EXHIBIT 10.13
STOCK PURCHASE AGREEMENT
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This STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into this
14th day of July, 1999, by and among ACCENT SOFTWARE INTERNATIONAL LTD., an
Israeli corporation (the "Company") and the investors listed on the signature
page to this Agreement (individually referred to as "Purchaser" and collectively
as the "Purchasers").
RECITALS
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A. The Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States Securities and Exchange Commission the "SEC") under the Securities Act of
1933, as amended (the "Act").
B. The Purchasers desire to purchase, upon the terms and conditions set
forth in this Agreement, a number of shares ("Shares") of the Company's Ordinary
Shares, nominal value NIS .01 per share (the "Common Stock").
IN CONSIDERATION OF the mutual promises, representations, warranties and
covenants contained herein, the parties hereto agree as follows:
ARTICLE I. PURCHASE AND SALE OF SHARES
Subject to the terms and conditions set forth in this Agreement, the
Purchasers will purchase in aggregate 9,523,810 Shares with an aggregate
purchase price of $2,000,000 ("Purchase Price") in the names and amounts as set
forth on Exhibit A hereto. The price per share of Common Stock shall be $0.21.
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ARTICLE II. CLOSINGS
The closing of the sale and purchase of the Shares under this Agreement
shall take place at the offices of the Company at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx
000, Xxxxxxxx Xxxxxxx, Colorado, in the following three phases:
1.1 Phase I Closing. Immediately upon the execution of this Agreement, or
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at such other time as the parties may agree (the "Phase I Closing Date"), the
Company shall deliver to Purchasers certificates for the Shares being purchased
by each Purchaser on the Phase I Closing Date as set forth on Exhibit A,
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registered in the name of each such Purchaser, and each
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Purchaser shall pay to the Company the respective Purchase Price for the Shares
as set forth on Exhibit A by wire transfer, certified check or other method
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acceptable to the Company. Upon receipt of the Purchase Price to be paid on the
Phase I Closing Date, the Company agrees to pay to Gotham Bay Partners, LLC
investment advisory fees representing 6.5% of the Purchase Price received on the
Phase I Closing Date.
1.2 Phase II Closing. The parties hereto covenant and agree to use
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commercially reasonable efforts to help the Company obtain a strategic partner
("Strategic Partner") to market the services provided by the Company in
connection with its Xxxxxxxxxxxx.xxx website (the "Product"). Within ten (10)
business days after the signing of a letter of intent ("Letter of Intent")
between the Company and a Strategic Partner to market the Product, the Company
shall deliver to Purchasers certificates for the Shares being purchased by each
Purchaser on the Phase II Closing Date as set forth on Exhibit A, registered in
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the name of each such Purchaser, and each Purchaser shall pay to the Company the
respective Purchase Price for the Shares as set forth on Exhibit A by wire
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transfer, certified check or other method acceptable to the Company. Upon
consummation of the transactions on the Phase II Closing Date, such transactions
shall be final among the parties irrespective of whether the conditions
precedent to the Phase III Closing Date transactions shall be achieved.
1.3 Phase III Closing. Within ten (10) business days after the execution
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of a definitive agreement memorializing the terms of the strategic alliance set
forth in the Letter of Intent, the Company shall deliver to Purchasers
certificates for the Shares being purchased by each Purchaser on the Phase III
Closing Date as set forth on Exhibit A, registered in the name of each such
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Purchaser, and each Purchaser shall pay to the Company the respective Purchase
Price for the Shares as set forth on Exhibit A by wire transfer, certified check
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or other method acceptable to the Company.
ARTICLE III. REPRESENTATIONS OF THE COMPANY
The following are representations, warranties and agreements made by the
Company as of the Closing Date.
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3.1 Organization and Standing. The Company and each of its subsidiaries
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is a corporation duly organized and validly existing under the laws of the
jurisdiction in which it is incorporated, and has full corporate power and
authority to conduct its business as presently conducted and as proposed to be
conducted by it and to enter into and perform this Agreement and to carry out
the transactions contemplated herein. The Company is duly qualified to do
business as a foreign corporation and is in good standing under the laws of the
State of Colorado and under the laws of any other state in which qualification
by the Company to do business is required and where failure to do so would have
a Material Adverse Effect. "Material Adverse Effect" means any material adverse
effect on (i) the Shares; (ii) the ability of the Company to perform its
obligations hereunder, or (iii) the business, operations, properties, prospects
or financial condition of the Company and its subsidiaries, taken as a whole.
