STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of October 18, 2001 (as the
same may be amended, supplemented or modified in accordance with the terms
hereof, the "Agreement"), by and between Vertex Interactive, Inc., a New Jersey
corporation (the "Company"), and Pitney Xxxxx Inc., a Delaware corporation (the
"Purchaser")
WHEREAS, upon the terms and conditions set forth in this
Agreement, the Company proposes to issue and sell to the Purchaser at the
Closing (as defined below) 1000 shares of Series B Convertible Preferred Stock,
par value $.01 per share (the "Series B Preferred"), of the Company for the
aggregate purchase price of $1,000,000; and
WHEREAS, each share of Series B Preferred is convertible
(subject to adjustment) into 1,190 shares of common stock, par value $.005 per
share (the "Common Stock"), of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Affiliate" shall mean any Person who is an "affiliate" as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.
"Agreement" has the meaning set forth in the preamble of this
Agreement.
"Board of Directors" means the Board of Directors of the
Company.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
"Certificate of Designations" means the Certificate of
Designations with respect to the Series B Preferred adopted by the Board of
Directors and duly filed with the Secretary of State of the State of New Jersey
on or before the Closing Date substantially in the form attached hereto as
Exhibit A.
"Claims" has the meaning set forth in Section 4.5 of this
Agreement.
"Closing" has the meaning set forth in Section 3.1 of this
Agreement.
"Closing Date" has the meaning set forth in Section 3.1 of
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.
"Commission" means the United States Securities and Exchange
Commission or any similar agency then having jurisdiction to enforce the
Securities Act.
"Common Stock" has the meaning set forth in the recitals of
this Agreement.
"Commonly Controlled Entity" means any entity which is under
common control with the Company within the meaning of Code section 414(b), (c),
(m), (o) or (t).
"Company" shall have the meaning set forth in the preamble of
this Agreement.
"Company Intellectual Property" has the meaning set forth in
Section 4.17 of this Agreement.
"Company Plans" means each Plan that the Company maintains or
to which the Company makes contributions.
"Company Stock Options" has the meaning set forth in Section
4.7 of this Agreement.
"Condition of the Company" means the assets, business,
properties, operations or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole.
"Condition of the Purchaser" means the assets, business,
properties, operations or condition (financial or otherwise) of the Purchaser
and its Subsidiaries taken as a whole.
"Contractual Obligations" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument to
which such Person is a party or by which it or any of its property is bound.
"Copyrights" means any foreign or United States copyright
registrations and applications for registration thereof, and any non-registered
copyrights.
"Corporation Law" has the meaning set forth in Section 4.21 of
this Agreement.
"Environmental Laws" means federal, state, local and foreign
laws, principles of common laws, civil laws, regulations, and codes, as well as
orders, decrees,
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judgments or injunctions, issued, promulgated, approved or entered thereunder
relating to pollution, protection of the environment or public health and
safety.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules promulgated and rulings issued thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"GAAP" means United States generally accepted accounting
principles in effect from time to time.
"Governmental Authority" means the government of any nation,
state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Indemnified Party" has the meaning set forth in Section 8.1
of this Agreement.
"Indemnifying Party" has the meaning set forth in Section 8.1
of this Agreement.
"Intellectual Property" means all Patents, Trademarks,
Copyrights, technology, know-how and processes.
"Internet Assets" means any Internet domain names and other
computer user identifiers and any rights in and to sites on the worldwide web,
including rights in and to any text, graphics, audio and video files and HTML or
other code incorporated in such sites.
"Knowledge" means the knowledge of the Company or its
Subsidiaries after due inquiry.
"Liabilities" has the meaning set forth in Section 4.16 of
this Agreement.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other) or preference,
priority, right or other security interest or preferential arrangement of any
kind or nature whatsoever (excluding preferred stock and equity related
preferences).
"Losses" has the meaning set forth in Section 8.1 of this
Agreement.
"Minimum Amount" has the meaning set forth in Section 8.4(b)
of this Agreement.
"Orders" has the meaning set forth in Section 4.2 of this
Agreement.
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"Patents" means any foreign or United States patents and
patent applications, including any divisions, continuations,
continuations-in-part, substitutions or reissues thereof, whether or not patents
are issued on such applications and whether or not such applications are
modified, withdrawn or resubmitted.
"Permits" has the meaning set forth in Section 4.6(b) of this
Agreement.
"Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.
"Plan" means any employee benefit plan, arrangement, policy,
program, agreement or commitment (whether or not an employee plan within the
meaning of Section 3(3) of ERISA), including, without limitation, any
employment, consulting or deferred compensation agreement, executive
compensation, bonus, incentive, pension, profit-sharing, savings, retirement,
stock option, stock purchase or severance pay plan, any life, health, disability
or accident insurance plan, whether oral or written, whether or not subject to
ERISA, as to which the Company or any Commonly Controlled Entity has or in the
future could have any direct or indirect, actual or contingent liability.
