SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT ("Agreement") is made as of the day of
April 28, 1998 by and between Xxxxxx, Inc., a Delaware corporation (the
"Company") and Transaction Systems Architects, Inc., a Delaware corporation (the
"Purchaser").
RECITALS
A. The Purchaser and the Company entered into a Loan Agreement dated March
25, 1998 (the "Loan Agreement") pursuant to which the Purchaser agreed to lend
the Company up to $1,500,000 subject to the terms and conditions thereof, of
which $500,000 of principal is outstanding as of the date hereof as evidenced by
a Note (the "Note").
B. Applied Communications, Inc., a wholly-owned subsidiary of the Purchaser
("ACI"), and the Company are parties to a Prism Non-Exclusive License Agreement
dated September 19, 1996 as amended April 19, 1997 and January 14, 1998.
Concurrently herewith, ACI and the Company are entering into an Amended and
Restated License Agreement (the "License Agreement") in the form of Exhibit I.
C. The Company desires to sell to the Purchaser, and the Purchaser desires
to purchase from the Company, (1) 2,500,000 shares of Common Stock of the
Company, par value $.01 per share (the "Common Stock"), and (2) a Warrant to
purchase up to an aggregate of 2,500,000 shares of Common Stock in the form set
forth as Exhibit II (the "Warrant").
D. Concurrently herewith the Company and the Purchaser are entering into
the Registration Rights Agreement in the form set forth as Exhibit III (the
"Registration Rights Agreement").
E. Concurrently with the consummation of this Agreement, the Company and
certain stockholders of the Company will enter into the amendments (the "Revised
Agreements") set forth as Exhibit IV hereto to certain existing agreements and
securities of the Company for the purpose of conforming such agreements and
securities to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and of other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, each intending to be legally
bound, do hereby agree as follows:
1. SALE AND PURCHASE OF COMPANY SECURITIES; OTHER TRANSACTIONS.
The Company has authorized the issuance and sale to the Purchaser of, (i)
2,500,000 shares of Common Stock ("the Shares") and (ii) the Warrant. Subject to
the terms and conditions herein set forth, the Company will issue and sell to
the Purchaser, and the Purchaser will purchase from the Company, at the Closing
(as defined below) the Shares and the Warrant. The aggregate purchase price for
the Shares and Warrant shall be $5,000,000 (the "Purchase Price") payable as
follows: (i) $4,500,000 in cash and (ii) surrender of the Note.
2. CLOSING.
(a) Subject to the applicable provisions of Sections 7, 8, and 9 hereof,
the closing of the sale of the Shares and the Warrant (the "Closing") shall take
place at a mutually agreed location as soon as practicable following the
satisfaction or waiver of the applicable conditions set forth in Sections 7, 8
and 9 hereof.
(b) At the Closing, (i) the Company shall deliver to the Purchaser
certificates evidencing the Shares and the Warrant to be purchased by the
Purchaser, (ii) the Company shall pay to the Purchaser the amount of all
interest on the Note accrued through the Closing in the form of a check or wire
transfer of immediately available funds to an account designated by the
Purchaser (iii) the Purchaser shall deliver to the Company the Purchase Price in
the form of wire transfer of immediately available funds to an account
designated by the Company in the amount of $4,500,000 and the delivery of the
Note marked as cancelled, and (iii) the parties shall make such other deliveries
as are contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Purchaser as follows:
(a) Organization, Standing and Power of the Company. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The Company has all requisite power and authority
to own, lease and operate its properties, assets and business and to conduct its
business as now being conducted and is duly qualified to do business as a
foreign corporation in good standing in those jurisdictions, other than the
state of its incorporation, in which the nature of the business conducted or
property owned by it makes such qualification necessary, except for any failures
so to qualify which would not have, individually or in the aggregate, a material
adverse effect on the business, condition or results of operations of the
Company (a "Company Material Adverse Effect").
(b) Authority; Enforceability; No Conflict. The Company has all requisite
corporate power and authority to enter into this Agreement, the Registration
Rights Agreement, the Warrant and the Revised Agreements (such agreements other
than this Agreement are collectively referred to hereafter as the "Related
Agreements") to issue and sell the Shares and the Warrant, and to carry out its
obligations hereunder and under the Related Agreements. The execution, delivery
and performance of this Agreement and the Related Agreements by the Company and
the issuance and sale of the Shares and the Warrant by the Company have been
duly and validly authorized by all requisite corporate proceedings on the part
of the Company. This Agreement is, and the Related Agreements when executed and
delivered by the Company will be, and when issued and sold the Warrant will be,
a valid and binding obligation of the Company, enforceable against it in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium, rehabilitation, liquidation,
conservatorship, receivership or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. Subject to the receipt of the consents or
approvals set forth in Section 3(b) of the disclosure schedule delivered by the
Company to the Purchasers concurrently with the execution and delivery of this
Agreement (the "Disclosure Schedule"), the execution and delivery of this
Agreement and each Related Agreement by the Company do not, and the consummation
by the Company of the transactions contemplated hereby and thereby will not, the
issuance and sale of the Shares and the Warrant will not, and the performance by
the Company of its obligations under the terms of the Shares and the Warrant
will not, result in or constitute: (i) a default, breach or violation of or
under the Certificate of Incorporation or the By-laws of the Company, or (ii) a
default, breach or violation of or under any mortgage, deed of trust, indenture,
note, bond, license, lease agreement or other instrument or obligation to which
the Company is a party or by which any of their properties or assets are bound,
except for any defaults, breaches or violations which would not have,
individually or in the aggregate, a Company Material Adverse Effect, or (iii) a
violation of any statute, rule, regulation, order, judgment or decree of any
court, public body or authority by which the Company or any of its properties or
assets are bound, except for any violations which would not have, individually
or in the aggregate, a Company Material Adverse Effect, or (iv) an event which
(with notice or lapse of time or both) would permit any person to terminate,
accelerate the performance required by, or accelerate the maturity of, any
indebtedness or obligation of the Company under any agreement or commitment to
which the Company is a party or by which the Company is bound or by which any of
its properties or assets are bound, except for any accelerations or terminations
which would not have, individually or in the aggregate, a Company Material
Adverse Effect, or (v) the creation or imposition of any lien, charge or
encumbrance on any property of the Company under any agreement or commitment to
which the Company is a party or by which the Company is bound or by which any of
its respective properties or assets are bound, except for any liens, charges or
encumbrances which would not have, individually or in the aggregate, a Company
Material Adverse Effect, or (vi) an event which would require any consent under
any agreement to which the Company is a party or by which the Company is bound
or by which any of its respective properties or assets are bound, except for any
consents which, if not received, would not have, individually or in the
aggregate, a Company Material Adverse Effect.