3.2 Issuance of Shares. The issuance, sale and delivery of the Shares in
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accordance with this Agreement, has been or will be on or prior to the Phase I
Closing Date, duly authorized and reserved for issuance, as the case may be, by
all necessary corporate action on the part of the Company, and the Shares when
so issued, sold and delivered against payment therefor in accordance with the
provisions of this Agreement, will be duly and validly issued, fully paid and
nonassessable.
3.3 Authority for Agreement. The execution, delivery and performance by
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the Company of this Agreement have been duly authorized by all necessary
corporate action, including actions of the Board of Directors of the Company,
and this Agreement has been duly executed and delivered by the Company. This
Agreement constitutes a valid and binding obligation of the Company enforceable
in accordance with its terms, subject as to enforcement of remedies to
applicable bankruptcy, insolvency, reorganization or similar laws affecting
generally the enforcement of creditors' rights and subject to a court's
discretionary authority with respect to the granting of a decree ordering
specific performance or other equitable remedies. The execution of, and the
Company's performance of the transactions contemplated by, this Agreement and
compliance with its provisions by the Company will not violate any provision of
law and will not conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute a default under the Company's
Memorandum of Association or Articles of Association ("Organizational
Documents"), or any indenture, lease, agreement or other instrument to which the
Company is a party or by which it or any of its properties is bound, or any
decree, judgment, order, statute, rule or regulation applicable to the Company
and will not constitute an event which with the lapse of time or notice by a
third party could result in any default under any of the foregoing or result in
the creation of any lien, charge or encumbrance upon the assets or properties of
the Company or upon its stock.
3.4 Governmental Consents. Based on the representations made by the
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Purchasers in Article IV of this Agreement, the offer and sale of the Shares to
the Purchasers will be in
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compliance with applicable federal and state securities laws. All consents,
approvals, orders or authorizations of, or registrations, qualifications,
designations, declarations or filings with, any governmental authority required
on the part of the Company in connection with the execution and delivery of this
Agreement, the offer, issue, sale and delivery of the Shares, or the other
transactions to be consummated at the Closing, as contemplated by this Agreement
have been, or will by the Closing be, obtained.
3.5 Litigation. Except as disclosed in the Company's Private Placement
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Memorandum, dated July 13, 1999 (the "PPM"), there is no action, suit,
proceeding or investigation pending, or, to the best of the Company's knowledge,
any basis therefor or threat thereof, against the Company, which questions the
validity of this Agreement or the right of the Company to enter into it, or
which might result, either individually or in the aggregate, in any material
adverse change in the assets, condition (financial or otherwise), business or
prospects of the Company, nor is there any litigation pending or, to the best of
the Company's knowledge, any basis therefor or threat thereof, against the
Company by reason of the past employment relationships of any of the Company's
officers, directors, employees or consultants, the proposed activities of the
Company, or negotiations by the Company with possible investors in the Company.
3.6 Absence of Liabilities. To the best knowledge of the Company, the
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Company does not have any material liabilities of any type, whether absolute or
contingent, other than those reflected in the financial statements (the
"Financial Statements") included in the Company's most recent periodic reports
filed with the U.S. Securities and Exchange Commission (the "SEC") incorporated
by reference into the PPM, or otherwise disclosed in the PPM.
3.7 Absence of Changes. Since the dates of the Financial Statements,
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there has been no material adverse change in the condition, financial or
otherwise, net worth or operations of the Company, other than changes occurring
in the ordinary course of business except as disclosed in the PPM.
3.8 SEC Documents, Financial Statements. The Common Stock of the Company
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is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and the Company has filed on a timely basis,
during the twelve calendar months and any portion of the month immediately
preceding the date hereof, all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act, including material filed pursuant to Section
13(a) or 15(d), in addition to one or more registration statements and
amendments thereto heretofore filed by the Company with the SEC under the Act
(all of the foregoing including filings incorporated by reference therein being
referred to herein as the "SEC Documents"). The Company has not provided to the
Purchasers any information which,
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according to applicable law, rule or regulation, should have been disclosed
publicly by the Company but which has not been so disclosed, other than with
respect to the transactions contemplated by this Agreement.