"Plus Purchase Agreement" means the Stock Purchase Agreement,
dated as of August 23, 2001, by and among Vertex Interactive, Inc., Plus
Integration Supply Chain Solutions B.V., Stichting WPM Plus and the Shareholders
of Plus Integration Supply Chain Solutions, B.V.
"Purchaser" has the meaning set forth in the preamble of this
Agreement.
"Registration Rights Agreement Amendment" means the Amendment
to the Registration Rights Agreement substantially in the form attached hereto
as Exhibit B.
"Requirements of Law" means, as to any Person, any law,
statute, treaty, rule, regulation, right, privilege, qualification, license or
franchise or determination of an arbitrator or a court or other Governmental
Authority or stock exchange, in each case applicable or binding upon such Person
or any of its property or to which such Person or any of its property is subject
or pertaining to any or all of the transactions contemplated or referred to
herein.
"SEC Reports" has the meaning set forth in Section 4.9 of this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Series A Preferred" has the meaning set forth in Section
4.7(a) of this Agreement.
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"Series B Preferred" has the meaning set forth in the recitals
of this Agreement.
"Shares" has the meaning set forth in Section 2.2 of this
Agreement.
"Software" means computer software programs, source code,
object code, data and documentation, including, without limitation, any computer
software programs that incorporate or run pricing models, formulas and
algorithms.
"Stock Equivalents" means any security or obligation which is
by its terms convertible into or exchangeable or exercisable for shares of
common stock or other capital stock, and any option, warrant or other
subscription or purchase right with respect to common stock or such other
capital stock.
"Subsidiaries" means, as of the relevant date of
determination, with respect to any Person, a corporation or other Person of
which 50% or more of the voting power of the outstanding voting equity
securities or 50% or more of the outstanding economic equity interest is held,
directly or indirectly, by such Person.
"Tax" or "Taxes" means any federal, state, local, foreign and
other taxes, charges, fees, levies or other assessments, however designated,
(including, without limitation, income, profits, gains, windfall profits,
alternative, minimum, accumulated earnings, personal holding company, capital
stock, premium, estimated, excise, sales, use, license, occupancy, gross
receipts, franchise, ad valorem, severance, capital levy, production, transfer,
withholding, employment, unemployment compensation, payroll and property taxes,
social security, stamp, registration, documentation and environmental taxes,
import duties and other governmental charges and assessments), whether or not
measured in whole or in part by net income, and including deficiencies,
interest, additions to tax or interest, and penalties with respect thereto,
imposed by any federal, state, local or foreign government.
"Tax Returns" means all reports, estimates, information
returns, statements and other documents (including any related or supporting
information) filed or required to be filed with any Tax authority in connection
with the determination, assessment, collection, or administration of any Taxes.
"Trade Secrets" means any trade secrets, research records,
processes, procedures, manufacturing formulae, technical know-how, technology,
blue prints, designs, plans, inventions (whether patentable and whether reduced
to practice), invention disclosures and improvements thereto.
"Trademarks" means any foreign or United States trademarks,
service marks, trade dress, trade names, brand names, designs and logos,
slogans, corporate names, domain names, product or service identifiers, whether
registered or unregistered, and all registrations and applications for
registration thereof.
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"Transaction Documents" means, collectively, this Agreement,
the Certificate of Designations and the Registration Rights Agreement Amendment.
ARTICLE II
AUTHORIZATION AND SALE OF PREFERRED STOCK
2.1 Authorization. The Company has authorized the sale and
issuance of up to 1000 shares of its Series B Preferred having rights,
privileges and preferences as set forth in the Certificate of Designations.
2.2 Sale of Series B Preferred. Subject to the terms and
conditions hereof, the Company will issue and sell to the Purchaser, and the
Purchaser will purchase from the Company, at the Closing, 1000 shares of Series
B Preferred at a purchase price of $1000 per share, for the aggregate purchase
price of $1,000,000 (all of the shares of Series B Preferred being purchased
hereto are referred to as the "Shares").
ARTICLE III
CLOSING
3.1 Closing. The closing of the sale and purchase of the
Shares (the "Closing") shall take place at the offices of Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx at 10:00 a.m., local time, on the date hereof, or at such
other time, place and date that the parties may agree in writing (the "Closing
Date"). At the Closing, the Company will deliver to the Purchaser an executed
counterpart of this Agreement together with a certificate, registered in the
Purchaser's name, representing the number of Shares to be issued on the Closing
Date in accordance with Section 2.2 hereof, against delivery of an executed
counterpart of this Agreement, together with payment of the purchase price for
the Shares by wire transfer pursuant to the Company's written instructions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as
follows:
4.1 Corporate Existence and Power. The Company and each of its
Subsidiaries (a) are corporations duly organized, validly existing and in good
standing under the laws of the jurisdiction of their incorporation; (b) have all
requisite power and authority to own and operate their property, to lease the
property they operate as lessee and to conduct the businesses in which they are
currently, or are proposed to be, engaged; (c) are duly qualified as foreign
corporations, licensed and in good standing under the laws of each jurisdiction
in which their ownership, lease or operation of property or the conduct of their
respective businesses requires such qualification, except to the extent such
failure would not reasonably be expected to have a material adverse effect on
the Condition of the Company; and (d) have the corporate power and authority to
execute,
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deliver and perform their respective obligations under this Agreement and each
of the other Transaction Documents. No jurisdiction, other than those referred
to in clause (c) above, has claimed, in writing or otherwise, that the Company
or any of its Subsidiaries is required to qualify as a foreign corporation or
other entity therein. Neither the Company nor any of its Subsidiaries owns or
leases property or is required to file any Tax Returns in any jurisdiction other
than their respective jurisdictions of incorporation and the jurisdictions
referred to in clause (c) above.