(c) Capitalization. The authorized capital stock of the Company consists of
(i) 30,000,000 shares of Common Stock, par value $.01 per share, of which
9,486,273 shares (excluding shares held in treasury) are outstanding as of the
close of business on April 16, 1998 and 10,000,000 shares of preferred stock,
par value $1.00 per share (the "Preferred Stock"), of which 1,363,250 shares of
Series B, 170,171 shares of Series D, 1,444 shares of Series E, 599 shares of
Series F, 777 share of Series G, and 2,026 shares of Series H Preferred Stock
are outstanding as of the close of business on April 16, 1998. All of the
outstanding shares of Common Stock and Preferred Stock have been duly authorized
and validly issued, and are fully paid and non-assessable. Immediately following
the Closing, 16,253,270 shares of Common Stock will be outstanding and no shares
of Preferred Stock will be outstanding except for 1,363,250 shares of Series B
and 170,171 shares of Series D Preferred Stock. Except for the outstanding
shares of Series B and Series D Preferred Stock, and except as set forth in
Section 3(c) of the Disclosure Schedule, there are no outstanding preemptive,
conversion or other rights, options, warrants or agreements granted or issued by
or binding upon the Company for the purchase or acquisition of any shares of
capital stock of the Company or any other securities convertible into,
exchangeable for or evidencing the right to subscribe for any shares of such
capital stock. The Company is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of the
capital stock of the Company 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 expressly restricting the transfer of
any shares of the capital stock of the Company. Upon the Closing and giving
effect to the transactions contemplated hereby and the satisfaction of the
conditions provided for herein, the Shares will constitute 11% of the
outstanding Common Stock on a fully diluted basis and 14% of the total voting
power of the Company, and the Shares together with the shares of Common Stock
issuable upon exercise of the Warrant will constitute 19.9% of the Common Stock
on a fully diluted basis and 24.6% of the total voting power of the Company.
(d) No Subsidiaries or Other Ventures. Except as set forth in Section
3(d)(i) of the Disclosure Schedule, the Company has no subsidiaries. Except as
set forth in Section 3(d)(i) of the Disclosure Schedule, the Company does not
own, directly or indirectly, any interest in any corporation, partnership, joint
venture, association or other entity.
(e) Status of Shares. The Shares to be issued at the Closing have been duly
authorized by all necessary corporate action on the part of the Company. When
issued and paid for as provided in this Agreement, the Shares will be validly
issued and outstanding, fully paid and nonassessable, and the issuance of the
Shares is not and will not be subject to preemptive rights of any other
stockholder of the Company. The shares of Common Stock to be issued upon
exercise of the Warrant have been duly authorized by all necessary corporate
action on the part of the Company and, as of the Closing, will be duly reserved
for issuance. When the shares of Common Stock are issued upon exercise of the
Warrant, such shares will be validly issued and outstanding, fully paid and
nonassessable and the issuance of such shares will not be subject to preemptive
rights of any other stockholder of the Company.
(f) Financial Statements.
(1) The Company has heretofore delivered or made available to the
Purchaser the audited consolidated balance sheets at December 31, 1997 and
1996, and June 30, 1996 of the Company and the related consolidated
statements of income, stockholders' equity and cash flows for the years
then ended, including the related notes and auditor's report thereon (the
"Financial Statements"). The Financial Statements (i) present fairly the
consolidated financial condition of the Company at the dates thereof and
present fairly its consolidated results of operations and cash flows for
the periods then ended and (ii) have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied consistently with
respect to the immediately preceding fiscal period except as set forth in
the notes to the Financial Statements or in the auditor's report thereon.
(2) The Company has heretofore delivered or made available to the
Purchaser the unaudited consolidated balance sheet at February 28, 1998 of
the Company (the "February Balance Sheet") and the related consolidated
statements of income and cash flows for the two months then ended (such
February Balance Sheet and related consolidated statements, collectively,
the "February Financial Statements"), each of which (i) presents fairly, in
all material respects, the consolidated financial condition of the Company
at February 28, 1998, and presents fairly its consolidated results of
operations and cash flows for the two months then ended and (ii) has been
prepared in compliance with all of the requirements of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") and the applicable
rules and regulations thereunder.
(g) SEC Reports. The Company has filed all reports, statements, forms and
documents with the Securities Exchange Commission ("SEC") that it was required
to file since December 31, 1990 (the "SEC Reports"), all of which have complied
in all material respects with all applicable requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the Exchange Act. As of their
respective dates, each such report, statement, form or document, including
without limitation any financial statements or schedules included therein, did
not contain any 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,
in light of the circumstances under which they were made, not misleading.
(h) Liabilities. As of the date hereof, except (i) as set forth on the
February Balance Sheet, (ii) as set forth in Section 3(h) of the Disclosure
Schedule or (iii) for liabilities or obligations which were incurred after
February 28, 1998 in the ordinary course of business and consistent with past
practices, the Company has no liabilities, obligations, claims or losses
(whether liquidated or unliquidated, secured or unsecured, absolute, accrued,
contingent or otherwise) that would be required to be disclosed on a
consolidated balance sheet of the Company (including the notes thereto) in
conformity with GAAP.