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Act or the Exchange Act as the case may be
and the rules and regulations of the SEC promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to such SEC
Documents, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and regulations with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
3.9 Disclosures. As of the date of this Agreement, neither this
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Agreement, the PPM nor any exhibit hereto, nor any report, other written
statement or certificate delivered or to be furnished to Purchasers in
connection with the transactions contemplated by this Agreement, when read
together, contains or will contain any material misstatement of fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading.
3.10 Registration and Listing. For a period of five (5) years after the
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Closing Date, the Company will cause its Common Stock to continue to be
registered under Sections 12(b) or 12(g) of the Exchange Act, will comply in all
respects with its reporting and filing obligations under such Exchange Act, will
comply with all requirements related to any registration statement filed
pursuant to this Agreement and will not take any action or file any document
(whether or not permitted by the Act or the Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under said Acts, except as permitted
herein. For a period of five (5) years after the Closing Date, the Company will
take all action within its power to continue the listing or trading of its
Common Stock on the Nasdaq Over-the-Counter Bulletin Board or on a principal
market including the New York Stock Exchange, American Stock Exchange, Nasdaq
NMS or Nasdaq SmallCap Market, and will comply in all respects with the
Company's reporting, filing
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and other obligations under the bylaws or rules of such principal market. The
covenants set forth in this Section 3.10 shall not be deemed to prohibit a
merger, sale of all assets or other corporate reorganization if the entity
surviving or succeeding to the Company is bound by this Agreement with respect
to its securities issued in exchange for or in replacement of the Common Stock
or the consideration received for or in replacement of the Common Stock is cash.
ARTICLE IV. REPRESENTATIONS OF THE PURCHASER
Each Purchaser, severally and not jointly, represents and warrants to the
Company as follows:
4.1 Investment. Each Purchaser is acquiring the Shares, for their own
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account, for investment and not with a view to, or for sale in connection with,
any public distribution thereof and, except as contemplated by this Agreement,
each Purchasers has no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness or commitment providing for the
disposition thereof.
4.2 Authority. Each Purchaser has full power and authority to enter into
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and to perform this Agreement in accordance with its terms. No Purchaser has
been organized, reorganized or recapitalized specifically for the purpose of
investing in the Company.
4.3 Experience. Each Purchaser has reviewed the representations
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concerning the Company contained in this Agreement, and has had the opportunity
to make inquiry concerning the Company, its business and its personnel; each
Purchaser has received any and all written information which it has requested
and all questions and inquiries have been answered to each Purchaser's
satisfaction; and each Purchaser has sufficient business and financial
experience to be able to evaluate the merits and risks of an investment in the
Company.
4.4 Accredited Investor. Each Purchaser is an "accredited investor"
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within the definition set forth in Securities Act Rule 501 (a) and has executed
and delivered to the Company an "Accredited Investor Questionnaire" in the form
attached hereto as Exhibit B.
4.5 Binding Effect. This Agreement has been duly executed and delivered
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by each Purchaser, constitutes a valid and binding obligation of each Purchaser,
and is enforceable in accordance with its terms, subject as to enforcement of
remedies to applicable bankruptcy, insolvency, reorganization or similar laws
affecting generally the enforcement of creditors' rights and subject to a
court's discretionary authority with respect to the granting of a decree
ordering specific performance or other equitable remedies.
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4.6 Restricted Securities. Each Purchaser understands that (i) except as
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provided herein, the Shares have not been and are not being registered under the
Securities Act or any state securities laws, and may not be transferred unless
(a) subsequently registered thereunder, or (b) an exemption from such
registration is available, or (c) a Purchaser shall have delivered to the
Company an opinion of counsel (which opinion shall be in form, substance and
scope customary for opinions of counsel in comparable transactions) to the
effect that the Shares to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration, or (d) sold pursuant to Rule
144 promulgated under the Securities Act (or a successor rule) ("Rule 144") or
(e) sold or transferred to an affiliate of a Purchaser; (ii) any sale of such
Shares made in reliance on Rule 144 may be made only in accordance with the
terms of said Rule and further, if said Rule is not applicable, any resale of
such Shares under circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in
the Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register
such Shares under the Securities Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder (in each case, other
than pursuant to this Agreement).