4.2 Authorization; No Contravention. The execution, delivery
and performance by the Company of this Agreement and each of the other
Transaction Documents and the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Shares and the issuance of
shares of Common Stock upon conversion of the Shares) (a) have been duly
authorized by all necessary corporate action of the Company; (b) do not
contravene the terms of the Certificate of Incorporation or the By-laws of the
Company; (c) do not violate, conflict with or result in any breach, default or
contravention of (or with due notice or lapse of time or both would result in
any breach, default or contravention of), or the creation of any Lien under, any
Contractual Obligation of the Company or any Requirement of Law applicable to
the Company; and (d) do not violate any judgment, injunction, writ, award,
decree or order of any nature (collectively, "Orders") of any Governmental
Authority against, or binding upon, the Company, excluding from the foregoing
clauses (c) and (d) violations, conflicts, breaches, defaults, contraventions
and creation of Liens which, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the Condition of the
Company or on the ability of the Company to consummate the transactions
contemplated by this Agreement.
4.3 Governmental Authorization; Third Party Consents. Except
as set forth in Schedule 4.3, no approval, consent, compliance, exemption,
authorization or other action by, notice to, or filing with, any Governmental
Authority or any other Person, and no lapse of a waiting period under a
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance (including, without limitation, the sale, issuance and
delivery of the Shares) by, or enforcement against, the Company of this
Agreement and the other Transaction Documents or the transactions contemplated
hereby and thereby.
4.4 Binding Effect. This Agreement and each of the other
Transaction Documents have been duly executed and delivered by the Company, and
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity relating to
enforceability (regardless of whether considered in a proceeding at law or in
equity).
4.5 Litigation. Except as disclosed in the SEC Reports, there
are no actions, suits, proceedings, claims, complaints, disputes, arbitrations
or investigations (collectively, "Claims") pending or, to the Knowledge of the
Company, threatened, at
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law, in equity, in arbitration or before any Governmental Authority against the
Company or any of its Subsidiaries that, individually or in the aggregate, has
resulted or could reasonably be expected to result in a material adverse change
in the Condition of the Company. No Order has been issued by any court or other
Governmental Authority against the Company or any of its Subsidiaries purporting
to enjoin or restrain the execution, delivery or performance of this Agreement
or any of the other Transaction Documents.
4.6 Compliance with Laws.
(a) The Company and each of its Subsidiaries is in
compliance with all material Requirements of Law and all Orders issued by any
court or Governmental Authority against the Company or any of its Subsidiaries,
as the case may be, in all respects, except to the extent such failure to comply
would not reasonably be expected to have a material adverse effect on the
Condition of the Company. To the Company's Knowledge, there is no existing or
proposed Requirement of Law which could reasonably be expected to prohibit or
restrict the Company or any of its Subsidiaries from, or otherwise materially
adversely affect the Company or any of its Subsidiaries in, conducting its
business in any jurisdiction in which it now conducts or proposes to conduct its
business, except to the extent such prohibition or restriction would not
reasonably be expected to have a material adverse effect on the Condition of the
Company.
(b) The Company and each of its Subsidiaries (i) has all
material licenses, permits and approvals of any Governmental Authority
(collectively, "Permits") that are necessary for the conduct of the business of
the Company and each of its Subsidiaries; (ii) such Permits are in full force
and effect; and (iii) no violations are or have been recorded in respect of any
Permit, except as could not reasonably be expected to have a material adverse
effect on the Condition of the Company.
4.7 Capitalization.
(a) The authorized capital stock of the Company consists
of (i) seventy-five (75) million shares of Common Stock and (ii) two (2) million
shares of preferred stock. After giving effect to the transactions contemplated
by this Agreement, (i) 35,312,147 shares of Common Stock are issued and
outstanding, all of which were validly issued and are fully paid, nonassessable
and not subject to preemptive rights, (ii) 40,055 shares of Common Stock were
held in the treasury of the Company or by the Company's Subsidiaries, (iii)
9,954,982 shares of Common Stock are reserved for issuance upon exercise of
outstanding Company Stock Options, (iv) 1,356,852 shares of Series A Convertible
Preferred Stock, par value $.01 per share (the "Series A Preferred"), of the
Company are issued and outstanding, all of which were validly issued, and are
fully paid, nonassessable and not subject to preemptive rights, (v) 1,356,852
shares of Common Stock are reserved for issuance upon the conversion of the
Series A Preferred, (vi) 1,000 shares of Series B Preferred are issued and
outstanding, all of which were validly issued, and are fully paid, nonassessable
and not subject to preemptive rights, (vii) 1,190,000 shares of Common Stock are
reserved for issuance upon the conversion of the
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Shares and (viii) $5,500,000 of Convertible Notes Payable, which automatically
convert into 3,860,864 shares of Common Stock on the day shareholder approval is
obtained for the issuance of the shares to Midmark Capital. Except as set forth
above, as of the Closing Date, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding.