(i) Indebtedness of the Company. Section 3(i) of the Disclosure Schedule
sets forth all outstanding secured and unsecured Indebtedness (as defined
hereinafter) of the Company in excess of $50,000 in any individual case, or for
which the Company has commitments, on the date of this Agreement. The Company is
not in default with respect to any such Indebtedness. "Indebtedness" means at
any time, (i) all indebtedness for borrowed money, (ii) all obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
reimbursement obligations and other liabilities under letters of credit, (iv)
all obligations to pay the deferred purchase price of property or services,
other than normal trade creditors in the ordinary course, (v) all obligations in
respect of capitalized leases, (vi) all guarantees and contractual obligations
of the Company, contingent or otherwise, with respect to any indebtedness or
obligation of another, and (vii) all obligations of the Company secured by any
mortgage, pledge, lien, security interest or other encumbrance on any asset or
property of the Company, whether or not such obligation has been assumed.
(j) Title to Properties; Liens. The Company does not own any real property.
Section 3(j) of the Disclosure Schedule correctly describes all real property
leased by the Company, together with a description of the lease payment
obligations and lease termination provisions relating thereto. The Company
enjoys peaceful and undisturbed possession under all leases necessary in any
material respect for the operation of its properties and assets, and all such
leases are valid and subsisting and are in full force and effect.
(k) Actions Pending. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened, against the
Company which questions the validity of this Agreement or the Related Agreements
or any action taken or to be taken pursuant hereto or thereto. Except as
disclosed in Section 3(k) of the Disclosure Schedule, there is no action, suit,
claim, investigation or proceeding pending or, to the knowledge of the Company,
threatened, against or involving the Company or any of its properties or assets.
There are no outstanding orders, judgments, injunctions, awards or decrees of
any court, arbitrator or governmental or regulatory body against the Company.
(l) Compliance with Law. The business of the Company has been and is
presently being conducted so as to comply with all applicable federal, state,
and local governmental laws, rules, regulations and ordinances. The Company has
all material franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals necessary for the conduct of its
business as now being conducted by it, and the Company is in compliance
therewith except for any non-compliances which would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(m) No Violations. Except as disclosed in Section 3(m) of the Disclosure
Schedule, the Company is not in violation of or default under (i) any term of
its Certificate of Incorporation or By-Laws, (ii) any of its contracts or
agreements or under any instrument by which the Company is bound, or (iii) any
outstanding indenture or other debt instrument or with respect to the payment of
principal of or interest on any outstanding obligations for borrowed money.
(n) Taxes.
(i) The Company has duly and timely filed, or caused to be filed, and
will duly and timely file, or cause to file, with the appropriate taxing
authority all Tax Returns (as defined below) required to be filed on or
before the date hereof by or with respect to the Company and such Tax
Returns were or will be true, correct and complete in all material respects
when filed.
(ii) The Company has paid or caused to be paid in full or has made
adequate provision for on its balance sheet all material Taxes (as defined
below) shown to be due on such Tax Returns. There are no liens for Taxes
upon the assets of either the Company except for statutory Liens for
current Taxes not yet due.
(iii) None of the Tax Returns filed by or on behalf of the Company has
been examined by the appropriate taxing authorities.
(iv) Except as set forth in Schedule 3(n)(iv) hereto, the Company has
not received any notice of deficiency or assessment from any taxing
authority with respect to liabilities or obligations for Taxes with respect
to the Company which has not been fully paid or finally settled, and any
such deficiency or assessment shown in Schedule 3(n)(iv) hereto is being
contested in good faith through appropriate proceedings. The Company has
not given any outstanding waivers or comparable consents extending the
application of the statute of limitations with respect to any Taxes or Tax
Returns with respect to the Company.
(v) The Company has complied in all material respects with all
applicable laws, rules and regulations relating to the payment and
withholding of payroll and employment taxes and have, within the time and
in the manner prescribed by law, withheld from employee wages and paid over
to the proper governmental authorities all material payroll and employment
taxes required to be so withheld and paid over.
(vi) No audit or other administrative proceeding or court proceeding
which is material to the financial condition of Company is presently
pending with regard to any Taxes or Tax Returns.
(vii) The amount and character of the tax loss carryforwards as set
forth in the Company's financial statements for the year ended December 31,
1997 are materially accurate and, to the Company's best knowledge, are not
subject to any "Section 382 limitation" under Section 382 of the Code, and
any regulations promulgated thereunder. To the Company's best knowledge, at
the Closing Date, the issuance of the Shares and the Warrant in accordance
with the terms of this Agreement and the Related Agreements will not result
in an "ownership change" under Section 382 of the Code, and any regulations
promulgated thereunder. As of the Closing Date, the Company shall not have
any plan or intention to take any action after the Closing Date, which to
its best knowledge would result in an "ownership change" under Section 382
of the Code and any regulations promulgated thereunder.
(viii) For purposes of this Agreement, "Taxes" shall mean any and all
taxes, charges, fees, levies or other like assessments (and all related
interest, additions to tax and penalties), including, but not limited to,
income, transfer, gains, gross receipts, excise, inventory, property (real,
personal or intangible), custom, duty, sales, use, license, withholding,
payroll, employment, capital stock and franchise taxes, imposed by the
United States, or any state, local or foreign taxing authority, whether
computed on a unitary, combined or any other basis and "Tax Return" shall
mean any report, return or other information filed with any taxing
authority with respect to Taxes imposed upon or attributable to the
operations of the Company.
(o) ERISA. Section 3(o) of the Disclosure Schedule contains a true and
complete list of each employee benefit plan, as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and any other bonus, severance or termination pay, stock option or stock
purchase, incentive pay or other plan, program or arrangement covering
present or former employees of the Company which is maintained or
contributed to by the Company or any of its subsidiaries (the "Plans").
