Exhibit 10.1
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is entered into
as of January 8, 2003, by and between SEEC, Inc., a Pennsylvania corporation
(the "Company"), and KPCB Holdings, Inc., a Delaware corporation (the
"Investor"). Certain capitalized terms used and not otherwise defined herein
shall have the meanings ascribed thereto in Section 1 hereof.
THE PARTIES HEREBY AGREE AS FOLLOWS:
SECTION 1:
Definitions
"Action or Proceeding" shall mean any action, suit, litigation,
proceeding, mediation, arbitration or investigation or audit by any Person.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the rules
and regulations promulgated under the Exchange Act; provided, however, that for
purposes hereof, the Investor and its Affiliates, on the one hand, and the
Company and its Affiliates, on the other, shall not be deemed to be Affiliates
of one another.
"Ancillary Agreements" shall mean (i) that certain Consent and
Agreement of even date herewith, by and among the Company, the Investor,
Sherwood and Asera, and (ii) that certain Consulting Agreement of even date
herewith, by and between the Company and the Investor.
"Agreement" shall have the meaning ascribed to it in the forepart of
this Agreement.
"Appointment Time" shall mean the time any director is appointed or
elected to the Company's board of directors pursuant to Section 7.4.
"Asera Acquisition" shall mean the acquisition by the Company of
substantially all of the assets of Asera, Inc. ("Asera") pursuant to that
certain Asset Purchase Agreement of even date herewith, by and between Sherwood
Partners, Inc. ("Sherwood") and the Company.
"Asera Financial Statements" shall mean the audited financial
statements for Asera (prepared in the manner and for the periods specified in
Regulation S-X, Article 3) and pro forma financial information relating to Asera
(prepared in the manner specified in Regulation S-X, Article 11) required to be
included in a Form 8-K which the Company must file with the SEC following the
Asera Acquisition.
"Associate" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act.
"Balance Sheet" shall mean the most recent unaudited consolidated
balance sheet of the Company and its Subsidiaries included in the Financial
Statements.
"Balance Sheet Date" shall mean September 30, 2002, the date of the
Balance Sheet.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in The City of New York are (or are permitted or
required by law, rule, regulation, order or state of emergency to be) closed.
"Closing" shall mean the closing referred to in Section 2.1(b).
"Closing Date" shall have the meaning ascribed to it in Section 2.1(b).
"Common Shares" shall have the meaning ascribed to it in Section
2.1(a).
"Common Stock" shall mean shares of common stock, par value $0.01 per
share, of the Company.
"Company" shall have the meaning ascribed to it in the forepart of this
Agreement.
"Company Agreement" shall mean any note, bond, mortgage, indenture,
lease, license, contract, agreement, arrangement, or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound.
"Company Benefit Plan" shall mean any employee benefit fund, plan,
program, arrangement or contract (including any "pension" plan, fund or program,
as defined in Section 3(2) of ERISA, and any "employee benefit plan", as defined
in Section 3(3) of ERISA and any plan, program, arrangement or contract
providing for severance; medical, dental or vision benefits; life insurance or
death benefits; disability benefits, sick pay or other wage replacement;
vacation, holiday or sabbatical; pension or profit-sharing benefits; stock
options or other equity compensation; bonus or incentive pay or other material
fringe benefits), whether written or not, of the Company.
"Company ESPP" shall mean the Company's 1998 Employee Stock Purchase
Plan.
"Company Intellectual Property" shall mean all Intellectual Property
owned by the Company or any of its Subsidiaries as of the date hereof.
"Company Material Adverse Effect" shall mean any circumstance
affecting, change in, or effect on the Company and its Subsidiaries that is, or
imminently shall be, materially adverse to the business, properties, assets,
liabilities (absolute, accrued, or contingent), operations, or results of
operation of the Company and its Subsidiaries, taking the Company together with
its Subsidiaries as a whole; provided, however, that none of the following shall
be deemed, in themselves, either alone or in combination, to constitute a
Company Material Adverse Effect, and none of the following shall be taken into
account in determining whether there has been or shall be a Company Material
Adverse Effect: (a) any change in the market price or trading volume of the
Common Stock after the date hereof; (b) any adverse circumstance, change or
effect resulting directly from conditions affecting the industries in which the
Company participates in their entirety, the U.S. economy as a whole, or foreign
economies as a whole in any countries where the Company or any of its
Subsidiaries has material operations; (c) any adverse circumstance, change or
effect resulting directly from the announcement or pendency of this Agreement or
the Closing (including any termination or breach of supplier, distributor,
partner or similar relationships); or (d) any adverse circumstance, change or
effect resulting directly from the taking of any action by the Company which
this Agreement requires the Company to take.
"Company Option" shall mean any right or option to purchase shares of
Common Stock which is granted by the Company's board of directors and is
outstanding as of the date hereof.
"Company SEC Documents" shall mean each form, report, schedule,
statement and other document filed or required to be filed by the Company since
April 1, 2001 through the date hereof under the Exchange Act or the Securities
Act, including any filed amendment to such document, whether or not such
amendment is required to be so filed.
"Company 1994 Plan" shall mean the SEEC, Inc. 1994 Stock Option Plan.
"Company 1997 Plan" shall mean the SEEC, Inc. 1997 Stock Option Plan.
"Company 2000 Plan" shall mean the SEEC, Inc. 2000 Non-Employee
Directors Plan.
"DGCL" shall mean the General Corporation Law of the State of Delaware.
"Effectiveness Termination Date" shall have the meaning ascribed to it
in Section 7.1(a).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the applicable rules and regulations of the SEC promulgated
thereunder.
"Financial Statements" shall mean each of the audited consolidated
financial statements and unaudited condensed consolidated interim financial
statements of the Company (including any related notes and schedules) included
(or incorporated by reference) in the Company SEC Documents.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Entity" shall mean a court, arbitral tribunal, Regulatory
Authority, administrative agency, commission or other governmental or other
regulatory authority or agency, or any Person exercising the authority of any of
the foregoing.
"Indemnified Party" shall have the meaning ascribed to it in Section
7.1(e)(iii).
"Indemnifying Party" shall have the meaning ascribed to it in Section
7.1(e)(iii).
"Intellectual Property" shall mean all of the following: (i) U.S. and
foreign registered and unregistered trademarks, trade dress, service marks,
logos, trade names, corporate names and all registrations and applications to
register the same; (ii) issued U.S. and foreign patents and pending patent
applications, patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and extension thereof, any
counterparts claiming priority therefrom, utility models, patents of
importation/confirmation, certificates of invention and like statutory rights;
(iii) U.S. and foreign registered and unregistered copyrights (including those
in computer software and databases), moral rights, rights of publicity and all
registrations and applications to register the same; and (iv) all trade
secrets; and, to the extent actually protected as a trade secret under the law,
computer software, databases, other confidential information, technology,
know-how, proprietary processes, formulae, algorithms, models, user interfaces,
customer lists, inventions, discoveries, concepts, ideas, techniques, methods,
source codes, object codes, methodologies and, with respect to all of the
foregoing, related confidential data or information.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended.
"Investor Counsel" shall have the meaning ascribed to it in Section
7.1(d)(i).
"Investor" shall have the meaning ascribed to it in the forepart of the
Agreement.
"Investor's Agents" shall have the meaning ascribed to it in Section
7.1(e)(i).
"Investor Indemnitees" shall have the meaning set forth in Section 7.8.
"IRS" shall mean the United States Internal Revenue Service and any
successor agency performing similar functions under the Internal Revenue Code.
"KPCB Designees" shall have the meaning ascribed to it in Section 7.4
"Licenses" shall mean all licenses and agreements pursuant to which the
Company has acquired rights in or to any Intellectual Property or licenses and
agreements pursuant to which the Company has licensed or transferred rights to
use any of the foregoing.
"NASD Rules" shall mean the rules, regulations policies adopted by the
National Association of Securities Dealers, Inc. concerning Nasdaq listed
companies.