Except for agreements or arrangements in connection with options to purchase an
aggregate of 9,954,982 shares of Common Stock (the "Company Stock Options"),
there are no options, warrants, calls, conversion rights, stock appreciation
rights, redemption rights, repurchase rights or other rights, agreements,
arrangements or commitments of any character to which the Company is a party or
by which the Company is bound obligating the Company to issue or sell any shares
of capital stock of, other equity interests in, or securities exchangeable for
or convertible into capital stock or other equity interests in, the Company. The
Shares, when issued and sold to the Purchaser after payment therefor, and the
shares of Common Stock when issued upon conversion of the Series B Preferred,
will be duly authorized, validly issued, fully paid and non-assessable, will be
issued in compliance with the registration and qualification requirements of all
applicable federal, state and foreign securities laws and will be free and clear
of all other Liens. All of the issued and outstanding shares of Common Stock are
all duly authorized, validly issued, fully paid and non-assessable, and were
issued in compliance with the registration and qualification requirements of all
applicable federal, state and foreign securities laws.
(b) Schedule 4.7(b) sets forth, as of the Closing Date, a
true and complete list of (x) each of the Subsidiaries of the Company, (y) the
aggregate number of authorized shares of capital stock of such Subsidiary and
(z) the stockholders of such Subsidiary and, opposite the name of each
stockholder, the amount of all outstanding capital stock and Stock Equivalents
owned by such stockholder. The Company owns all of the issued and outstanding
capital stock of the Subsidiaries of the Company, free and clear of all Liens.
All of such shares of capital stock are duly authorized, validly issued, fully
paid and non-assessable, and were issued in compliance with the registration and
qualification requirements of all applicable federal, state and foreign
securities laws. Except as set forth on Schedule 4.7(b), there are no options,
warrants, conversion privileges, subscription or purchase rights or other rights
presently outstanding to purchase or otherwise acquire any authorized but
unissued, unauthorized or treasury shares of capital stock or other securities
of, or any proprietary interest in, any of the Company's Subsidiaries, and there
is no outstanding security of any kind convertible into or exchangeable for such
shares or proprietary interest. Except as set forth on Schedule 4.7(b), neither
the Company nor any of its Subsidiaries owns any interest, or has a right to
acquire any interest, in any Person that is not a Subsidiary.
(c) The Shares to be purchased by the Purchaser hereunder
represent, in the aggregate, on the Closing Date, 2.3% of the outstanding shares
of Common Stock on a fully diluted basis assuming the grant of all options that
may be granted under the Company Stock Options and the exercise thereof and the
conversion, exercise or exchange of any outstanding securities into shares of
Common Stock, including, without limitation, all of the Shares.
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4.8 No Default or Breach; Contractual Obligations. Except as
set forth on Schedule 4.8, the Company has not received notice of a default and
is not in default under, or with respect to, any Contractual Obligation nor does
any condition exist that with notice or lapse of time or both would constitute a
default thereunder. All Contractual Obligations of the Company are valid and
legally binding obligations of the parties thereto, enforceable in accordance
with their terms, and are subsisting, in full force and effect and binding upon
the Company and the other parties thereto, and the Company has paid in full or
accrued all amounts due thereunder and has satisfied in full or provided for all
of its liabilities and obligations thereunder. To the Knowledge of the Company,
no other party to any such Contractual Obligation is in violation of or in
default thereunder, nor does any condition exist that with notice or lapse of
time or both would constitute a default by such other party thereunder.
4.9 SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports, schedules, statements and other documents (including
all exhibits, annexes, supplements and amendments to such documents) required to
be filed by it under the Exchange Act and the Securities Act since January 1,
1998 (the "SEC Reports"). The SEC Reports, including any financial statements or
schedules included or incorporated therein by reference, at the time they were
filed, (i) complied in all material respects with the requirements of the
Exchange Act or the Securities Act or both, as the case may be, applicable to
those SEC Reports and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated or necessary in
order to make the statements made in those SEC Reports, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the SEC Reports (including the related notes and
schedules) fairly presented, in all material respects, the consolidated
financial position of the Company as of the dates set forth in those
consolidated balance sheets. Each of the consolidated statements of income and
of cash flows included in or incorporated by reference into the SEC Reports
(including any related notes and schedules) fairly presented, in all material
respects, the consolidated results of operations and cash flows, as the case may
be, of the Company and the consolidated Subsidiaries of the Company for the
periods set forth in those consolidated statements of income and of cash flows
(subject, in the case of unaudited quarterly statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect), in
each case in conformity with GAAP (except, in the case of unaudited quarterly
statements, as permitted by Form 10-Q of the Commission) consistently applied
throughout the periods indicated. All of such balance sheets and statements
complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto.