None of the Plans is subject to the provisions of Title IV of ERISA, and
none of the Plans is a multiemployer Plan as defined in Section 3(37) of
ERISA (a "Multiemployer Plan"). The Company has not incurred (directly or
indirectly) any liability to the Pension Benefit Guaranty Corporation or
with respect to a Multiemployer Plan. None of the Plans is subject to the
minimum funding standards set forth in Section 302 of ERISA or Section 412
of the Internal Revenue Code of 1986, as amended (the "Code"). None of the
Company or any of its officers or employees has engaged in a "prohibited
transaction" as defined in Section 406 of ERISA or Section 4975 of the Code
with respect to any Plan which would subject any of such parties to a civil
penalty under Section 502(i) of ERISA or an excise tax under Section 4975
of the Code. Each of the Plans has been operated in all material respects
in accordance with applicable law, including ERISA and the Code. None of
the Plans is an employee welfare plan, as defined in Section 3(1) of ERISA,
which provides health or life insurance benefits to employees of the
Company following their retirement (other than coverage mandated by
applicable law). Each Plan that is intended to be qualified under Section
401(a) of the Code is so qualified.
(p) Absence of Specified Changes. Except as set forth in Section 3(p)
of the Disclosure Schedule, during the period from February 28, 1998 to the
date hereof, there has not been any:
(1) material adverse change in the business, condition or results
of operations of the Company;
(2) transactions involving the Company except in the ordinary
course of business;
(3) change in accounting principles, methods or practices of the
Company;
(4) amendment to the Certificate of Incorporation or By-Laws of
the Company; or
(5) agreement or understanding to take any of the actions
described above in this paragraph.
(q) Certain Fees. No broker's, finder's or financial advisory fees or
commissions will be payable by the Company with respect to the transactions
contemplated by this Agreement and the Related Agreements.
(r) Use of Proceeds. The Company will apply the proceeds from the sale
of the Shares and the Warrant to general working capital purposes.
(s) Intellectual Property Rights.
(i) The Company is the owner of or has rights to use (including
the right to xxx for past infringement) the intellectual and similar
property of every kind and nature used at any time in or necessary for
the conduct of its business, including without limitation, (A) Patents
(meaning all United States and foreign patents and patent
applications, patent disclosures and inventions, and all patents
issued upon said patent applications or based upon said disclosures
and inventions, including all reissues, divisions, continuations,
continuations-in-part, substitutions, extensions or renewals of any of
the foregoing), (B) Trademarks (meaning all United States, any
political subdivision thereof, and foreign trademarks, service marks,
trade names, corporate names, company names, business names,
fictitious business names, trade styles, logos, designs and general
intangibles of like nature, all registrations and recordings thereof,
and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark
Office (the "PTO"), any State of the United States or any other
country or jurisdiction or any political subdivision thereof, and all
goodwill symbolized thereby and/or associated therewith and all
extensions or renewals thereof,), (C) Copyrights (meaning all
copyrights, United States and foreign copyright registrations, and
applications to register copyrights), (D) inventions, formulae,
processes, designs, know-how, show-how or other data or information,
(E) confidential or proprietary technical and business information,
processes and trade secrets, (F) computer software and databases
(including all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions,
improvements, enhancements, updated and accessions thereto), (G) all
technical manuals and documentation made or used in connection with
any of the foregoing, and (H) all licenses and rights with respect to
the foregoing or property of like nature, in each case as any of the
foregoing have been at any time used in or necessary for the conduct
of the business of the Company (collectively, the "Intellectual
Property Rights").
(ii) Section 3(s)(ii) of the Disclosure Schedule sets forth a
complete and accurate list of all Copyrights, Patents, and Trademarks
owned by or under obligation of assignment to the Company. Each owner
identified thereon is listed in the records of the appropriate United
States, State or foreign agency as the sole owner of record.
(iii) Section 3(s)(iii) of the Disclosure Schedule sets forth a
complete and accurate list of (a) all material agreements and (b) all
other agreements entered into since January 1, 1990, in each case
between the Company and any third party granting any right to use or
practice any rights under any Intellectual Property Right
(collectively, the "Intellectual Property Licenses"), except for
single-user licenses granting the right to use on a single personal
computer a single copy of application software incorporating any of
the Company's Intellectual Property Rights.
(iv) There is no restriction or limitation on the right of the
Company to transfer any of the Intellectual Property Rights.
(v) No trade secret, formula, process, invention, design,
know-how, show-how or any other confidential information relating to
the Company's business has been disclosed or authorized to be
disclosed to any third party unless any such third party has entered
into, or is bound by, a confidentiality agreement that is sufficient
to protect fully the Company's proprietary interest and right in and
to such Intellectual Property Right.
(vi) The use of the Intellectual Property Rights by the Company
is not in conflict with the rights of others. There are no pending
legal or governmental proceedings, including oppositions,
interferences, proceedings or suits, relating to the Intellectual
Property Rights, and, to the best knowledge of the Company, no such
proceedings are threatened. To the best knowledge of the Company, the
conduct of the business of the Company and the exercise of the
Intellectual Property Rights does not infringe upon or otherwise
violate, and the exercise of any rights granted to the Company under
any Intellectual Property License would not infringe upon or violate
any intellectual property rights of any third party. To the best
knowledge of the Company, except as set forth in Section 3(s)(vi), no
person is infringing upon or otherwise violating any of the
Intellectual Property Rights. None of the Company or its affiliates
has received notice of any claims, and there are no pending claims, of
any persons relating to the scope, ownership or use of any of the
Intellectual Property Rights.
(vii) Each copyright registration, patent, and registered
trademark and application therefor listed in Section 3(s)(ii) of the
Disclosure Schedule is valid, subsisting and in proper form, and has
been duly maintained, including the submission of all necessary
filings in accordance with the legal and administrative requirements
of the appropriate jurisdictions. There have been no failures in
complying with such requirements. Except as provided in Section
3(s)(ii) of the Disclosure Schedule, no such Copyright, Patent or
Trademark has lapsed and there has been no cancellation or abandonment
thereof.