"Nasdaq" shall mean the Nasdaq Stock Market.
"PBCL" shall mean the Pennsylvania Business Corporation Law.
"Person" shall mean any natural person, corporation, limited liability
company, partnership (general or limited), business trust, joint stock company,
trust, unincorporated association, joint venture, Governmental Entity or other
entity or organization.
"Purchase Price" shall have the meaning ascribed to it in Section
2.1(a).
"Registration Expenses" shall mean all expenses incurred by the Company
in complying with Sections 7.1(a) hereof including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of one
counsel for the Company and reasonable fees and disbursements of Investor
Counsel, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company and Selling Expenses).
"Registrable Securities" shall mean the Common Shares and any other
shares of Common Stock issued as (or issuable upon the conversion or exercise of
any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for, or in replacement of, any Common Shares.
"Registration Statement" shall mean a registration statement on Form
S-3 under the Securities Act or any registration form under the Securities Act
subsequently adopted by the SEC which similarly permits the inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC, including the prospectus, amendments and
supplements to such registration statements, including post-effective
amendments, all exhibits and all materials incorporated by reference or
explicitly deemed to be incorporated by reference in such registration
statements, and/or as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered
thereby; provided, however, that the term "Registration Statement" shall refer
to any other registration form under the Securities Act available to the Company
including, without limitation, a Form S-1 (or any successor form thereto) if the
Company is not eligible to register securities on Form S-3 or such similar
registration form, unless such ineligibility is caused solely by the Company's
failure to file, within the time periods required by such form, a Form 8-K
containing the Asera Financial Statements.
"SEC" shall mean the U.S. Securities and Exchange Commission (or any
successor thereto).
"SEC Rule 144" shall have the meaning ascribed to it in Section 7.2.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the applicable rules and regulations of the SEC promulgated thereunder.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to a sale of the Registrable Securities.
"Standstill Termination Date" shall mean the earlier to occur of (i)
the consummation of the Bridge Conversion (as such term is defined in the
Ancillary Agreements), or (ii) August 15, 2003.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other organization, whether incorporated or unincorporated, of which (i) at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization is, directly or indirectly, owned or controlled by such Person or
by any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries or (ii) such Person or any other Subsidiary of such Person is a
general partner or managing member (excluding any such partnership or limited
liability company where such Person or any Subsidiary of such Person does not
have a majority of the voting interest in such partnership or limited liability
company).
"Suspension" shall have the meaning set forth in Section 7.1(b)(ii).
"Tax" and "Taxes" shall mean all taxes, charges, fees, duties, levies,
penalties or other assessments imposed by any federal, state, local or foreign
governmental authority, including income, gross receipts, excise, property,
sales, gain, use, license, custom duty, unemployment, capital stock, transfer,
franchise, payroll, withholding, social security, minimum estimated, and other
taxes, and shall include interest, penalties or additions attributable thereto.
"Tax Return" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Transactions" shall mean the transactions contemplated by this
Agreement.
SECTION 2:
Purchase and Sale of the Common Shares
2.1 Purchase and Sale of the Common Shares at the Closing.
(a) Subject to the terms and conditions hereof, the Investor
agrees to purchase at the Closing, and the Company agrees to sell and issue to
the Investor at the Closing 1,205,354 shares of Common Stock at a per share
purchase price of $1.08 (the "Purchase Price") (such shares of Common Stock so
purchased, the "Common Shares"). The number of Common Shares to be purchased by
the Investor at the Closing pursuant to this Section 2.1(a), and the Purchase
Price applicable to such Common Shares, shall be proportionately adjusted for
any subdivision or combination of Common Stock on or prior to the Closing Date
(by stock split, reverse stock split, dividend, reorganization, recapitalization
or otherwise).
(b) The closing of the purchase and sale of the Common Shares
pursuant to this Agreement (the "Closing") shall take place at 10:00 a.m. (EST)
at the offices of Xxxxx & Xxxxxxx, P.C., 00 Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxxx, XX 00000 on the date hereof (the "Closing Date") or at such other
time and place as may be agreed to by the Company and the Investor.
(c) At the Closing, subject to the terms and conditions
hereof, the Company shall deliver to the Investor a certificate representing the
Common Shares purchased by the Investor from the Company, dated as of the
Closing Date, against payment of the full amount of the aggregate Purchase Price
by wire transfer of immediately available funds to the Company's bank account,
and the Company shall register the issuance and ownership of the Common Shares
so purchased in the shareholders' registry and books of the Company.
2.2 Legends; Stop Transfer Orders.
(a) All certificates representing the Common Shares shall bear
the following legends:
(i) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SHARES MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION
THEREFROM. SEEC, INC. MAY REQUIRE AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
IT TO BE PROVIDED PRIOR TO SUCH SALE, TRANSFER, PLEDGE OR HYPOTHECATION THAT A
PROPOSED SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE ACT."
(ii) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON TRANSFER AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED EXCEPT IN ACCORDANCE WITH, AND SUBJECT TO THE TERMS AND CONDITIONS
OF, THAT CERTAIN COMMON STOCK PURCHASE AGREEMENT DATED JANUARY 8, 2003, BY AND
BETWEEN SEEC, INC. AND KPCB HOLDINGS, INC."
(iii) Any legend required by the blue sky or
securities laws of any state or jurisdiction to the extent such laws are
applicable to the shares represented by the certificate so legended.
(b) The certificates representing the Common Shares shall be
subject to a stop transfer order with the Company's transfer agent that
restricts the transfer of such shares except in compliance herewith.
SECTION 3:
Representations and Warranties of the Company
The Company represents and warrants to the Investor that:
3.1 Organization; Qualification. Each of the Company and its
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation; (b) has all requisite
corporate power and authority to carry on its business as it is now being
conducted and to own the properties and assets it now owns; and (c) is duly
qualified or licensed to do business as a foreign corporation in good standing
in every jurisdiction in which such qualification is required except where
failure to be so qualified or licensed or in good standing would not reasonably
be expected to have a Company Material Adverse Effect.
3.2 Capitalization. The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock and 10,000,000 shares of preferred
stock, par value $0.01 per share. As of December 31, 2002, (i) 6,057,057 shares
of Common Stock were issued and outstanding, (ii) 252,130 shares of Common Stock
were issued and held in the treasury of the Company, (iii) no shares of
preferred stock were issued and outstanding, (iv) 226,305, 1,300,000 and 250,000
shares of Common Stock were reserved for issuance upon exercise of Company
Options under the Company 1994 Plan, the Company 1997 Plan and the Company 2000
Plan, respectively, and (v) 300,000 shares of Common Stock were reserved for
issuance pursuant to the Company ESPP. All the outstanding shares of the
Company's capital stock are, and all shares of Common Stock which may be issued
pursuant to the exercise of outstanding Company Options shall be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and nonassessable.
3.3 Authorization, Validity of Agreement, Company Action. The Company
has all requisite corporate power and authority to execute and deliver this
Agreement and the Warrant, to perform its obligations under this Agreement, and
to consummate the Transactions. The execution and delivery of this Agreement by
the Company and the performance by the Company of its obligations thereunder and
the consummation by the Company of the Transactions, have been duly authorized
by the Company's board of directors and no other corporate action on the part of
the Company or its shareholders is necessary to authorize the execution and
delivery by the Company of this Agreement or the consummation by it of the
Transactions. This Agreement has been duly executed and delivered by the Company
and, assuming the due authorization, execution and delivery by the Investor,
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with their respective terms except (a) as limited by
applicable bankruptcy, insolvency, reorganization, or similar laws relating to
or affecting the enforcement of creditors' rights generally and (b) as limited
by equitable principles generally.