(c) Except as and to the extent set forth on the
consolidated balance sheet of the Company and the consolidated Subsidiaries of
the Company as of June 30, 2001, including the related notes, neither the
Company nor any Subsidiary of the Company has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet or in
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the related notes prepared in accordance with GAAP, except for liabilities or
obligations that, individually or in the aggregate, could not reasonably be
expected to result in a material adverse change in the Condition of the Company.
4.10 Taxes. To the best Knowledge of the Company (a) the
Company has paid or reserved for all Taxes shown on its Tax Returns that have
come due and are required to be paid by it on and through the date hereof, other
than Taxes being disputed by the Company in good faith for which adequate
reserves have been made in accordance with GAAP and which are shown on the
financial statements of the Company; (b) except for certain state or foreign
filings which have not been timely filed but for which there will be no material
impact, either individually or in the aggregate, on the Condition of the
Company, the Company has timely filed or caused to be filed all Tax Returns that
it is required to file on and through the date hereof (including all applicable
extensions), and all such Tax Returns are accurate and complete in all material
respects; (c) with respect to all Tax Returns of the Company, (i) there is no
unassessed Tax deficiency proposed or threatened against the Company that is
material in amount and has not been reserved for and (ii) no audit or other
administrative or judicial proceeding is in progress with respect to any Tax
Returns, no extension of time is in force with respect to any date on which any
Tax Return was or is to be filed and no waiver or agreement is in force for the
extension of time for the assessment or payment of any Tax; and (d) there are no
Liens for Taxes on the assets of the Company. For federal income tax purposes,
the Company is an association taxable as a corporation. The Company is not a
"collapsible corporation" within the meaning of Section 341(b) of the Code.
4.11 No Material Adverse Change; Ordinary Course of Business.
Except as publicly disclosed prior to the date hereof, since June 30, 2001, (a)
there has not been any material adverse change, nor any event or development
which could reasonably be expected to result in a material adverse change on the
Condition of the Company, (b) the Company has not participated in any
transaction material to the Condition of the Company or otherwise acted outside
the ordinary course of business, including, without limitation, declaring or
paying any dividend or declaring or making any distribution to its stockholders
except out of the earnings of the Company, (c) the Company has not increased the
compensation of any of its officers or the rate of pay of any of its employees,
except as part of regular compensation increases in the ordinary course of
business, (d) the Company has not created or assumed any Lien on a material
asset of the Company, (e) the Company has not entered into any Contractual
Obligation, other than in the ordinary course of business and (f) there has not
occurred a material change in the Company's accounting principles or practice
except as required by reason of a change in GAAP.
4.12 Private Offering. No form of general solicitation or
general advertising was used by the Company or its representatives in connection
with the offer or sale of the Shares. No registration of the Shares, pursuant to
the provisions of the Securities Act or any state securities or "blue sky" laws,
will be required by the offer, sale or issuance of the Shares. The Company
agrees that neither it, nor anyone acting on its behalf, shall offer to sell the
Shares or any other securities of the Company so as to require the registration
of the Shares pursuant to the provisions of the Securities Act or
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any state securities or "blue sky" laws, unless such Shares or other securities
are so registered.
4.13 Labor Relations. (a) The Company is not engaged in any
unfair labor practice; (b) there is (i) no grievance or arbitration proceeding
arising out of or under collective bargaining agreements pending or, to the
Knowledge of the Company, threatened against the Company, and (ii) no strike,
labor dispute, slowdown or stoppage pending or, to the Knowledge of the Company,
threatened against the Company; (c) the Company is not a party to any collective
bargaining agreement or contract; (d) there is no union representation question
existing with respect to the employees of the Company; and (e) no union
organizing activities are taking place. To the Knowledge of the Company, no
officer or key employee, or any group of key employees, intends to terminate
their employment with the Company. The Company has not discussed or taken any
steps to terminate the employment of any officer, key employee or group of key
employees. To the knowledge of the Company, each of the Company's officers and
key employees spends all, or substantially all, of his business time on the
Company's business. None of the Company's employees is resident in the United
States in violation of any Requirement of Law.
4.14 Employee Benefit Plans. Except as would not have a
material adverse effect on the Company, each Company Plan (and related trust,
insurance contract or fund) has been established and administered in accordance
with its terms, and complies in form and in operation with the applicable
requirements of ERISA and the Code and other applicable Requirements of Law.
Except as would not have a material adverse effect on the Company, all
contributions (including all employer contributions and employee salary
reduction contributions) which are due have been paid to each Company Plan. Each
Company Plan that is intended to be qualified under Section 401(a) of the Code
is so qualified and has been so qualified during the period since its adoption;
each trust created under any such Company Plan is exempt from tax under Section
501(a) of the Code and has been so exempt since its creation.