4.7 Legends. Each Purchaser understands that until such time as the
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Shares have been registered under the Securities Act as contemplated herein, or
otherwise may be sold by a Purchaser pursuant to Rule 144, the certificates for
the Shares shall bear a restrictive legend in substantially the following form:
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 of the United States. The securities
represented hereby may not be offered or sold, in the absence of an
effective registration statement for the securities under applicable
securities laws or unless offered, sold or transferred pursuant to an
available exemption from the registration requirements of those laws.
The Company shall promptly (within three (3) business days) instruct its
stock transfer agent to issue a certificate without such legend to the holder of
any Shares if (a) the sale of such Shares are registered under the Securities
Act, or (b) such holder provides the Company with an opinion of counsel, in
form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Shares may be
made without registration under the Securities Act or (c) such holder provides
the Company with reasonable assurances that such Shares can be sold pursuant to
Rule 144.
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4.8 Solicitation. Each Purchaser acknowledges that the Shares are not
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being purchased as a result of any form of general solicitation or general
advertising including advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or broadcast over radio,
or television or any seminar or meeting whose attendees have been invited by
general solicitation or general advertising.
ARTICLE V. CONDITIONS TO THE OBLIGATIONS OF PURCHASER
The obligation of Purchasers to purchase the Shares on the Phase I, Phase
II and Phase III Closing Dates (collectively, the "Closing Dates") is subject to
the fulfillment, or the waiver by Purchasers, of the following conditions on or
before each of the Closing Dates:
5.1 Accuracy of Representations and Warranties. Each representation and
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warranty contained in Article III shall be true on and as of each of the Closing
Dates with the same effect as though such representation and warranty had been
made on and as of that date.
5.2 Performance. The Company shall have performed and complied with all
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agreements and conditions contained in this Agreement required to be performed
or complied with by the Company prior to or at each of the Closing Dates.
5.3 Compliance Certificate of the Company. The Company shall have
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delivered to the Purchasers certificates, executed by the President of the
Company, dated on each of the Closing Dates, certifying to the fulfillment of
the conditions specified in Sections 5.1 and 5.2 of this Agreement.
5.4 Regulatory Matters. No statute, rule, regulation, executive order,
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decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
5.5 Consents. The Company shall have received all consents,
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authorizations, approvals and orders necessary to enter into this Agreement and
consummate the transactions contemplated hereby.
5.6 Other Matters. All corporate and other proceedings in connection with
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the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to Purchasers and Purchasers shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
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ARTICLE VI. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligations of the Company to sell the Shares at the Closing are
subject to fulfillment, on or before the Closing Date, of each of the following
conditions:
6.1 Accuracy of Representations and Warranties. The representations and
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warranties of each of the Purchasers contained in Article IV shall be true on
and as of the Closing Dates with the same effect as though such representations
and warranties had been made on and as of that date.
6.2 Investment. Purchasers shall have tendered, in the manner specified
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in Article II hereof, the Purchase Price for the Shares at each of the Closing
Dates.
6.3 Regulatory Matters. No statute, rule, regulation, executive order,
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decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
6.4 Consents. The Company shall have received all consents,
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authorizations, approvals and orders necessary to enter into this Agreement and
consummate the transactions contemplated hereby.
ARTICLE VII. COVENANTS OF THE COMPANY AND PURCHASERS
7.1 Registration of Shares. The Company agrees to file, within ninety
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(90) days after the Phase I Closing Date, a Registration Statement on Form S-3
registering the Shares issued or to be issued to the Purchasers on the Closing
Dates (the "Registrable Securities").