3.4 Consents and Approvals, No Violations. Except for the filings,
permits, authorizations, consents, notices, and approvals as may be required
under, and other applicable requirements of, the Exchange Act, state
securities or blue sky laws, none of the execution, delivery or performance of
this Agreement by the Company, the consummation by the Company of the
Transactions or compliance by the Company with any of the provisions of this
Agreement shall (a) conflict with or result in any breach of any provision of
the articles of incorporation, the by-laws or similar organizational documents
of the Company or any of its Subsidiaries, (b) require any material filing with,
or permit, authorization, consent or approval of, any Governmental Entity, (c)
result in a material violation or breach of, or constitute (with or without due
notice or the passage of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or loss of any rights)
under, any of the terms, conditions or provisions of any Company Agreement, (d)
violate any order, writ, injunction, decree, or any material statute, rule or
regulation applicable to the Company, any Company Subsidiary or any of their
material properties or assets or (e) create, result in the creation of or
otherwise give rise to any right of any Person pursuant to Chapter 25 of the
PBCL including, without limitation, Subchapters (E) through (J) thereof.
3.5 Valid Issuance. The Common Shares that are being purchased by the
Investor hereunder, when issued, sold and delivered in accordance with the terms
hereof for the consideration expressed herein, will be duly and validly issued,
fully paid and nonassessable and will be free of restrictions on transfer, other
than restrictions set forth herein and under applicable federal and state
securities laws.
3.6 Offering. Subject in part to the truth and accuracy of the
Investor's representations set forth in Section 4 hereof, the offer, sale and
issuance of the Common Shares as contemplated hereby are exempt from the
registration requirements of the Securities Act, and the qualification or
registration requirements of the applicable blue sky laws. Neither the Company
nor any authorized agent acting on its behalf shall take any action hereafter
that would cause the loss of such exemptions.
3.7 Reports and Financial Statements.
(a) The Company has filed with the SEC the Company SEC
Documents. As of their respective dates (or, if amended or superseded, as of the
date of the last such amendment or superseding report filed prior to the date
hereof), the Company SEC Documents, including any financial statements or
schedules included therein (a) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading and (b) complied in all
material respects with the applicable requirements of the Exchange Act and the
Securities Act, as the case may be, and the applicable rules and regulations of
the SEC thereunder. The Chief Executive Officer and the Chief Financial Officer
of the Company have signed, and the Company has furnished to the SEC, all
certifications required by Section 906 of the Xxxxxxxx-Xxxxx Act of 2002; such
certifications contain no qualifications or exceptions to the matters certified
therein and have not been modified or withdrawn; and neither the Company nor any
of it officers has received notice from any Governmental Entity questioning or
challenging the accuracy, completeness, form or manner of filing or submission
of such certifications. None of the Company's Subsidiaries is required to file
any forms, reports or other documents with the SEC.
(b) Each of the Financial Statements has been prepared from,
and are in accordance with, the books and records of the Company and its
Subsidiaries. The Financial Statements complied, as of their respective dates,
in all material respects with applicable accounting requirements and
published rules and regulations of the SEC. The Financial Statements have been
prepared in accordance with GAAP, applied on a consistent basis (except as may
be indicated in the notes thereto and subject, in the case of interim condensed
consolidated financial statements, to normal, recurring and year-end adjustments
which were not and are not expected to be material in amount and the absence of
certain notes) and fairly present in all material respects as of their
respective dates (i) the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and (ii) the consolidated results of
operations, changes in shareholders' equity and cash flows of the Company and
its Subsidiaries for the periods presented therein (except as may be indicated
in the notes thereto and subject, in the case of interim condensed consolidated
financial statements, to normal, recurring and year-end adjustments which were
not and are not expected to be material in amount and the absence of certain
notes).
3.8 No Undisclosed Liabilities. Except (a) as disclosed in the
Financial Statements, (b) for liabilities disclosed in the Company SEC
Documents, and (c) for liabilities and obligations incurred in the ordinary
course of business and consistent with past practice since the Balance Sheet
Date, neither the Company nor any of its Subsidiaries has any liability or
obligation of any nature, whether or not accrued, contingent or otherwise that
would be required by GAAP to be disclosed on a consolidated balance sheet of the
Company or in the notes thereto and which, individually or in the aggregate, has
had or is reasonably likely to have a Company Material Adverse Effect. The
Company has not created any entities or entered into any transactions or created
any liabilities or obligations of any nature, whether or not accrued, contingent
or otherwise, for the purpose of avoiding disclosure required by GAAP.
3.9 Absence of Certain Changes; Conduct of Business. Since the Balance
Sheet Date, (a) no event or development has occurred which has had, or could
reasonably be expected to have, a Company Material Adverse Effect, and (b) the
business and operations of the Company and each of its Subsidiaries have been
conducted in the ordinary course consistent with past practice.
3.10 Litigation. Except as disclosed in the Company SEC Documents,
there is no Action or Proceeding by or before any Governmental Entity or, to the
knowledge of the Company and its Subsidiaries, threatened against or involving
the Company or any of its Subsidiaries which either (i) is reasonably likely to
result in material damages to or any material injunctive relief against the
Company or its Subsidiaries or (ii) questions or challenges the validity of this
Agreement, the Transactions or any action taken or to be taken by the Company or
any of its Subsidiaries pursuant hereto or in connection with the Transactions.
Neither the Company nor any of its Subsidiaries is in default under or in
violation of, nor to the knowledge of the Company and its Subsidiaries is there
any valid basis for any claim of default under or violation of, any Company
Agreement, except as would not otherwise have a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is subject to any judgment,
order or decree that materially restricts its business practices or its ability
to acquire any property or conduct its business as currently conducted.
3.11 Employee Benefit Plans. No Action or Proceeding is currently
pending or, to the Company's knowledge, threatened in writing against or with
respect to any such Company Benefit Plan (other than routine benefits claims)
and there is no pending audit or inquiry by the Internal Revenue Service or
United States Department of Labor with respect to any Company Benefit Plan. To
the knowledge of Company or any of its Subsidiaries, there exists no condition
or set of circumstances that could subject the Company or any of its
Subsidiaries to any liability relating in any way to any Company Benefit Plan,
except as would not otherwise have a Company Material Adverse Effect.
3.12 Tax Matters. The Company and each of its Subsidiaries have duly
filed all Tax Returns that are required to be filed, and have duly paid or
caused to be duly paid in full all Taxes reflected on such Tax Returns. All such
Tax Returns are correct and complete in all material respects and accurately
reflect all liability for Taxes for the periods covered thereby. All material
unpaid Taxes owed by the Company and all of its Subsidiaries relating to periods
or portions of periods through the Balance Sheet Date (whether or not shown on
any Tax Return) are reflected on the Financial Statements. Since the Balance
Sheet Date, the Company and its Subsidiaries have not incurred any liability for
any Taxes other than in the ordinary course of business. Neither the Company nor
any of its Subsidiaries has received written notice of any claim made by an
authority in a jurisdiction where the Company or such Subsidiary, as the case
may be, does not file Tax Returns, that the Company or such Subsidiary is or may
be subject to taxation by that jurisdiction.
3.13 Title to Properties; Encumbrances. Each of the Company and each of
its Subsidiaries has good, valid and marketable title to all the material
properties and assets which it purports to own (real, personal and mixed,
tangible and intangible) and which are reflected in the Balance Sheet, and all
the material properties and assets purchased by the Company and its Subsidiaries
since the Balance Sheet Date, in each case free and clear of all mortgages,
title defects or objections, liens, claims, charges, security interests or other
encumbrances of any nature whatsoever including, leases, chattel mortgages,
conditional sales contracts, collateral security arrangements and other title or
interest retention arrangements, except, with respect to all such properties and
assets: (a) liens shown on the Balance Sheet as securing specified liabilities
or obligations, with respect to which no default exists; (b) minor imperfections
of title, if any, none of which are substantial in amount, materially detract
from the value or impair the use of the property subject thereto, or impair the
operations of the Company or any of its Subsidiaries and which have arisen only
in the ordinary course of business and consistent with past practice since the
date of the Balance Sheet; and (c) liens for current Taxes not yet due
(collectively, "Permitted Liens"). The rights, properties and other assets
presently owned, leased or licensed by the Company and its Subsidiaries include
all rights, properties and other assets necessary to permit the Company and its
Subsidiaries to conduct their businesses in all material respects in the same
manner as their businesses have been conducted prior to the date hereof.