(viii) With respect to each patent and patent application listed
in Section 3(s) of the Disclosure Schedule, there are no defects of
form in the preparation or filing of the applications thereof. Each
pending application is being diligently prosecuted. During the
prosecution of each Patent, (A) all pertinent prior art references
known to the Company or its counsel was properly disclosed to the PTO,
and (B) neither such counsel nor the Company made any
misrepresentation to, or concealed any material fact from, the PTO.
(ix) The execution and delivery of this Agreement and the Related
Agreements and the taking of the actions contemplated hereby and
thereby will not alter any of the rights of the Company in or to the
Intellectual Property Rights.
(t) 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 leased
by it or to the use, operation or occupancy thereof, except for violations
or liabilities which individually or in the aggregate could not reasonably
be expected to have a Company Material Adverse Effect. The Company has not
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 Company Material Adverse
Effect. 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 Company Material Adverse Effect.
(u) Registration Rights. Except as set forth in Section 3(u) of the
Disclosure Schedule, the Company is not a party to any agreement granting
registration rights to any person with respect to any of its equity or debt
securities. Upon execution of the Revised Agreements and the consents
listed in Section 3(b) of the Disclosure Schedule, the Purchaser's rights
under the Registration Rights Agreement will not be subordinated to the
registration rights of any other person.
(v) Agreements. Section 3(v) of the Disclosure Schedule contains a
list of each agreement or instrument (including any and all amendments
thereto) to which the Company is a party as of the date hereof and which is
or, immediately following the consummation of the transactions contemplated
by this Agreement, will be, material to the business, condition or results
of operations of the Company. Each such agreement or instrument (including
any and all amendments thereto) is in full force and effect and constitutes
a legal, valid and binding obligation of (i) the Company and (ii) to the
best knowledge of the Company, the other respective parties thereto, and,
to the best knowledge of the Company, no person is in default or breach of
(with or without the giving of notice or the passage of time) any such
agreement or instrument.
(w) Availability of Documents. Section 3(w) of the Disclosure Schedule
contains a true, correct and complete copy of the Company's Certificate of
Incorporation, together with all amendments thereto. The Company has also
heretofore provided or made available to the Purchaser an accurate copy of
its by-laws and has heretofore made available for inspection by the
Purchaser all written agreements, arrangements, commitments and documents
referred to herein or in the Disclosure Schedule, in each case, together
with all amendments and supplements thereto. The Company has heretofore
made available for inspection by the Purchaser its corporate minute books.
Such corporate minute books contain the minutes of all the meetings of
stockholders, board of directors and any committees thereof which have been
held since the Company's date of incorporation and all written consents to
action executed in lieu thereof.
(x) Business Relations. To the knowledge of the Company,no client,
customer or supplier will cease to do business with the Company due to the
consummation of the transactions contemplated by this Agreement or the
Related Agreements.
(y) Interest in Competitors, Suppliers, Customers, etc. Except as set
forth on Section 3(y) of the Disclosure Schedule or with respect to the
ownership of less than 1% of the outstanding publicly traded securities of
an entity, neither the Company nor its officers, directors, or affiliates
have any ownership interest in any competitor, supplier, customer or
franchisee of the Company.
(z) Private Offering. Assuming the accuracy of the Purchaser's
representations set forth in Section 4(c) herein, the offer and sale of the
Shares and the Warrant hereunder is exempt from the registration and
prospectus delivery requirements of the Securities Act. Neither the Company
nor any person acting on behalf of it has taken or will take any action
which would subject the offering and issuance of any of such securities to
the provisions of Section 5 of the Securities Act or to the provisions of
any securities law, rule or regulation of any applicable jurisdiction.
(aa) NASDAQ Listing Qualifications. Except for the minimum bid price,
upon Closing, the Company will be in full compliance with the initial
listing requirements of The Nasdaq SmallCap Market and after due inquiry
the Company has no knowledge of any condition, event, or circumstance
relating to the Company, its officers, directors, or significant
stockholders which would cause the Company's application to list the Common
Stock on The Nasdaq SmallCap Market not to be approved.
(bb) Disclosure. No representation or warranty to Purchaser contained
in this Agreement and no statement contained in the Disclosure Schedule or
any Officer's Certificate of the Company furnished pursuant to the
provisions hereof, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser represents and warrants to the Company as follows:
(a) Organization and Standing of the Purchaser. The Purchaser is a
corporation duly organized, validly existing and in good standing (to the extent
such concept exists) under the laws of the State of Delaware.
(b) Authority; Enforceability; No Conflict. The Purchaser has all requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution, delivery and performance of this Agreement
by the Purchaser have been duly and validly authorized by all requisite
corporate proceedings on the part of the Purchaser. This Agreement is a valid
and binding obligation of the Purchaser, enforceable against it in accordance
with its terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium, rehabilitation, liquidation,
conservatorship, receivership or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The execution and delivery of this Agreement
by the Purchaser do not, and consummation by the Purchaser of the transactions
contemplated hereby will not, result in or constitute (i) a default, breach or
violation of or under the organizational documents of the Purchaser, or (ii) a
default, breach or violation of or under any mortgage, deed of trust, indenture,
note, bond, license, lease agreement or other instrument or obligation to which
the Purchaser is a party or by which any of its properties or assets are bound,
except for any defaults, breaches or violations which would not, individually or
in the aggregate, have a material adverse effect on the Purchaser or prevent or
materially delay the consummation by the Purchaser of the transactions
contemplated hereby, or (iii) a violation of any statute, rule, regulation,
order, judgment or decree of any court, public body or authority, except for any
violations which would not, individually or in the aggregate, have a material
adverse effect on the Purchaser or prevent or materially delay the consummation
by the Purchaser of the transactions contemplated hereby.
