof.
Transfer: Any sale, assignment, pledge or other disposition of any
--------
security, or of any interest therein, which
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could constitute a "sale" as that term is defined in section 2(3) of the
Securities Act.
Warrants: As defined in the introduction to the Base Warrant.
--------
ARTICLE 11. MISCELLANEOUS
---------- -------------
11.1 Effect on Warrants. The Purchaser is the holder of certain Common
------------------
Stock Purchase Warrants of the Company, each dated December 21, 1990 (the
"Warrants"). The Warrants contain certain anti-dilution provisions which provide
for an increase in the number of shares of Common Stock covered by the Warrants
or a decrease in the Warrant exercise price upon the happening of certain
events. The Purchaser agrees that the issuance of the Shares by the Company
pursuant to this Agreement will not result in any change in the number of shares
of Common Stock covered by the Warrants or in the exercise price per share
contained in the Warrants and hereby irrevocably waives any rights it or any
subsequent holder of the Warrants may have under the anti-dilution provisions of
such Warrants as a result of the issuance of the Shares pursuant to this
Agreement.
11.2 Expenses. Whether or not the transactions contemplated by this
--------
Agreement shall be consummated, the Company will pay on demand all expenses in
connection with such transactions and in connection with any amendments or
waivers (whether or not the same become effective) under or in respect of this
Agreement, including, without limitation: (a) the cost and expenses of printing
or reproducing this Agreement, of furnishing all opinions of counsel for the
Company (including any opinions reasonably requested by your special counsel as
to any legal matter arising hereunder) and all certificates on behalf of the
Company, and of the Company's performance of and compliance with all agreements
and conditions contained herein to be performed or complied with by it; (b) the
cost of delivering to your principal office, insured to your satisfaction, the
Shares; (c) the fees, expenses and disbursements of your special counsel in
connection with such transactions (in an amount not to exceed $15,000), any such
amendments or waivers and in connection with or arising out of any litigation,
investigation or proceeding instituted by any Governmental Agency or any other
Person with respect to this Agreement, or any other agreements contemplated
hereby or thereby or the transactions contemplated hereby or thereby and
requiring your participation or involvement; and (d) the out-of-pocket expenses
incurred by you in connection with such transactions, any such amendments or
waivers and in connection with any such litigation, investigation or proceeding.
The Company also will pay, and will save you and each holder of any Shares
harmless from (i) all claims in respect of the fees, if any, of brokers and
-31-
finders acting on behalf of the Company, and (ii) any and all liabilities with
respect to any taxes (including interest and penalties) which may be payable in
respect of the execution and delivery of this Agreement, any amendment or waiver
under or in respect of this Agreement, (other than normal federal income taxes
imposed on a holder of Shares or any share of Common Stock issued upon exercise
of Warrants in respect of interest or dividends received) or in respect of any
determination by the Internal Revenue Service to set aside or fail to recognize
the Company's S corporation election.
11.3 Indemnification. The Company agrees to indemnify and hold
---------------
harmless you and your Affiliates and respective directors, officers, general
partners, limited partners, employees, agents and controlling Persons thereof
(each such Person being an "Indemnified Party") from and against any and all
losses, claims, damages and liabilities, joint or several, to which such
Indemnified Party may become subject under any applicable law or otherwise
relating to or arising out of the transactions contemplated by this Agreements
or the execution, delivery, enforcement and performance of this Agreement and
any other documents in any way related to the transactions contemplated by this
Agreement and the performance by you or your Affiliates of the services
contemplated hereby and thereby, and will reimburse any Indemnified Party for
all expenses (including reasonable counsel fees and expenses) as they are
incurred in connection with the investigation of, preparation for or defense of
any pending or threatened claim or any action or proceeding arising therefrom,
whether or not such Indemnified Party is a party thereto. The Company will not
be liable under the foregoing indemnification provision to the extent that any
loss, claim, damage, liability or expense is found to have resulted primarily
from the bad faith, willful misconduct or gross negligence of you as determined
by a final judgment of a court of competent jurisdiction. The agreements in this
section 11.3 shall survive the execution and delivery of this Agreement, the
purchase of the Shares by you under this Agreement and any disposition of any
shares of Common Stock issued upon exercise of any Warrants.
11.4 Amendment, Modification and Waiver. This Agreement shall not be
----------------------------------
altered or otherwise amended except pursuant to an instrument in writing signed
by the Purchaser and the Company, and any obligation owed to a party under this
Agreement may only be waived in a writing signed by such party. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.
11.5 Expenses; Transfer Taxes, Etc. All fees, costs and expenses
-----------------------------
incurred by the Company in connection with, relating to or arising out of the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated
-32-
hereby shall be borne by the Company. The Company shall pay all sales, use and
excise taxes and all registration, recording or transfer taxes which may be
payable in connection with the transactions contemplated by this Agreement.
11.6 Binding Effect; Benefits; Parties in Interest. This Agreement
---------------------------------------------
shall be binding upon, inure to the benefit of, and be enforceable by, the
respective successors, assigns, heirs and legal representatives of the parties
hereto; provided, however, that this Agreement shall not be assignable by the
Company or the Purchaser without the prior written consent of the other.
11.7 Entire Agreement. This Agreement (including the Schedules
----------------
attached hereto), and the other writings referred to herein or delivered
pursuant hereto contain the entire understanding of the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings
with respect to such subject matter.
11.8 Headings. The section and paragraph headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.9 Notices. All notices, claims, certificates, requests, demands and
-------
other communications hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand, mailed (by first-class mail, postage
prepaid), transmitted by telex or telecopier or sent by air courier guaranteeing
overnight delivery as follows:
If to the Company, to:
Information Management Associates, Inc.
0000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxxxxx
With a copy to:
Xxxxxx X. Xxxxxxxxx, Esq.
LeBoeuf, Lamb, Xxxxx & XxxXxx
CityPlace II
Xxxxxxxx, XX 00000
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If to the Purchaser, to:
WAND/IMA Investments, L.P.
c/o Wand Partners, Inc.
00 Xxxxxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xx. Xxxxx X. Xxxxxxx
With a copy to:
Xxxxx X. Xxxxx, Esq.
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been given, in the case of personal
delivery, on the date of delivery and in the case of mailing five (5) days after
such mailing.
11.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
11.11 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Connecticut.
11.12 Gender. Any reference to the masculine gender shall be deemed to
------
include the feminine and neuter genders unless the context otherwise requires.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered on the date first above written.
THE COMPANY:
INFORMATION MANAGEMENT ASSOCIATES,
INC.
By: /s/Xxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxx
President
THE PURCHASER:
WAND/IMA Investments, L.P.
By Wand Partners Inc., as General
Partner
By: /s/Xxxxx X. Xxxxxxx
-------------------------------
Xxxxx X. Xxxxxxx
President
-35-