3.14 Intellectual Property.
(a) Ownership; Sufficiency of IP Assets. The Company or one of
its Subsidiaries owns or possesses adequate licenses or other rights to use,
free and clear of liens (other than Permitted Liens), all of Intellectual
Property used in, and material to, its respective businesses. The Company
Intellectual Property, together with rights under the licenses granted to the
Company and/or its Subsidiaries with respect to any Intellectual Property of any
Person (other than the Company or its Subsidiaries), constitutes all the
Intellectual Property rights used in the operation of the Company's and its
Subsidiaries' businesses as they are currently conducted and are all the
Intellectual Property rights necessary to operate such businesses after the
Closing in substantially the same manner as such businesses have been operated
by the Company and its Subsidiaries prior thereto. The Company has taken
reasonable steps to protect the Company Intellectual Property.
(b) Infringement.
(i) By the Company. To the knowledge of the Company
and its Subsidiaries, none of the Intellectual Property used by the Company or
its Subsidiaries in the conduct of the Company's or its Subsidiaries' businesses
as currently conducted, infringes upon, violates or constitutes the unauthorized
use of any valid and enforceable rights owned or controlled by any Person (other
than the Company or its Subsidiaries). No Action or Proceeding to which the
Company is a party is now pending and, to the knowledge of the Company and its
Subsidiaries, no notice or claim in writing has been received by the Company or
any of its Subsidiaries within the one (1) year prior to the date hereof (A)
alleging that the Company or any of its Subsidiaries has engaged in any activity
or conduct that infringes upon, violates or constitutes the unauthorized use of
the Intellectual Property rights of any Person (other than the Company or its
subsidiaries) or (B) challenging the ownership, use, validity or enforceability
of any Intellectual Property owned by or exclusively licensed to or by the
Company.
(ii) By Third Parties. To the knowledge of the
Company and its Subsidiaries, no Person is misappropriating, infringing or
violating any Company Intellectual Property, and no such claims have been
brought against any Person by the Company or any of its Subsidiaries.
3.15 Employment Matters. The Company and each of its Subsidiaries are
in compliance in all material respects with all currently applicable laws and
regulations respecting employment, discrimination in employment, terms and
conditions of employment, wages, hours and occupational safety and health and
employment practices, and is not engaged in any unfair labor practice. There is
no controversy pending or, to the knowledge of the Company and its Subsidiaries,
threatened, between the Company or any of its Subsidiaries, on the one hand, and
any of their respective employees, on the other hand, which controversies have
resulted, or could reasonably be expected to result, in an Action or Proceeding
before any Governmental Entity in which an adverse decision would result in a
Company Material Adverse Effect. To the knowledge of the Company and its
Subsidiaries, no officer or key employee of the Company is in violation of any
material term of any employment contract, patent disclosure agreement,
noncompetition agreement, or any restrictive covenant to a former employer
relating to the right of any such employee to be employed by the Company or a
Subsidiary of the Company because of the nature of the business conducted by the
Company or any of its Subsidiaries or to the use of trade secrets or proprietary
information of others.
3.16 Compliance with Laws. The Company and each of its Subsidiaries are
in compliance in all material respects with, and have not violated in any
material respect any applicable law, rule or regulation of any United States
federal, state, local, or foreign Governmental Entity applicable to the Company
or any of its Subsidiaries, except as would not otherwise have a Company
Material Adverse Effect. No written notice has been received by the Company or
any of its Subsidiaries or has been filed, commenced or, to the knowledge of the
Company and its Subsidiaries, threatened against the Company or any of its
Subsidiaries alleging any such violation. All licenses, permits and approvals
required under such laws, rules and regulations are in full force and effect
except where the failure to be in full force and effect would not reasonably be
expected to result in a Company Material Adverse Effect.
3.17 Certain Corporate Matters.
(a) PBCL Approval. The action taken by the Company's board of
directors constitutes approval of the Transactions by the Company's board of
directors under the provisions of Section 2538 of the PBCL such that Section
2538 of the PBCL does not apply to this Agreement or the Transactions, and such
approval has not been amended, rescinded or modified. No other state
takeover, antitakeover, moratorium, fair price, interested shareholder, business
combination or similar statute or rule is applicable to the Transactions. If any
state takeover statute other than Section 2538 of the PBCL becomes or is deemed
to become applicable to this Agreement or the Transactions, the Company shall
(and shall cause each of its applicable Subsidiaries to) take all reasonable
action necessary to render such statute inapplicable to all of the foregoing.
Further, the provisions of subchapter (E) and (F) of Chapter 25 of the PBCL are
not applicable to this Agreement or the Transactions.
(b) Absence of Questionable Payments. Neither the Company nor
any of its Subsidiaries nor to the Company's knowledge, any director, officer,
agent, employee or other Person acting on behalf of the Company or any of its
Subsidiaries, has used any corporate or other funds for any unlawful
contribution, payment, gift, or entertainment, or made any unlawful expenditure
relating to political activity to government officials or others or established
or maintained any unlawful or unrecorded funds in violation of Section 30A of
the Exchange Act. Neither the Company nor any of its Subsidiaries nor, to the
Company's knowledge, any current director, officer, agent, employee or other
Person acting on behalf of the Company or any of its Subsidiaries, has accepted
or received any unlawful contribution, payment, gift or expenditure. The Company
and each of its Subsidiaries which is required to file reports pursuant to
Section 12 or 15(d) of the Exchange Act is in compliance in all material
respects with the provisions of Section 13(b) of the Exchange Act.
(c) Insider Interests. Except as disclosed in Company SEC
Reports, to the Company's knowledge, no executive officer or director of the
Company or any of its Subsidiaries has any material interest in any material
property, real or personal, tangible or intangible, including any Intellectual
Property used in or pertaining to the business of the Company or any of its
Subsidiaries.
3.18 Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person is or shall be entitled to any brokers' or
finder's fee or any other commission or similar fee in connection with any of
the Transactions.
SECTION 4:
Representations, Warranties and Covenants of the Investor
The Investor hereby represents and warrants to the Company that:
4.1 Organization. The Investor is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware.
4.2 Share Ownership. Immediately prior to the consummation of the
Transactions, neither the Investor nor any of its Affiliates owns any shares of
capital stock of the Company.
4.3 Authorization; Validity of Agreement; Investor Action. The Investor
has all requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations under this Agreement and to consummate the
Transactions including the purchase of the Common Shares hereunder. The
execution and delivery of this Agreement by the Investor and the performance by
the Investor of its obligations under this Agreement and the consummation by the
Investor of the Transactions have been duly authorized by the Investor's board
of directors and no other corporate action on the part of the Investor or its
shareholders is necessary to authorize the execution and delivery by the
Investor of this Agreement or the consummation by it of the Transactions. This
Agreement has been duly executed and delivered by the Investor and, assuming the
due authorization, execution
and delivery by the Company, constitutes a valid and binding obligation of the
Investor, enforceable against the Investor in accordance with its terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, or similar
laws relating to or affecting the enforcement of creditors' rights generally and
(b) as limited by equitable principles generally.
4.4 Investment Experience. The Investor is an "accredited investor" as
defined in Rule 501(A) under the Securities Act.
4.5 Investment Intent. The Investor is purchasing the Common Shares for
its own account as principal, for investment purposes only, and not with a
present view to, or for, resale, distribution or fractionalization thereof, in
whole or in part, within the meaning of the Securities Act. The Investor
understands that its acquisition of the Common Shares has not been registered
under the Securities Act or registered or qualified under any state securities
law in reliance on specific exemptions therefrom, which exemptions may depend
upon, among other things, the bona fide nature of such Investor's investment
intent as expressed herein. The Investor shall not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Common
Shares, except in compliance with the terms of this Agreement and the
registration requirements of the Securities Act, and the rules and regulations
promulgated thereunder, or an exemption thereunder.