4.15 Title to Assets. The Company owns and has good, valid,
and marketable title to all of its properties and assets used in its business
and reflected as owned in the SEC Reports or in any financial statements or
schedules included or incorporated by reference therein or so described in any
Schedule hereto, in each case free and clear of all Liens.
4.16 Liabilities. The Company does not have any direct or
indirect obligation or liability ("Liabilities") other than (a) Liabilities
fully and adequately reflected or reserved against on any financial statements
or schedules included or incorporated by reference into the SEC Reports and (b)
Liabilities incurred since June 30, 2001 in the ordinary course of business. The
Company has no Knowledge of any circumstance, condition, event or arrangement
that could reasonably be expected to give rise hereafter to any Liabilities of
the Company except in the ordinary course of business.
12
4.17 Intellectual Property.
(a) (i) The Company and each Subsidiary of the Company is
the owner of all, or has the license or right to use, sell and license all of,
the material Copyrights, Patents, Trade Secrets, Trademarks, Internet Assets,
Software and other proprietary rights (collectively, "Company Intellectual
Property") that are necessary for its business as presently conducted or
contemplated in its business plan, free and clear of all Liens.
(ii) None of the Company Intellectual Property is
subject to any outstanding Order, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand is pending or, to the
Knowledge of the Company, threatened, which challenges the validity,
enforceability, use or ownership of the item.
(iii) The Company and each Subsidiary of the Company
have substantially performed all obligations imposed upon it under all
Intellectual Property licenses, sublicenses, distributor agreements and other
agreements under which the Company or any of its Subsidiaries is either a
licensor, licensee or distributor, and is not, nor to the Knowledge of the
Company is any other party thereto, in breach of or default thereunder in any
respect, nor is there any event which with notice or lapse of time or both would
constitute a default thereunder except as could not be expected to have a
material adverse effect on the Condition of the Company. All of the material
Intellectual Property licenses are valid, enforceable and in full force and
effect in all material respects, and will continue to be so on identical terms
immediately following the Closing except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity relating to enforceability
(regardless of whether considered in a proceeding at law or in equity).
(iv) None of the Intellectual Property currently sold
or licensed by the Company or any of its Subsidiaries to any Person or used by
or licensed to the Company by any Person infringes upon or otherwise violates in
any material respect any Intellectual Property rights of others.
(v) No litigation is pending and no Claim has been
made against the Company or any of its Subsidiaries or, to the Knowledge of the
Company, is threatened, contesting the right of the Company or any of its
Subsidiaries to sell or license to any Person or use the Intellectual Property
presently sold or licensed to such Person or used by the Company or any of its
Subsidiaries.
(b) To the Knowledge of the Company, no Person is
infringing upon or otherwise violating the Intellectual Property rights of the
Company or any of its Subsidiaries.
4.18 Insurance. The Company maintains insurance policies
covering all risks associated with the Company's business that are customarily
insured against in the Company's industry in such amounts as are customary in
such industry. Such policies
13
and binders are valid and enforceable in accordance with their terms and are in
full force and effect. None of such policies will be affected by, or terminate
or lapse by reason of, any transaction contemplated by this Agreement or any of
the other Transaction Documents.
4.19 Environmental Matters. The Company is in compliance with
all applicable Environmental Laws. There is no civil, criminal or administrative
judgment, action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter pending or, to the Knowledge
of the Company, threatened against the Company pursuant to Environmental Laws;
and, to the Knowledge of the Company, there are no past or present events,
conditions, circumstances, activities, practices, incidents, agreements, actions
or plans which could reasonably be expected to prevent compliance with, or which
have given rise to or will give rise to liability under, Environmental Laws.
4.20 Broker's, Finder's or Similar Fees. There are no
brokerage commissions, finder's fees or similar fees or commissions payable in
connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Company or any action taken by the
Company.
4.21 New Jersey Business Combination. The Board of Directors
has taken all necessary actions to exempt (i) the transactions contemplated by
this Agreement and (ii) any future "business combination" (as such term is
defined in Section 14A:10A-3 of the New Jersey Business Corporation Act (the
"Corporation Law")) between the Purchaser and/or any of its "affiliates" (as
such term is defined in Section 14A:10A-3 of the Corporation Law) and the
Company from the New Jersey Shareholders Protection Act (Sections 14A:10A-1 to
14A:10A-9 of the Corporation Law). Other than the New Jersey Shareholders
Protection Act, no other state takeover or similar statute or regulation applies
or purports to apply to the transactions contemplated by this Agreement or any
future "business combination" (as such term is defined in Section 14A:10A-3 of
the Corporation Law) between the Purchaser and/or any of its "affiliates" (as
such term is defined in Section 14A:10A-3 of the Corporation Law) and the
Company.
4.22 Plus Purchase Agreement. Exhibit C hereto contains a
true, complete and correct copy of the Plus Purchase Agreement, which has not
been amended or modified in any way and is in full force and effect.