(c) Acquisition for Investment. The Purchaser is either an "accredited
investor," as that term is defined in 230.501(a) of the rules and regulations
promulgated by the SEC under the 1933 Act or a person described in
230.506(b)(ii) of such rules and regulations. The Purchaser is acquiring the
Shares and the Warrant solely for its own account for the purpose of investment
and not with a view to or for sale in connection with any distribution thereof,
and has no present intention or plan to effect any distribution of such Shares
or the Warrant. The Purchaser acknowledges that it is able to bear the financial
risks associated with an investment in the Shares and the Warrant. The Shares
and Warrant may bear a legend to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE IN
RELIANCE ON CERTAIN EXEMPTIONS FROM REGISTRATION THEREUNDER. THE SALE,
PLEDGE, HYPOTHECATION OR OTHER TRANSFER OF SUCH SECURITIES IS SUBJECT TO
COMPLIANCE WITH APPLICABLE SECURITIES LAWS AND REGULATIONS."
5. CONDUCT OF BUSINESS OF THE COMPANY.
Except as expressly contemplated by this Agreement or the Related
Agreements, during the period from the date hereof through the Closing, the
Company will conduct its operations according to its ordinary course of business
and consistent with past practice, and the Company will use its best efforts to
preserve intact its business organization, to keep available the services of its
officers and employees and to maintain existing relationships with customers and
others having business relationships with it. Without limiting the generality of
the foregoing, and except as otherwise expressly contemplated by this Agreement
or the Related Agreements or as set forth in Section 5 of the Disclosure
Schedule, prior to the Closing, the Company will not, without the prior written
consent of the Purchaser:
(a) amend its Certificate of Incorporation or By-Laws;
(b) (i) except in accordance with the existing terms of the convertible
securities, warrants, options and other agreements disclosed on Section 3(c) of
the Disclosure Schedule, authorize for issuance, issue, sell, deliver or agree
or commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any securities of any class, or (ii) amend in any respect any of the terms of
any such securities outstanding as of the date hereof, except to the extent
required by the express terms on the date hereof of such securities;
(c) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock, or
property or any combination thereof) in respect of its capital stock (except for
dividends on the existing preferred stock in accordance with its terms), or
redeem, retire, repurchase or otherwise acquire, directly or indirectly, any of
its securities or adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing any such liquidation;
(d) incur any additional Indebtedness, except for short-term borrowings or
other Indebtedness incurred in the ordinary course of business, or mortgage or
pledge any of its assets, tangible or intangible;
(e) acquire, sell, lease or dispose of any assets outside the ordinary
course of business;
(f) make any change in any of the accounting principles or practices,
methods or practices or business policies used by it;
(g) acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership or other business organization or division thereof;
(h) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, contingent or otherwise), other than pursuant to the terms
of this Agreement, the payment, discharge or satisfaction in the ordinary course
of business consistent with past practice or, in accordance with their terms, of
liabilities reflected or reserved against in the February Balance Sheet (or the
notes thereto) or incurred in the ordinary course of business consistent with
past practice;
(i) increase the compensation payable to the officers and employees of the
Company, except for increases in salary or wages (a) in accordance with past
practice or (b) in conjunction with promotions or other changes in job status in
the ordinary course of business;
(j) pay, loan or advance any amounts to, transfer or lease any properties
or assets to or enter into any contract or agreement with any officers,
directors, employees or shareholders of the Company, except with respect to
directors' fees and compensation to officers and employees at rates in
accordance with past practice, and except with respect to reimbursable business
expenses of a nature and in amounts reasonably related to the requirements of
the business of the Company;
(k) waive or release any rights of material value or terminate or fail to
renew any material contract; or
(l) take, or agree in writing or otherwise to take, directly or indirectly,
any of the actions described in Sections 5(a) through 5(k).
6. ADDITIONAL AGREEMENTS.
(a) Access to Information; Confidentiality. From the date hereof to the
Closing, the Company shall afford the officers, employees and agents of the
Purchaser access during normal business hours to the Company's officers,
employees, agents, properties, offices and all books and records of the Company,
and shall furnish the Purchaser with all financial, operating and other data and
information concerning the Company as the Purchaser, through its officers,
employees or agents, may request and shall cooperate fully with the Purchaser
and its representatives in their examination of the Company.
The Purchaser will, and will cause its affiliates, partners, directors,
officers, employees, agents, representatives and financial advisors
(collectively, "Representatives") to, hold in strict confidence all Confidential
Information (as hereinafter defined), and not disclose the same to any person
without the prior consent of the Company, unless compelled to disclose any such
Confidential Information by judicial or administrative process or, in the
written opinion of their counsel, by other requirements of law. Prior to
disclosing any Confidential Information to any such person, the Purchaser will
inform such person and its representatives of the confidential nature thereof
and will obtain from such person its agreement to be bound by the provisions of
this paragraph as if references herein to the Purchaser were references to such
person. If this Agreement is terminated, the Purchaser will promptly return to
the Company or destroy all documents (including all copies thereof) furnished by
the Company and received by the Purchaser or any of its Representatives
containing such Confidential Information. For purposes hereof, "Confidential
Information" shall mean all confidential nonpublic information concerning the
Company that the Purchaser obtains from the Company, or its representatives,
excluding any such information that subsequently becomes publicly available
(other than directly or indirectly through acts of the Purchaser) and excluding
any such information which is currently in the possession of the Purchaser or
its affiliates or obtained by them from the Company in connection with the
performance of the License Agreement.
(b) Best Efforts. Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use its best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things reasonably
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Related Agreements as promptly as practicable. In case at any time after
the Closing any further action is necessary or desirable to carry out the
purposes of this Agreement and the Related Agreements, the proper officers and
directors of each party hereto shall take all such reasonable and necessary
action.
(c) Public Announcements. The Purchaser and the Company will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
the Related Agreements, and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
applicable law, and then only after reasonable prior notice and giving
reasonable opportunity to comment to the other party. The Company shall not
disclose the identity of the Purchaser in any such press release or other public
statement without the prior written consent of the Purchaser, except as may be
required by applicable law, and then only after giving the Purchaser reasonable
prior notice and reasonable opportunity to comment of the disclosure.
(d) Supplements to Disclosure Schedule. Prior to the Closing, the Company
will supplement or amend the Disclosure Schedule with respect to any matter
hereafter arising which, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in the Disclosure
Schedule. No supplement or amendment of the Disclosure Schedule made pursuant to
this section shall be deemed to cure any breach of any representation or
warranty made in this Agreement unless the Purchaser specifically agrees thereto
in writing.