4.6 Opportunity to Obtain Information. The Investor has had an
opportunity to ask questions of and receive answers from the Company or a person
acting on behalf of the Company concerning the terms and conditions of the
Transactions and the business, properties and financial condition of the Company
and has received and considered all information it deems relevant to make an
informed investment decision.
4.7 Registration or Exemption Requirements. The Investor acknowledges
and agrees that the Common Shares may not be resold, transferred, pledged or
hypothecated (i) except in a transaction registered under the Securities Act or
(ii) unless an exemption from such registration is available and, if the Company
so requests in writing, an opinion of counsel reasonably satisfactory to the
Company is obtained to the effect that the transaction is so exempt; provided,
however, that an opinion of counsel shall not be required upon the transfer by
the Investor of any securities to its Affiliates if such Affiliate is an
"accredited investor" as defined in Rule 501(A) under the Securities Act and
such Affiliate agrees to be bound by this Agreement. The Investor understands
that the certificate(s) evidencing the Common Shares shall be imprinted with the
legend set forth in Section 2.2(a) above.
4.8 No Legal, Tax or Investment Advice. The Investor understands that
nothing in this Agreement or any other materials presented to such Investor in
connection with the purchase of the Common Shares constitutes legal, tax or
investment advice. The Investor has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Common Shares.
4.9 Investor Information. The information to be supplied by or on
behalf of the Investor for inclusion or incorporation by reference in the
Registration Statement to be filed by the Company, or to be supplied by or on
behalf of the Investor for inclusion in any filing pursuant to Rule 165 under
the Securities Act or Rule 14a-12 under the Exchange Act (each a "Regulation M-A
Filing") or on Form 8-K, shall not at the time the Registration Statement,
such Regulation M-A Filing or the Form 8-K is filed with the SEC, at any time it
is amended or supplemented, or at the time the Registration Statement is
declared effective by the SEC, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading. If at any time after the
Registration Statement has become effective, any fact or event relating to the
Investor or any of its Affiliates is discovered by the Investor or occurs which
should be set forth in an amendment or supplement to the Registration Statement
or prospectus included therein, the Investor shall promptly inform the Company
of such fact or event.
4.10 Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person is or shall be entitled to any brokers' or
finder's fee or any other commission or similar fee in connection with any of
the Transactions.
SECTION 5:
Conditions to Closing of the Investor
5.1 Conditions to Investor's Obligations at the Closing. The obligation
of the Investor to purchase the Common Shares at the Closing under this
Agreement is subject to the fulfillment on or prior to the Closing of the
following conditions, any of which may be waived in whole or in part by the
Investor:
(a) Representations and Warranties True. The representations
and warranties made by the Company in Section 3 hereof shall be true and correct
in all respects as of the date hereof and at and as of the Closing with the same
force and effect as if they had been made on and as of said date (other than
representations and warranties made specifically with reference to a particular
date, which shall have been true and correct in all respects as of such date),
except in each case, or in the aggregate, where the failure to be true and
correct (disregarding any additional materiality "baskets" contained therein)
does not constitute a Company Material Adverse Effect.
(b) Covenants. Each covenant, agreement and condition
contained in this Agreement to be performed by the Company on or prior to the
Closing shall have been performed or complied with in all material respects.
(c) Compliance with Laws. The purchase of the Common Shares by
the Investor shall be legally permitted by all laws and regulations to which the
Investor or the Company is subject including, without limitation, the NASD
Rules.
(d) Board of Directors Designees. The Company's board of
directors (which shall have eight authorized directors as of the Closing) shall
have appointed, effective as of the Closing, the KPCB Designees identified in
Section 7.4 hereof as member(s) of the Company's board of directors, and such
appointments shall be in full force and effect and shall not have been amended,
modified or rescinded, either directly or indirectly.
(e) Opinion of the Company's Counsel. The Investor shall have
received from Xxxxx & Xxxxxxx, P.C., counsel to the Company, an opinion letter
addressed to the Investor in the form attached hereto as Exhibit A, dated as of
the Closing Date.
SECTION 6:
Conditions to closing of THE Company
6.1 Conditions to the Company's Obligations at the Closing. The
Company's obligation to sell and issue the Common Shares at the Closing under
this Agreement is subject to the fulfillment on or prior to the Closing of the
following conditions, any of which may be waived in whole or in part by the
Company:
(a) Representations and Warranties True. The representations
and warranties made by the Investor in Section 4 hereof shall be true and
correct in all material respects (disregarding any additional materiality
"baskets" contained therein) at and as of the Closing with the same force and
effect as if they had been made on and as of the same date (other than
representations and warranties made specifically with reference to a particular
date, which shall have been true and correct in all material respects as of such
date).
(b) Covenants. Each covenant, agreement and condition
contained in this Agreement to be performed by the Investor on or prior to the
Closing shall have been performed or complied with in all material respects.
(c) Compliance with all Laws. At the Closing, the purchase of
the Common Shares by the Investor shall be legally permitted by all laws and
regulations to which the Investor or the Company is subject including, without
limitation, the NASD Rules.
SECTION 7:
Covenants of the Company
7.1 Registration Rights.
(a) Shelf Registration. The Company shall prepare and file or
cause to be prepared and filed with the SEC, as soon as practicable but in any
event no later than ten (10) business days following the date that Asera
Financial Statements are filed on Form 8-K by the Company with the SEC, a
Registration Statement for an offering to be made on a delayed or continuous
basis pursuant to Rule 415 of the Securities Act registering the resale from
time to time by the Investor of the Registrable Securities. The Company shall
use commercially reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as soon as practicable thereafter
and to keep such Registration Statement continuously effective under the
Securities Act until the earlier of (A) the date that is the later of (1) the
second anniversary of the Closing Date and (2) the date that neither the
Investor nor any of its Affiliates is an Affiliate of the Company, (B) such date
as all unsold securities registered on such Registration Statement may be sold
in a single three-month period in accordance with Rule 144 under the Securities
Act or (C) such date as all securities registered on such Registration Statement
have been resold (the earlier to occur of (A), (B) and (C) is the "Effectiveness
Termination Date"). At the time the Registration Statement is declared
effective, the Investor shall be named as a selling securityholder in the
Registration Statement and the related prospectus in such a manner as to permit
such Investor to deliver such prospectus to purchasers of registered securities
in accordance with applicable law.
(b) Selling Procedure.
(i) Following the date that the Registration
Statement is declared effective by the SEC, the Investor shall be permitted,
subject to Sections 7.1(b)(ii), 7.1(e) and 7.7 below, to offer and sell the
Registrable Securities included thereon in the manner described in such
Registration Statement during the period of its effectiveness; provided,
however, that the
Investor arranges for delivery of a current prospectus to the transferee of
the Registrable Securities.
(ii) Notwithstanding the foregoing, or anything
contained in this Agreement to the contrary, the Company may suspend offers and
sales of Registrable Securities pursuant to such Registration Statement if in
the good faith judgment of the Company's Board of Directors, upon the advice of
counsel, (A)(I)(a) such registration would be substantially contrary to the
bests interests of the Company because (1) it would materially interfere with a
material financing plan or other material transaction or negotiations relating
thereto then pending, or (2) it would require the disclosure of any material
non-public information prior to the time that such information would otherwise
be disclosed or be required to be disclosed, if such early disclosure would be
substantially contrary to the best interests of the Company, or (b) such
Registration Statement contains or may contain an untrue statement of material
fact or omits or may omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and (II) the Board
of Directors concludes, as a result, that it is necessary and appropriate to
defer the filing of such registration statement at such time, and (B) the
Company shall furnish to the Investor a certificate signed by the President or
Chief Executive Officer of the Company stating the good faith judgment of the
Board of Directors to such effect, then the Company shall have the right to
defer such filing only for the period during which such filing would be
substantially contrary to the best interests of the Company (a "Suspension");
provided, however, that the aggregate number of days included in such periods of
Suspension shall not exceed ninety (90) days in any twelve (12) month period. In
the event of any Suspension, the Investor shall discontinue disposition of
Registrable Securities covered by the Registration Statement until copies of a
supplemented or amended prospectus are distributed to the Investor or until the
Investor is advised in writing by the Company that the use of the applicable
prospectus may be resumed.