4.23 Plus Representations and Warranties. Each of the
representations and warranties contained in the Plus Purchase Agreement made by
the Company is true and correct. To the Knowledge of the Company, each of the
representations and warranties contained in the Plus Purchase Agreement made by
the other parties thereto is true and correct.
14
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as
follows:
5.1 Existence and Power. The Purchaser (a) is a corporation
duly organized and validly existing under the laws of the jurisdiction of its
formation and (b) has the requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement and each of the other
Transaction Documents to which it is a party.
5.2 Authorization; No Contravention. The execution, delivery
and performance by the Purchaser of this Agreement and each of the other
Transaction Documents to which it is a party and the transactions contemplated
hereby and thereby, (a) have been duly authorized by all necessary corporate
action, (b) do not contravene the terms of the Purchaser's organizational
documents, or any amendment thereof, (c) do not violate, conflict with or result
in any breach or contravention of, or the creation of any Lien under, any
Contractual Obligation of the Purchaser or any Requirement of Law applicable to
the Purchaser and (d) do not violate any Orders of any Governmental Authority
against, or binding upon, the Purchaser, excluding from the foregoing clauses
(c) and (d) violations, conflicts, breaches, defaults, contraventions and
creation of Liens that, individually or in the aggregate, could not reasonably
be expected to have a material adverse effect on the Condition of the Purchaser
or on the ability of the Purchaser to consummate the transactions contemplated
by this Agreement.
5.3 Governmental Authorization; Third Party Consents. No
approval, consent, compliance, exemption, authorization or other action by, or
notice to, or filing with, any Governmental Authority or any other Person, and
no lapse of a waiting period under any Requirement of Law, is necessary or
required in connection with the execution, delivery or performance (including,
without limitation, the purchase of the Shares) by, or enforcement against, the
Purchaser of this Agreement and each of the other Transaction Documents to which
it is a party or the transactions contemplated hereby and thereby.
5.4 Binding Effect. This Agreement and each of the other
Transaction Documents to which it is a party have been duly executed and
delivered by the Purchaser and constitute the legal, valid and binding
obligations of the Purchaser, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
5.5 Purchase for Own Account. The Shares to be acquired by the
Purchaser pursuant to this Agreement are being or will be acquired for its own
account and with no intention of distributing or reselling such Shares or any
part thereof in any
15
transaction that would be in violation of the securities laws of the United
States of America, or any state, without prejudice, however, to the rights of
the Purchaser at all times to sell or otherwise dispose of all or any part of
such Shares under an effective registration statement under the Securities Act,
or under an exemption from such registration available under the Securities Act,
and subject, nevertheless, to the disposition of the Purchaser's property being
at all times within its control. If the Purchaser should in the future decide to
dispose of any of such Shares, the Purchaser understands and agrees that it may
do so only in compliance with the Securities Act and applicable state securities
laws, as then in effect. The Purchaser agrees to the imprinting, so long as
required by law, of a legend on certificates representing all of the Shares to
the following effect:
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR THE SECURITIES LAWS OF ANY
STATE. THE SECURITIES MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
5.6 Restricted Securities. The Purchaser understands that the
Shares will not be registered at the time of their issuance under the Securities
Act for the reason that the sale provided for in this Agreement is exempt
pursuant to Section 4(2) of the Securities Act and that the reliance of the
Company on such exemption is predicated in part on the Purchaser's
representations set forth herein. In the event that the Purchaser desires to
transfer the Shares to a third party at any time that the foregoing legend is
required, the Purchaser shall provide the Company, prior to such transfer, with
reasonable assurances that such transfer can be made in a manner that would not
violate the Securities Act.
5.7 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the
Purchaser in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Purchaser or any action taken
by the Purchaser.
16
ARTICLE VI
CONDITIONS TO THE OBLIGATION
OF THE PURCHASER TO CLOSE
The obligation of the Purchaser to purchase the Shares, to pay
the purchase price therefor at the Closing and to perform any obligations
hereunder shall be subject to the satisfaction or waiver by the Purchaser of the
following conditions on or before the Closing Date.
6.1 Representations and Warranties. The representations and
warranties of the Company contained in Article IV hereof shall be true and
correct in all material respects (except for any such representations and
warranties which are qualified by their terms by a reference to materiality or
material adverse effect, which representations as so qualified shall be true and
correct in all respects) at and on the Closing Date as if made at and on such
date.
6.2 Compliance with this Agreement. The Company shall have
performed and complied in all material respects with all of its agreements set
forth herein that are required to be performed by the Company on or before the
Closing Date.
6.3 Officer's Certificate. The Purchaser shall have received a
certificate from the Company, in form and substance reasonably satisfactory to
the Purchaser, dated the Closing Date, and signed by the Chief Executive Officer
and Chief Financial Officer of the Company certifying as to the matters set
forth in Sections 6.1 and 6.2.