7.2 Demand Registration. The Company shall cause the Registration
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Statement required to be filed pursuant to Section 7.1 hereof to become
effective as soon as practicable after filing, but in no event later than six
(6) months after the Phase I Closing Date ("Registration Deadline"). In the
event such registration is not so declared effective or does not include all
Shares, a holder of Registrable Securities shall have the right to require by
notice in writing that the Company register all or any part of the Registrable
Securities held by such holder (a "Demand Registration") and the Company shall
thereupon effect such registration in accordance herewith (which may include
adding such shares to an existing shelf registration). The parties agree that if
the holder of Registrable Securities demands registration of less than all of
the Registrable Securities, the Company, at its option, may nevertheless file a
registration statement covering all of the Registrable Securities. If such
registration statement is declared
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effective with respect to all Registrable Securities and the Company is in
compliance with its obligations under this Agreement, the demand registration
rights granted pursuant to this Section shall cease. If such registration
statement is not declared effective with respect to all Registrable Securities
or if the Company is not in compliance with such obligations, the demand
registration rights described herein shall remain in effect. The Company shall
not be obligated to effect a Demand Registration as described above: (i) if all
of the Registrable Securities held by the holder of Registrable Securities which
are demanded to be covered by the Demand Registration are, at the time of such
demand, included in an effective registration statement and the Company is in
compliance with its obligations under this Agreement; (ii) if all of the
Registrable Securities may be sold under Rule 144(k) of the Act and the
Company's transfer agent has accepted an instruction from the Company to such
effect; or (iii) at any time after two (2) years from the Closing Date.
7.3 Obligations of the Company. In connection with any registration of
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the Registrable Securities required herein, the Company shall have the following
obligations:
(a) The Company shall keep the Registration Statement effective
pursuant to SEC Rule 415 at all times until such date as is the earlier of (i)
the date on which all of the Registrable Securities have been sold and (ii) the
date on which all of the Registrable Securities (in the reasonable opinion of
counsel to the Purchaser) may be immediately sold to the public without
registration pursuant to Rule 144(k) under the Securities Act (the "Registration
Period"), which Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein and all documents incorporated by
reference therein) shall 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 not misleading.
(b) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement.
(c) The Company shall furnish to each Purchaser whose Registrable
Securities are included in the Registration Statement and its legal counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of the
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Registration Statement referred to in Sections 7.1 and 7.2, each letter written
by or on behalf of the Company to the SEC or the staff of the SEC (including,
without limitation, any request to accelerate the effectiveness of any
Registration Statement or amendment thereto), and each item of correspondence
from the SEC or the staff of the SEC, in each case relating to such Registration
Statement (other than any portion, if any, thereof which contains information
for which the Company has sought confidential treatment), (ii) on the date of
effectiveness of the Registration Statement or any amendment thereto, a notice
stating that the Registration Statement or amendment has been declared
effective, and (iii) such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as such Purchaser may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Purchaser.
(d) The Company shall, at its expense, use its best efforts to (i)
register and qualify the Registrable Securities covered by the Registration
Statement under such other securities or "blue sky" laws of such jurisdictions
in the United States as each Purchaser who holds Registrable Securities being
offered reasonably requests, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (a) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 7.3(d), (b) subject itself to general taxation in any such
jurisdiction, (c) file a general consent to service of process in any such
jurisdiction, (d) provide any undertakings that cause the Company undue expense
or burden, or (e) make any change in its organizational documents, which in each
case the Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders.
(e) In the event the Purchasers who hold a majority in interest of the
Registrable Securities being offered in an offering select underwriters for the
offering, the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriters of such offering.
(f) As promptly as practicable after becoming aware of such event, the
Company shall notify each Purchaser of the happening of any event, of which the
Company has knowledge, as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading,
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and use its best efforts promptly to prepare a supplement or amendment to the
Registration Statement to correct such untrue statement or omission, and deliver
such number of copies of such supplement or amendment to each Purchaser as such
Purchaser may reasonably request.
(g) The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued to obtain the withdrawal of such order at the
earliest practicable moment (including in each case by amending or supplementing
such Registration Statement) and to notify each Purchaser who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof
(and if such Registration Statement is supplemented or amended, deliver such
number of copies of such supplement or amendment to each Purchaser as such
Purchaser may reasonably request).
(h) The Company shall permit a single firm of counsel designated by
the Purchasers to review the Registration Statement and all amendments. and
supplements thereto a reasonable period of time prior to their filing with the
SEC, and not file any document in a form to which such counsel reasonably
objects.