(c) Expenses of Registration. All Registration Expenses
incurred in connection with the registrations pursuant to Section 7.1(a) shall
be borne by the Company. All Selling Expenses incurred in connection with any
registrations hereunder, shall be borne by the Investor.
(d) Registration Procedures.
(i) In the case of a registration, and any
qualification or compliance effected by the Company pursuant to this Section
7.1, the Company shall keep the Investor advised in writing as to the initiation
of such registration, qualification and compliance and as to the completion
thereof. Subject to Sections 7.1(a), (b)(ii) and (c) above, and until the
Effectiveness Termination Date, the Company shall take the following actions:
(A) Prepare and file with the SEC the
Registration Statement in accordance with Section 7.1(a) above;
(B) Furnish to the Investor such reasonable
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as it may reasonably request in order to facilitate the disposition of
Registrable Securities owned by it;
(C) Use commercially reasonable efforts to
register and qualify the securities covered by such registration statement under
such other securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Investor for the purpose of permitting the offers
and sales of the securities in such jurisdictions, provided that the Company
shall not
be required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service of process in any such
states or jurisdictions;
(D) Notify as soon as reasonably practicable
after the Company becomes aware the Investor at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of 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 a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing;
(E) If for any reason it shall be necessary
to amend or supplement the Registration Statement or the prospectus used in
connection with such Registration Statement in order to correct any untrue
statements, ensure that the Registration Statement is not misleading or
otherwise to comply with the Securities Act, as promptly as reasonably
practicable, prepare and file with the SEC such amendments and supplements to
such Registration Statement and the prospectus as may be necessary to correct
such untrue statements, ensure that such Registration Statement is not
misleading or to comply with the provisions of the Securities Act, provided,
that to the extent that any statements to be corrected relate to any information
provided by the Investor, the Company shall not be obligated to amend the
Registration Statement until the Company has received such corrected information
from the Investor and has had a reasonable opportunity to amend or supplement
such Registration Statement or prospectus;
(F) If the Registration Statement ceases to
be effective for any reason at any time prior to the Effectiveness Termination
Date (other than because all securities registered thereunder have been resold
pursuant thereto), use commercially reasonable efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof;
(G) Cause all such Registrable Securities
registered hereunder to be listed or included on each securities exchange or
automated quotation system on which similar securities issued by the Company are
then listed or included; and
(H) Provide a transfer agent and registrar
for all Registrable Securities registered hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
In addition, in the event of any underwritten public offering, the Company shall
(I) enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering,
provided that the Investor shall also enter into and perform its obligations
under such an agreement, and (II) use its best efforts to furnish, at the
request of the Investor, on the date that such Registrable Securities are
delivered to the underwriters for sale in connection with a registration
pursuant to this Section 7.1, (a) an opinion, dated as of the date the
registration statement with respect to such securities becomes effective, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given in an underwritten public offering (and
reasonably acceptable to the counsel for the Investor), addressed to the
underwriters, if any, and to the Investor, and (b) a letter dated such date,
from the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants in
an underwritten public offering (and reasonably acceptable to the counsel
for the Investor), addressed to the underwriters, to the extent such letter is
permitted under generally recognized accounting practice.
(ii) The Company shall reasonably cooperate with
legal counsel to the Investor, which shall be Xxxxxxx Phleger & Xxxxxxxx LLP
("Investor Counsel"), in performing the Company's obligations under this Section
7.1 and shall: (A) permit Investor Counsel to review and comment upon any
offering pursuant to this Section 7.1 and to review and comment upon (I) the
Registration Statement prior to its filing with the SEC and (II) all amendments
and supplements thereto (except for Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K and any similar or
successor reports) prior to their filing with the SEC; and (B) furnish to
Investor Counsel, without charge, (1) any correspondence from the SEC or the
staff of the SEC to the Company or its representatives relating to any
Registration Statement, (2) promptly after the same is prepared and filed with
the SEC, one copy of any Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits, and (3) upon the effectiveness of any
Registration Statement, one copy of the prospectus included in such Registration
Statement and all amendments and supplements thereto.
(e) Indemnification.
(i) The Company shall indemnify the Investor, its
officers, directors, employees, partners, affiliates, agents, representatives
and legal counsel (including Investor Counsel), and each person controlling (or
deemed controlling) the Investor within the meaning of the Securities Act,
(collectively, the "Investor's Agents") with respect to which registration,
qualification or compliance has been effected pursuant to this Section 7.1,
against all claims, losses, damages and liabilities (or actions in respect
thereof), joint or several, arising out of or based on (i) any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other similar document or any amendments or supplements
thereto (including any related registration statement and amendments or
supplements thereto, notification or the like) incident to any such
registration, qualification or compliance, (ii) 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 in the light of the
circumstances under which they were made, or (iii) any violation by the Company
of the Securities Act, the Exchange Act or any rule or regulation promulgated
thereunder applicable to the Company in connection with any such registration,
qualification or compliance, and shall reimburse the Investor, and the
Investor's Agents, for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, as incurred; provided, however, that the Company shall not
be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by an
instrument duly executed by such Investor and stated to be specifically for use
therein or furnished in writing by such Investor to the Company in response to a
request by the Company stating specifically that such information shall be used
by the Company therein.
(ii) The Investor shall indemnify the Company, its
officers, directors, employees, affiliates, agents, representatives, legal
counsel, independent accountant, and each person controlling the Company within
the meaning of the Securities Act (collectively, the "Company's Agents"),
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus,
offering circular or other similar document or any amendments or supplements
thereto (including any related registration statements and any amendments or
supplements thereto, notification and the like), or (ii) 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 in the light of the
circumstances under which they were made, and shall reimburse the Company and
the Company's Agents for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, as incurred, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such prospectus, offering circular or other similar
document or any amendments or supplements thereto (including any related
registration statements and any amendments or supplements thereto, notification
and the like) in reliance upon and in conformity with written information
furnished in writing to the Company by an instrument duly executed by the
Investor and stated to be specifically for use therein or furnished by the
Investor to the Company in response to a request by the Company stating
specifically that such information shall be used by the Company therein;
provided, however, that the indemnity agreement provided in this Section
7.1(e)(ii) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
prior written consent of the Investor, which consent shall not be unreasonably
withheld, unless such consent is obtained in accordance with subsection (iii)
hereof. In no event shall the Investor's indemnification obligation exceed the
net proceeds received from its sale of Registrable Securities in such offering.
(iii) Each party entitled to indemnification under
this Section 7.1(e) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has received written notice of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom; provided,
however, that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld). The Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
Indemnifying Party shall bear the expense of such defense of the Indemnified
Party if representation of both parties by the same counsel would be
inappropriate due to actual or potential conflicts of interest. The failure of
any Indemnified Party to give notice within a reasonable period of time as
provided herein shall relieve the Indemnifying Party of its obligations under
this Section 7.1(e), but only to the extent that such failure to give notice
shall materially adversely prejudice the Indemnifying Party in the defense of
any such claim or any such litigation. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the written consent of each
Indemnified Party (which shall not be unreasonably withheld), consent to entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(iv) If the indemnification provided for in this
Section 7.1(e) is held by a court of competent jurisdiction to be unavailable to
an Indemnified Party with respect to any loss, liability, claim, damage or
expense referred to therein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the Indemnified
Party on the other in connection with the statements or omissions
that resulted in such loss, liability, claim, damage or expense as well as any
other relevant equitable considerations; provided, however, that in no event
shall any contribution by an Investor under this Section 7.1(e) exceed the net
proceeds from the offering received by such Investor. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission.