(e) Directors. For so long as the Purchaser or any of its wholly-owned
subsidiaries shall own and/or have the right to acquire from the Company at
least 2,500,000 million shares (subject to adjustment for stock splits, stock
dividends, subdivisions, etc.) of Common Stock in the aggregate, the Purchaser
shall be entitled to propose one candidate (the "Purchaser Designee") for
election to the Board of Directors of the Company. Subject to its fiduciary
duties to stockholders, the Company will recommend to its stockholders that the
Purchaser Designee be elected to the Company's Board of Directors.
(f) NASDAQ Listing Application. As soon as practicable, but in no event
more than 30 days after the bid price of the Common Stock closes at the minimum
amount for any minimum time period required by The Nasdaq SmallCap Market
initial listing requirements, the Company will complete and file a listing
application for the Common Stock together with all required documents and shall
use its best efforts to cause the Common Stock including the Shares and the
shares issuable upon exercise of the Warrant to be listed and to continue to be
listed on The Nasdaq SmallCap Market.
(g) Termination of Loan Agreement. Any obligation of the Purchaser to make
any loans under the Loan Agreement shall terminate upon the Closing. The
Purchaser shall file a Uniform Commercial Code statement to terminate its
security interest in collateral for loans under the Loan Agreement.
(h) Conversion of Preferred Stock. The Company agrees to use its reasonable
efforts to take, or cause to be taken, all reasonable actions, and to do, and
cause to be done, all things reasonably necessary for the conversion of the
shares of Series B and Series D Preferred Stock of the Company including all
accrued dividends thereon into Common Stock at the applicable conversion rates
provided in the respective terms of such series as soon as practicable after the
Closing.
7. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE THE SHARES AND
WARRANT AND OF THE PURCHASER TO PURCHASE THE SHARES AND THE WARRANT.
The respective obligations hereunder of the Company to issue and sell the
Shares and the Warrant and of the Purchaser to purchase the Shares and the
Warrant are subject to the satisfaction, at or before the Closing, of each of
the following conditions set forth in paragraphs (a) through (c) below.
(a) Consents. The consents and approvals set forth in Section 3(b) of the
Disclosure Schedule shall have been obtained.
(b) No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or enforced
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this Agreement.
(c) Related Agreements. The Related Agreements shall have been executed and
delivered by the parties thereto.
8. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO SELL THE SHARES AND
WARRANT.
The obligation hereunder of the Company to sell the Shares and Warrant to
the Purchaser is further subject to the satisfaction, at or before the Closing,
of each of the following conditions set forth in paragraphs (a) and (b) below.
These conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion.
(a) Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser shall be true and correct in all
material respects as of the date when made and as of the Closing as though made
at that time (except for representations and warranties that speak as of a
particular date).
(b) Performance by the Purchaser. The Purchaser shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Purchaser at or prior to the Closing.
9. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO PURCHASE THE
SHARES AND WARRANT.
The obligation of the Purchaser hereunder to acquire and pay for the Shares
and Warrant is subject to the satisfaction, at or before the Closing, of each of
the following conditions set forth in paragraphs (a) through (h) below. These
conditions are for the Purchaser's sole benefit and may be waived by the
Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Closing as though made
at that time (except for representations and warranties that speak as of a
particular date).
(b) Performance by the Company. The Company shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.
(c) Legal Opinion. The Purchaser shall have received the opinion of Xxxx
Marks & Xxxxx, substantially in the form set forth in Exhibit V hereto.
(d) Compliance with Securities Laws. The offering and sale by the Company,
at or prior to the Closing, of the Shares and Warrant shall have been made in
compliance with all applicable requirements of federal and state securities laws
and the Purchaser shall have received evidence thereof in form and substance
reasonably satisfactory to it.
(e) No Offerings. Neither the Company nor any of its subsidiaries shall
have offered, placed or sold, or caused or agreed to be offered, placed or sold,
any securities or other obligations other than as part of the contemplated sale
of the Shares and Warrant and the capital structure as reflected herein.
(f) Regulatory Approvals. All regulatory approvals shall have been obtained
by the Purchaser.
(g) Conversion of Preferred Stock. All shares of Series E, Series F, Series
G and Series H Preferred Stock of the Company including all accrued dividends
thereon shall be converted into Common Stock at the applicable conversion rates
provided in the respective terms of such series.
(h) Cancellation of Warrants for Preferred Stock. All warrants for
Preferred Stock or other rights to acquire any shares of Preferred Stock of the
Company shall be cancelled or converted to warrants or other rights to acquire
Common Stock at a price per share no less than would have been payable for the
Common Shares if the warrants or other rights had been exercised and the
Preferred Stock thereby acquired converted into Common Stock.
10. TERMINATION.
(a) Right To Terminate. Notwithstanding anything to the contrary set forth
in this Agreement, this Agreement may be terminated and the transactions
contemplated herein abandoned at any time prior to the Closing:
(i) at any time by mutual written consent of the Company and the
Purchaser;
(ii) by either the Company or the Purchaser if the Closing shall not
have occurred by June 30, 1998; provided, however, that the right to
terminate this Agreement under this Section 10(a)(ii) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Closing
to occur on or before such date; or
(iii) by either the Company or the Purchaser if a court of competent
jurisdiction shall have issued an order, decree or ruling permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or other
action shall have become final and nonappealable.
(b) Obligations to Cease. In the event that this Agreement shall be
terminated pursuant to Section 10(a) hereof, all obligations of the parties
hereto under this Agreement shall terminate and there shall be no liability of
any party hereto to any other party except that (i) the provisions of the second
paragraph of Section 6(a), Section 11, and Section 12(b) shall survive, and
shall be and remain in full force and effect and (ii) nothing herein will
relieve any party from liability for any willful breach of this Agreement.