(i) The Company shall make available for inspection by (i) any
Purchaser, (ii) any underwriter participating in any disposition pursuant to the
Registration Statement, (iii) one firm of attorneys and one firm of accountants
or other agents retained by the Purchasers, and (iv) one firm of attorneys
retained by all such underwriters (collectively, the "Inspectors") all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may reasonably request
for purposes of such due diligence; provided, however, that each Inspector shall
hold in confidence and shall not make any disclosure (except to a Purchaser) of
any Record or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(a) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (b) the release of such
Records is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction, or (c) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this or any other agreement. The Company shall not be required
to disclose any confidential information in such Records to any Inspector until
and unless such Inspector shall have entered into confidentiality agreements (in
form and substance satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this Section 7.3(i). Each Purchaser
agrees that it shall, upon learning that disclosure of such Records is sought in
or by a court or governmental body of competent
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jurisdiction or through other means, give prompt notice to the Company and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein shall be deemed to limit the Purchasers' ability to
sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.
(j) At the request of any Purchaser, the Company shall prepare and
file with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary in order to change the plan
of distribution set forth in such Registration Statement.
(k) The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including without limitation the Securities Act of 1933 and the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated by
the SEC.)
(l) The Company shall take all such other actions as any Purchaser or
the underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities.
7.4 Reporting Status. So long as the Purchasers beneficially own any of
----------------
the Shares, the Company shall timely file all reports required to be filed with
the SEC pursuant to the Exchange Act, and the Company shall not terminate its
status as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination.
7.5 Corporate Existence. So long as the Purchasers beneficially own any
-------------------
of the Shares, the Company shall maintain its corporate existence, and in the
event of a merger, consolidation or sale of all or substantially all of the
Company's assets, the Corporation shall ensure that the surviving or successor
entity in such transaction (i) assumes the Company's obligations hereunder and
the agreements and instruments entered into in connection herewith regardless of
whether or not the Company would have had a sufficient number of shares of
Common Stock authorized and available for issuance in order to effect the
exercise of all Warrants outstanding as of the date of such transaction and (ii)
is a publicly traded corporation whose common stock is listed for trading on the
NASDAQ, NYSE or AMEX.
7.6 Reserved Employee Shares. So long as the Purchasers, in the
------------------------
aggregate, hold more than five percent (5%) of the outstanding shares of Common
Stock, the Company agrees that it will not reserve more than 4,500,000 shares of
Common Stock ("Reserved Employee
-13-
Shares") for issuance upon exercise of options granted under the Company's
Employee Stock Option Plan and CEO Option Plan (collectively, the "Employee
Option Plans"). Any shares of Common Stock issued upon conversion of options
granted under the Employee Option Plans in excess of the Reserved Employee
Shares shall be subject to the rights granted to Purchasers under Section 7.7
hereof.
7.7 Anti-Dilution. So long as the Purchasers, in the aggregate, hold more
-------------
than five percent (5%) of the outstanding shares of Common Stock, if the Company
offers or sells or enters into any agreement to offer or sell its Common Stock
(other than in connection with an acquisition of technology or a business
entity), then each Purchaser shall have the right to maintain their then current
respective percentage ownership in the Company's outstanding Common Stock,
through the purchase of additional shares of Common Stock at the offering price
offered to third parties in such offer or sale.
7.8 Right of First Refusal. So long as the Purchasers, in the aggregate,
----------------------
hold more than five percent (5%) of the outstanding shares of Common Stock, if
an unaffiliated third party makes a bona fide offer for all of the stock or
substantially all of the assets of the Company (or to lease its product line on
an exclusive basis) ("Acquisition Offer"), the Purchasers shall have thirty (30)
days to match the terms and conditions of the Acquisition Offer. If Purchasers
shall fail to match the terms and conditions of the Acquisition Offer under this
Section 7.8, Purchasers agree to sell their shares of Common Stock under the
terms of the Acquisition Offer, or to vote their shares of Common Stock in favor
of the sale of the assets of the Company or to lease the Company's product line
under the terms of the Acquisition Offer, as the case may be.