(v) The obligations of the Company and the Investor
under this Section 7.1 shall survive the completion of any offering of the
Registrable Securities in a Registration Statement under this Section 7.1, any
investigation made by or on behalf of the Indemnified Party or any officer,
director or controlling Person of such Indemnified Party and shall survive the
transfer of securities.
(f) Information by the Investor. As a condition precedent to
the obligations of the Company under this Section 7.1, the Investor shall
furnish to the Company all such information and materials regarding the Investor
and the distribution proposed by the Investor as the Company may reasonably
request in writing in connection with any registration, qualification or
compliance referred to in this Section 7.1. The Investor will promptly notify
the Company in writing of any changes in the information set forth in the
Registration Statement after it is prepared regarding the Investor or its plan
of distribution to the extent required by applicable law.
(g) Inclusion of Additional Securities. The Company may
include additional Company securities in any registration pursuant to Section
7.1 hereof for its own account and by other parties in amounts as determined by
the Company's Board of Directors, provided that any such inclusion does not (i)
reduce the number of Registrable Securities (or other securities of the
Investor) which are included in the registration statement filed pursuant to
this Section 7.1 or otherwise materially and adversely affect the rights of the
Investor hereunder, or (ii) cause Form S-3 to be unavailable under the
Securities Act for such registration due to the nature of the additional
securities to be so included.
(h) Termination of Registration Rights. All rights and
obligations provided for in this Section 7.1 (except for in Section 7.1(e),
which rights and obligations shall survive) shall terminate on the date on which
the Company has no obligation to maintain the effectiveness of the Registration
Statement.
7.2 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Investor the benefits of Rule 144 promulgated under the
Securities Act ("SEC Rule 144") and any other rule or regulation of the SEC that
may at any time permit Investor to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-3, the Company
agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times so long as the Company
remains subject to the periodic reporting requirements under Sections 13 or
15(d) of the Exchange Act;
(b) use its best efforts to take such action as is necessary
to enable the Investor to utilize Registration Statement for the sale of its
Registrable Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(d) furnish to the Investor, so long as the Investor owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of the Securities
Act and the Exchange Act, or that it qualifies as a registrant whose securities
may be resold pursuant to Form S-3, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Investor of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
7.3 Assignment of Rights. The rights to cause the Company to register
Registrable Securities pursuant to Section 7.1 may be assigned by the Investor
only to its Affiliates. In the event of such assignment, the transferee shall
furnish the Company written notice of such assignment and agree in writing to be
bound by the obligations of the Investor hereunder.
7.4 Election of Directors.
(a) The Company shall use its best efforts to cause, at the
Closing, two (2) persons designated by the Investor (the "KPCB Designees") to be
appointed to the board of directors of the Company, who shall initially be Xxxxx
Xxxxxx and a designee to be named by the Investor at a later date, who shall be
appointed to the board promptly following his designation by the Investor. For
so long as the funds managed or advised by the Investor hold at least 200,000
shares of Common Stock (as adjusted by stock split, reverse stock split,
dividend, reorganization, recapitalization or otherwise) purchased by the
Investor pursuant to the Transactions, the Company shall use its best efforts to
cause the KPCB Designees to be nominated and elected to the board of directors
of the Company in any election of directors, and (ii) if either KPCB Designees
who has been elected to the board of directors of the Company shall cease for
any reason to be a member of the board of directors of the Company during such
person's term as a director, then the Company shall use its best efforts,
subject to applicable laws and regulations, to cause such vacancy to be filled
by a replacement designated by the Investor, and such designee shall be a KPCB
Designee for purposes of this Agreement.
(b) In addition to the foregoing, as soon as reasonably
practicable following the Closing, the Company shall cause a third individual to
be appointed to the Company's board of directors who shall be mutually
acceptable to the Investor and the other members of the Company's board of
directors.
7.5 Nasdaq Listing. The Company shall file a listing application with
Nasdaq for the Registrable Securities held by the Investor and use its best
efforts to maintain the listing of its Common Stock on Nasdaq (or a comparable
system then in use) or the New York Stock Exchange or other national exchange
for a period of not less than three years from the date of issuance.
7.6 D&O Insurance. Promptly following the date hereof and prior to the
Appointment Time, the Company shall take all reasonable actions required to
cause the directors appointed or elected to the Company's board of directors
pursuant to Section 7.4 to be fully covered by the Company's existing directors'
and officers' liability insurance, to the same extent as the Company's directors
as of the date hereof, effective automatically as of
the Appointment Time and without further action by any director so appointed
or elected.
7.7 Board of Directors; Committees. As of the Closing Date, the bylaws
of the Company shall have been amended in accordance with its terms, to provide
the following:
(a) The board of directors shall have eight (8) members.
(b) The board of directors shall have an audit committee, the
composition and duties of which shall be in compliance with all applicable
federal and state securities laws and NASD Rules, and which shall consist of
three (3) members of the board of directors.
(c) The board of directors shall have a compensation
committee, the composition and duties of which shall be in compliance with all
applicable federal and state securities laws and NASD Rules, and which shall
consist of three (3) members of the board of directors. The duties of the
compensation committee shall include (i) authorizing the compensation of any
executive officer, (ii) setting number of shares reserved under the Company's
option pool, and (iii) setting employee compensation guidelines.
7.8 Indemnification.
(a) Subject to Section 7.8(b) hereof, the Company agrees to
indemnify and hold harmless the Investor and its officers, directors,
shareholders, employees, agents and counsel (collectively, the "Investor
Indemnitees"), against any claims, Actions or Proceedings and for any expenses,
damages, liabilities or losses (joint or several) arising out of such claims,
Actions or Proceedings, to which the Investor Indemnitee may become subject
under the Securities Act, the Exchange Act and any rules or regulations
promulgated thereunder, the NASD Rules, or any state law or regulation, or
common law, arising out of, related to or in any way attributable to any breach
of any representation, warranty, agreement or covenant of the Company contained
herein. Upon written request, the Company agrees to reimburse the Investor
Indemnitees for any legal or other expenses reasonably incurred in connection
with investigating or defending any such claims, Actions or Proceedings, as such
expenses or other costs are incurred. The Investor Indemnitees may select their
own counsel. The foregoing indemnity shall extend upon the same terms and
conditions to, and shall inure to the benefit of, each Person, if any, who
controls any Investor Indemnitee within the meaning of the Securities Act or the
Exchange Act. This indemnity shall be in addition to any obligations that the
Company may otherwise have with respect to the Investor, including, without
limitation, any obligations to the Investor or its representatives in their
individual capacities as directors of the Company.
(b) The liability of the Company pursuant to this Section
7.8(a) shall be limited to an aggregate of the aggregate purchase price payable
by the Investor hereunder plus all expenses incurred by the Investor Indemnitees
in connection with such claim, Action, or Proceeding; provided, however, that
the foregoing limitation shall not apply to any claims, Actions or Proceedings
(or expenses, damages, liabilities or losses relating thereto) relating to a
breach by the Company of the representations and warranties set forth in
Sections 3.4(e) and 3.17(a) hereof.
7.9 Reasonable Efforts; Notification; Representations. Subject to the
other terms and conditions of this Agreement, each of the parties to this
Agreement shall use reasonable efforts to take promptly, or cause to be taken,
all actions, and to do promptly, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the Transactions contemplated by this Agreement. Each party to this
Agreement shall give prompt notice to each other party to this Agreement upon
becoming aware that any representation or warranty made by such party in this
Agreement has become untrue or inaccurate or that such party has failed to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by such party under this Agreement,
in each case such that the conditions set forth in Section 5.1 or Section 6.1,
as the case may be, would not be satisfied. No party to this Agreement shall
take any action that would cause any representation or warranty made by such
party in this Agreement to be untrue if made at Closing.