11. INDEMNIFICATION.
(a) General Indemnity. The Company agrees to indemnify and save harmless
the Purchaser (and its directors, officers, partners, affiliates,
representatives, advisors, successors and assigns) from and against any and all
losses, liabilities, deficiencies, costs, damages and expenses (including,
without limitation, interest, penalties, reasonable attorneys' fees, charges and
disbursements) incurred by the Purchaser as a result of (i) any breach of the
representations, warranties or covenants made by the Company herein or in the
Related Agreements or (ii) any action, proceeding or claim commenced or
threatened by a third party in connection with this Agreement, the Related
Agreements and the transactions contemplated hereby and thereby. The Purchaser
agrees to indemnify and save harmless the Company (and its directors, officers,
partners, affiliates, representatives, advisors, successors and assigns) from
and against any and all losses, liabilities, deficiencies, costs, damages and
expenses (including, without limitation, interest, penalties, reasonable
attorneys' fees, charges and disbursements) incurred by the Company as a result
of any breach of the representations, warranties or covenants made by the
Purchaser herein or in the Related Agreements. No party shall be entitled to
indemnification hereunder unless and until the aggregate amount of such party's
indemnification claims exceeds $15,000 and then to the full extent of such
claims.
(b) Indemnification Procedure. Any party entitled to indemnification under
this Section 11 (an "indemnified party") will give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
promptly after the discovery by such party of any matters giving rise to a claim
for indemnification; provided that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Section 11 except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of the indemnified party a conflict of interest between it
and the indemnifying party may exist in respect of such action, proceeding or
claim, to assume the defense thereof, with counsel reasonably satisfactory to
the indemnified party. In the event that the indemnifying party advises an
indemnified party that it will contest such a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or
pay such action or claim. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The indemnifying
party shall keep the indemnified party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. The indemnifying party shall not be
liable for any settlement of any action, claim or proceeding effected without
its written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. Anything in this Section
11 to the contrary notwithstanding, the indemnifying party shall not, without
the indemnified party's prior written consent, settle or compromise any claim or
consent to entry of any judgment in respect thereof which imposes any future
obligation on the indemnified party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
indemnified party of a release from all liability in respect of such claim. The
indemnification required by this Section 11 shall be made by periodic 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. The
indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar right of the indemnified party against the indemnifying party
or others, (ii) the indemnification rights of the indemnified party under any
other agreement, and (iii) any liabilities the indemnifying party may be subject
to pursuant to the law.
12. MISCELLANEOUS.
(a) Brokers. The Company and the Purchaser represent and warrant to each
other that they have not taken any action which will result in any liability of
the other to pay any broker's or finder's fee with respect to this Agreement or
the transactions contemplated hereby.
(b) Expenses. Each party hereto shall pay its own fees and expenses
incurred in connection with this Agreement.
(c) Survival of Representations, Warranties and Covenants. The
representations and warranties set forth herein shall survive the Closing until
sixty days after the Company shall have delivered to the Purchaser the audited
financial statements of the Company and its consolidated subsidiaries (if any)
for the fiscal year ended December 31, 1998, certified by the Company's
independent public accountants; provided that the representations and warranties
shall survive such date to the extent written notice of any breach thereof is
given on or prior to such date and representations and warranties relating to
Taxes shall survive until a date which is six months after the expiration of the
applicable statute of limitations. The covenants of the Company set forth herein
shall endure for so long as the Purchaser shall continue as a stockholder of the
Company or for such shorter period as may be specified herein.
(d) Assignment and Binding Effect. Neither the Company nor the Purchaser
shall assign all or any part of this Agreement without the prior written consent
of the other; provided, however, that the Purchaser, without such prior written
consent, may assign its rights hereunder to any entity or entities directly or
indirectly controlled by, or under common control with, it; provided, further,
that no such assignment shall relieve the Purchaser of its obligations under
this Agreement. This Agreement shall be binding upon and inure to the benefit of
the permitted successors and assigns of the parties pursuant to this paragraph.
(e) Headings. Subject headings are included for convenience only and shall
not affect the interpretation of any provisions of this Agreement.
(f) Notices. Any notice, demand, request, waiver, or other communication
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if personally served or on the third day after
mailing if mailed to the party to whom notice is to be given, by first class
mail, registered, return receipt requested, postage prepaid and addressed as
follows:
To the Company: Xxxxxx, Inc.
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Chief Executive Officer
With copies to: Xxxx Marks & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
To the Transaction Systems Architects, Inc.
Purchaser: 000 Xxxxx 000 Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
(g) Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH,
AND GOVERNED BY, THE LAWS OF THE STATE OF DELAWARE AS APPLIED TO CONTRACTS MADE
AND TO BE PERFORMED ENTIRELY IN THE STATE OF DELAWARE.
(h) Entire Agreement. This Agreement, including the Exhibits and Schedules
hereto, sets forth the entire understanding and agreement of the parties hereto
relating to the matters set forth herein and supersedes any and all other
understandings, negotiations or agreements between the parties hereto relating
to the matters set forth herein.
(i) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which together shall constitute a
single agreement.
(j) Severability. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable, the same shall not affect any other provision of this
Agreement, but this Agreement shall be construed in a manner which, as nearly as
possible, reflects the original intent of the parties.
(k) Words in Singular and Plural Form. Words used in the singular form in
this Agreement shall be deemed to import the plural, and vice versa, as the
sense may require.
(l) Amendment and Modification. This Agreement may be amended or modified
only by written agreement executed by all parties hereto.
(m) Waiver. At any time prior to the Closing, any party hereto may (i)
extend the time for the performance of any of the obligations or other acts of
any other party hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party granting such waiver but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or future
failure.
(n) Specific Enforcement. The Purchaser and the Company acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state thereof having
jurisdiction, this being in addition to any other remedy to which they may be
entitled at law or equity.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
XXXXXX, INC.
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxx
---------------------------------
Title: Chief Financial Officer
TRANSACTIONS SYSTEMS ARCHITECTS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
--------------------------------
Title: Chief Executive Officer
--------------------------------