7.9 Lock-Up Period. Each of the Purchasers agrees that (a) for a period
--------------
of six (6) months beginning on the Phase I Closing Date, no Purchaser will
transfer, conduct any offering or sale or enter into an agreement to transfer or
sell any of the Shares purchased on the Phase I Closing Date without the prior
written consent of the Company; (b) for a period of six (6) months beginning on
the Phase II Closing Date, no Purchaser will transfer, conduct any offering or
sale or enter into an agreement to transfer or sell any of the Shares purchased
on the Phase II Closing Date without the prior written consent of the Company;
(c) for a period of six (6) months beginning on the Phase III Closing Date, no
Purchaser will transfer, conduct any offering or sale or enter into an agreement
to transfer or sell any of the Shares purchased on the Phase III Closing Date
without the prior written consent of the Company.
7.10 Board Representation. Upon closing of the transactions contemplated
--------------------
to be consummated on the Phase I Closing Date, the Company will take all steps
necessary and appropriate under its Organizational Documents, including the
calling of a special meeting of the Board of Directors of the Company, to
appoint two (2) members of the Company's Board of Directors as shall be
designated by the Purchasers.
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ARTICLE VIII. INDEMNIFICATION
8.1 Indemnification by the Company. Subject to the conditions set forth
------------------------------
below, in connection with any registration of Registrable Securities pursuant to
Article 7 above, the Company agrees to indemnify and hold harmless Purchasers,
each person, if any, who controls any Purchaser within the meaning of Section 15
of the Securities Act and Purchasers' officers, directors and agents, if any, as
follows:
(a) Against any and all loss, claim, damage and expense whatsoever arising
out of or based upon (including but not limited to, any and all
expense whatsoever reasonably incurred in investigating, preparing or
defending any litigation, commenced or threatened, or any claim
whatsoever based upon) any untrue or alleged material fact contained
in any preliminary prospectus (if used prior to the effective date of
the Registration Statement), the Registration Statement or the
prospectus (as from time to time amended and supplemented), or in any
application or other document executed by the Company or based upon
written information furnished by the Company filed in any jurisdiction
in order to qualify the Company's securities under the securities laws
thereof; or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading; or any other violation of applicable federal
or state statutory or regulatory requirements or limitations relating
to action or inaction by the Company in the course of preparing,
filing, or implementing the Registration Statement; provided however,
that the indemnity contained in this subsection (a) shall not apply to
a holder of Registrable Securities with respect to any loss, claim,
damage, liability or action arising out of or based upon any untrue or
alleged untrue statement or omission made in reliance upon and in
conformity with any information furnished in writing to the Company by
or on behalf of such holder expressly for use in connection therewith
or arising out of any action or inaction of any such holder;
(b) Subject to the provision contained in subsection (a) above, against
any and all loss, liability, claim, damage and expense whatsoever to
the extent of the aggregate amount paid in settlement of any
litigation, commenced or threatened or of any claim whatsoever based
upon any such untrue statement or omission or any such alleged untrue
statement or omission (including but not limited to, any and all
expense whatsoever reasonably incurred in investigating, preparing or
defending against any such litigation or claim) if such settlement is
effected with the written consent of the Company.
-15-
(c) The Company shall be entitled to participate at its own expense in the
defense of any suit brought to enforce any such claim, but if the
Company elects to assume the defense, such defense shall be conducted
by counsel chosen by it, provided that such counsel is reasonably
satisfactory to the Purchasers and any other holders of Registrable
Securities or controlling persons who are defendants in any suit so
brought. In the event the Company elects to assume the defense of any
such suit and retain such counsel, such holders or controlling persons
shall, after the date they are notified of such election, bear the
fees and expenses of any counsel thereafter retained by them as well
as any other expenses thereafter incurred by them in connection with
the defense thereof unless, in the reasonable opinion of such holders
or controlling persons, separate representation is advisable because
of conflict in the interests of the parties, in which case the Company
shall continue to pay the fees of such counsel.