7.10 Standstill. For the period commencing on the Closing and ending on
the Standstill Termination Date, the Investor hereby covenants and agrees that
neither the Investor nor its Affiliates shall, directly or indirectly, acquire
any shares, or rights to acquire shares, of capital stock of the Company (except
by way of stock split, stock dividends or other distributions made available to
all holders of Common Stock) except in connection with the transactions
contemplated by the Ancillary Agreements.
7.11 Termination. The covenants of the Company set forth in this
Section 7 (other than the covenants in Sections 7.1 (Registration Rights), 7.4
(Election of Directors), 7.6 (D&O Insurance) and 7.9 (Reasonable Efforts) and
the covenants which terminate earlier as specifically set forth in such
covenant) shall terminate on the earlier to occur of (a) the third anniversary
of the Closing Date, and (b) the date on which the Investor and its respective
Affiliates beneficially own less than five percent (5%) of the then outstanding
shares of Common Stock.
SECTION 8:
Termination
8.1 Termination Events. Without prejudice to other remedies which may
be available to the parties by law or this Agreement, this Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any time
prior to the Closing:
(a) Mutually, by the written consent of the Company and the
Investor; or
(b) By either the Company or the Investor by giving written
notice to the other party or parties if any Governmental Entity shall have
issued an injunction or other ruling prohibiting the consummation of any of the
transactions contemplated by this Agreement and such injunction or other ruling
shall not be subject to appeal or shall have become final and unappealable.
8.2 Effect of Termination. In the event of any termination of this
Agreement pursuant to Section 8.1, all rights and obligations of the parties
hereunder shall terminate without any liability on the part of any party or its
Subsidiaries and Affiliates in respect thereof; provided, however, that such
termination shall not relieve the Company or the Investor of any liability for
any breach of this Agreement.
SECTION 9:
Miscellaneous
9.1 Waivers and Amendments. Any provision of this Agreement may be
amended, waived or modified only upon the written consent of the Company and the
Investor.
9.2 Governing Law. This Agreement shall be governed in all respects by
and construed in accordance with the laws of the State of Delaware without any
regard to conflicts of laws principles.
9.3 Waiver of Jury Trial; Trial Costs. Each of the Company, for itself
and its Affiliates, and Investor hereby irrevocably waive all right to trial by
jury in any action, proceeding or counterclaim (whether based on contract, tort
or otherwise) arising out of or relating to the actions of the Company and the
Investor or their respective Affiliates pursuant hereto in the negotiation,
administration, performance or enforcement thereof. The party in whose favor a
final judgment is rendered shall be entitled to reasonable costs and reasonable
attorneys' fees.
9.4 Survival. Notwithstanding any investigation made by any party to
this Agreement, all representations and warranties made by the Company and the
Investor herein shall survive the execution hereof, the delivery to the Investor
of the Shares being purchased and the payment therefor and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Investor, its counsel or the Company, as the case may be, but shall
terminate on the date which is 60 days after the filing of the Company's Annual
Report on Form 10-K for the year ended March 30, 2003 with the SEC. All
covenants made by the Company and the Investor herein shall survive the
execution of this Agreement, the delivery to the Investor of the Shares being
purchased and the payment therefor.
9.5 Successors and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties to this Agreement. Neither the Company nor the
Investor may assign, except as expressly contemplated herein, any rights,
obligations or benefits under this Agreement without the prior written consent
of the other party.
9.6 Entire Agreement. This Agreement, with the Warrant and the other
documents appended hereto, constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
9.7 Notices, etc. All notices and other communications required or
permitted under this Agreement shall be effective upon receipt and shall be in
writing and may be delivered in person, by telecopy, overnight delivery service
or registered or certified United States mail, addressed:
If to the Company: SEEC, Inc.
Park West One, Ste. 000
Xxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile: 000.000.0000
Attention: Chief Executive Officer
With a copy to: Xxxxx & Xxxxxxx, P.C.
00 Xxxxxxx Xx., 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Facsimile: 412.209.0672
Attention: Xxxxxx X. Xxxxxxx
If to the Investor: KPCB Holdings, Inc.
c/o Kleiner Xxxxxxx Xxxxxxxx & Xxxxx
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Facsimile: 650.233.0378
Attention: Xxxx X. Xxxxxxxxx
Chief Operating Officer
With a copy to: Xxxxxxx, Phleger & Xxxxxxxx LLP
Xxx Xxxxxx - Xxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: 415.442.1010
Attention: Xxxxxx X. Xxxxxxxxx
All notices and other communications shall be effective upon the
earlier of actual receipt thereof by the person to whom notice is directed or
(i) in the case of notices and communications sent by personal delivery or
telecopy, one Business Day after such notice or communication arrives at the
applicable address or was successfully sent to the applicable telecopy number,
(ii) in the case of notices and communications sent by overnight delivery
service, at noon (local time) on the second Business Day following the day such
notice or communication was sent, and (iii) in the case of notices and
communications sent by United States mail, seven days after such notice or
communication shall have been deposited in the United States mail.
9.8 Interpretation. When a reference is made in this Agreement to
Exhibits or Schedules, such reference shall be to an Exhibit or Schedule to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used in this Agreement shall be deemed in each case to be
followed by the words "without limitation." The phrase "provided to," "furnished
to," and terms of similar import in this Agreement shall mean that a paper copy
of the information referred to has been furnished to the party to whom such
information is to be provided. In this Agreement, the phrases "the date hereof",
and terms of similar import, unless the context otherwise requires, shall be
deemed to refer to January 8, 2003. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
9.9 Severability of this Agreement. Whenever possible, each provision
of this Agreement shall be interpreted in such manner as to be valid, legal, and
enforceable under all applicable laws and regulations. If, however, any
provision of this Agreement shall be invalid, illegal, or unenforceable under
any such law or regulation in any jurisdiction, it shall, as to such
jurisdiction, be deemed modified to conform to the minimum requirements of such
law or regulation, or, if for any reason it is not deemed so modified, it shall
be invalid, illegal, or unenforceable only to the extent of such invalidity,
illegality, or limitation on enforceability without affecting the remaining
provisions of this Agreement, or the validity, legality, or enforceability of
such provision in any other jurisdiction.
9.10 Counterparts. This Agreement may be executed in any number of
counterparts, including counterparts transmitted by facsimile or electronic
transmission, each of which shall be an original, but all of which together
shall constitute one instrument.
9.11 Further Assurances. Each party to this Agreement shall do and
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments
and documents as the other party hereto may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
9.12 Public Announcements. Except as may be required by law or
regulation, the Company shall not use the name of, or make reference to, the
Investor or its Affiliates in any press release or in any public manner
(including any reports or filings made by the Company under the Exchange Act)
without the Investor's prior written consent which consent shall not be
unreasonably withheld. The initial press release with respect to the execution
of this Agreement shall be approved by the Company and the Investor. Thereafter,
so long as this Agreement is in effect, the Company and the Investor shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or the Transactions without the
prior consent of the other party, which consent shall not be unreasonably
withheld; provided, however, that the Company, on the one hand, and the
Investor, on the other hand, may, without the prior consent of the other party,
issue a press release or make such public statement as may, upon the advice of
counsel, be required by law if it has used all reasonable efforts to consult
with the other party.
9.13 Expenses. Each of the parties hereto shall bear its own expenses
incurred with respect to this Agreement and the Transactions; provided, however,
that, at the Closing, the Company shall reimburse the reasonable fees and
expenses of Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel to the Investor, not to
exceed $30,000 promptly following delivery of an invoice therefor.
(This space intentionally left blank)
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"COMPANY" "INVESTOR"
SEEC, INC., a Delaware corporation KPCB HOLDINGS, INC., a Delaware
corporation, as nominee
By: /s/ Xxxxxxxx Xxxx By: /s/ Xxxx X. Xxxxxxxxx
----------------- ----------------------
Name: Xxxxxxxx Xxxx Name: Xxxx X. Xxxxxxxxx
Title: President and CEO Title: President