8.2 Indemnification of Company. Each Purchaser, severally and not
--------------------------
jointly, agrees to indemnify and hold harmless the Company, any underwriters for
the offering and each of their officers and directors and agents and each other
person, if any, who controls the Company or such underwriters within the meaning
of Section 15 of the U.S. Securities Act against any and all such losses,
liabilities, claims, damages and expenses as are indemnified against by the
Company under Section 8; provided however, that such indemnification shall be
limited to statements or omissions, if any, made (or in settlement of any
litigation effected with your written consent, alleged to have been made) in any
preliminary prospectus, the Registration Statement or prospectus or any
amendment or supplement thereof, or written information furnished by a
Purchaser. In case any action shall be brought against the Company or any other
person so indemnified, in respect of which indemnity may be sought against a
Purchaser, the Purchasers shall have the rights and duties given to the Company,
and each other person so indemnified shall have the rights and duties given to
Purchasers by the provisions of Section 8(c).
ARTICLE IX MISCELLANEOUS
9.1 Survival of Representations, Warranties and Covenants. All
-----------------------------------------------------
agreements, representations, warranties and covenants contained herein shall
survive the execution and delivery of this Agreement and the closing of the
transactions contemplated hereby.
-16-
9.2 Expenses. Each party shall pay its own expenses in connection with
--------
the investment contemplated herein.
9.3 Notices. All notices, requests, consents and other communications
-------
when deemed given under this Agreement shall be in writing and shall be
delivered by hand, which shall include delivery by express courier service, or
mailed by first class certified or registered mail, return receipt requested,
postage prepaid, and notice shall be deemed given when actually received by the
intended recipient:
If to the Company:
Accent Software International, Ltd.
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Attention: President
With a copy to:
Xxxxxxx X. Xxxxx III
Rothgerber, Xxxxxxx & Xxxxx LLP
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
If to Purchasers:
Gotham Bay Partners LLC
Attn: Xxxxx Xxxxxxx
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
or at such other address or addresses as may have been furnished in writing
pursuant to the provision of this Section 9.3.
9.4 Entire Agreement. This Agreement together with the other agreements
----------------
referred to herein embody the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject matter.
9.5 Amendments and Waivers. Except as otherwise expressly set forth in
----------------------
this Agreement, any term of this Agreement may be amended and the observance of
any term of
-17-
this Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) with the written consent of the Company
as to any provision that is for the benefit of the Company and by the
Purchasers.
9.6 Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
9.7 Headings. The headings of the sections, articles and paragraphs of
--------
this Agreement have been added for convenience only and shall not be deemed to
be a part of this Agreement.
9.8 Severability. The invalidity or unenforceability of any provision of
------------
this Agreement shall not affect the validity or enforceability of any other
provision.
9.9 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Colorado.
9.10 Successors and Assigns. The provisions of this Agreement shall be
----------------------
binding upon, and inure to the benefit of, the respective successors, assigns,
heirs, executors and administrators of the parties hereto.
9.11 Specific Enforcement, Consent to Jurisdiction. The Company and the
---------------------------------------------
Purchasers 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 or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which either of them may be entitled by law or equity.
The Company and the Purchasers each (i) hereby irrevocably submits to the
jurisdiction of the United States District Court and other courts of the United
States sitting in Colorado for the purposes of any suit, action or proceeding
arising out of or relating to this Agreement and (ii) hereby waives, and agrees
not to assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. The Company and the Purchasers each consent to
process being served in any such suit action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this paragraph shall affect or
limit any right to serve process in any other manner permitted by law.
-18-
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the day
and year first above written.
THE COMPANY:
ACCENT SOFTWARE
INTERNATIONAL LTD.
By:
----------------------------
Name: Xxxx Xxxxx
--------------------------
Title: President, CEO
-------------------------
THE PURCHASERS:
GOTHAM BAY PARTNERS LLC
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
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EXHIBIT A
---------
PHASE I CLOSING DATE
INVESTOR SHARES PURCHASE PRICE
-------- ------ --------------
Gotham Bay
Partners LLC 2,380,952 $500,000
PHASE II CLOSING DATE
INVESTOR SHARES PURCHASE PRICE
-------- ------ --------------
Gotham Bay
Partners LLC 3,571,429 $750,000
PHASE III CLOSING DATE
INVESTOR SHARES PURCHASE PRICE
-------- ------ --------------
Gotham Bay
Partners LLC 3,571,429 $750,000
TOTALS 9,523,810 $2,000,000
-20-