6.4 Secretary's Certificate. The Purchaser shall have received
a certificate from Company, in form and substance reasonably satisfactory to the
Purchaser, dated the Closing Date and signed by the Secretary or an Assistant
Secretary of the Company certifying (a) that the Company is in good standing
with the Secretary of State of the State of New Jersey, (b) that the attached
copies of the Certificate of Incorporation, the By-laws, and resolutions of the
Board of Directors approving this Agreement and each of the other Transaction
Documents and the transactions contemplated hereby and thereby, are all true,
complete and correct and remain unamended and in full force and effect and (c)
as to the incumbency and specimen signature of each officer of the Company
executing this Agreement, each other Transaction Document and any other document
delivered in connection herewith on behalf of the Company.
6.5 Filing of Certificate of Designations. The Certificate of
Designations shall have been duly filed by the Company with the Secretary of
State of the State of New Jersey in accordance with the General Corporation Law
of the State of New Jersey, and the Company shall have received evidence of such
filing in form and substance reasonably satisfactory to the Purchaser.
17
6.6 Delivery of Shares. The Company shall have delivered to
the Purchaser certificates in definitive form representing the Shares.
6.7 Transaction Documents. The Company shall have duly
executed and delivered the other Transaction Documents to which it is a party.
6.8 Opinion of Counsel. The Purchaser shall have received an
opinion of Xxxxxxx X. Xxxxx, dated the Closing Date, relating to the
transactions contemplated by or referred to herein, substantially in the form
attached hereto as Exhibit D.
6.9 Consents and Approvals. All consents, exemptions,
authorizations, or other actions by, or notice to, or filings with, Governmental
Authorities and other Persons in respect of all Requirements of Law and with
respect to those Contractual Obligations of the Company that are necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, the Company of this Agreement and each of the other
Transaction Documents shall have been obtained and be in full force and effect,
and the Purchaser shall have been furnished with appropriate evidence thereof
and all applicable waiting periods shall have expired without any action being
taken or threatened which would have a material adverse effect on the Condition
of the Company.
6.10 Board Representation. Simultaneous with the Closing
hereunder, Xxxxxxx Xxxxxxx shall have been elected to the Board of Directors to
serve until the next succeeding annual meeting of stockholders of the Company
after the date hereof.
ARTICLE VII
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE
The obligation of the Company to issue and sell the Shares and
the obligation of the Company to perform its other obligations hereunder shall
be subject to the satisfaction or waiver by the Company of the following
conditions on or before the Closing Date:
7.1 Representations and Warranties. The representations and
warranties of the Purchaser contained in Article V hereof shall be true and
correct in all material respects (except for any such representations and
warranties which are qualified by their terms by a reference to materiality or
material adverse effect, which representations as so qualified shall be true and
correct in all respects) at and on the Closing Date as if made at and on such
date.
7.2 Compliance with this Agreement. The Purchaser shall have
performed and complied in all material respects with all of its agreements set
forth herein that are required to be performed by the Purchaser on or before the
Closing Date.
7.3 Payment of Purchase Price. The Purchaser shall be prepared
to pay the aggregate purchase price for the Shares set forth in Section 2.2
hereof.
18
7.4 Transaction Documents. The Purchaser shall have duly
executed and delivered the other Transaction Documents to which it is a party.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. Except as otherwise provided in this
Article VIII, the Company (the "Indemnifying Party") agrees to indemnify, defend
and hold harmless the Purchaser and its Affiliates and their respective
officers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (each, an "Indemnified Party") to the fullest extent
permitted by law from and against any and all losses, Claims, or written threats
thereof (including, without limitation, any Claim by a third party), damages,
expenses (including reasonable fees, disbursements and other charges of counsel
incurred by the Indemnified Party in any action between the Indemnifying Party
and the Indemnified Party or between the Indemnified Party and any third party
or otherwise) or other liabilities (collectively, "Losses") resulting from or
arising out of any breach of any representation or warranty, covenant or
agreement by the Company in this Agreement or the other Transaction Documents.
The amount of any payment to any Indemnified Party herewith in respect of any
Loss shall be of sufficient amount to make such Indemnified Party whole for any
diminution in value of the Shares. In connection with the obligation of the
Indemnifying Party to indemnify for expenses as set forth above, the
Indemnifying Party shall, upon presentation of appropriate invoices containing
reasonable detail, reimburse each Indemnified Party for all such expenses
(including reasonable fees, disbursements and other charges of counsel incurred
by the Indemnified Party in any action between the Indemnifying Party and the
Indemnified Party or between the Indemnified Party and any third party) as they
are incurred by such Indemnified Party; provided, however, that if an
Indemnified Party is reimbursed under this Article VIII for any expenses, such
reimbursement of expenses shall be refunded to the extent it is finally
judicially determined that the Losses in question resulted primarily from the
willful misconduct or gross negligence of such Indemnified Party.
8.2 Notification. Each Indemnified Party under this Article
VIII shall, promptly after the receipt of notice of the commencement of any
Claim against such Indemnified Party in respect of which indemnity may be sought
from the Indemnifying Party under this Article VIII, notify the Indemnifying
Party in writing of the commencement thereof. The omission of any Indemnified
Party to so notify the Indemnifying Party of any such action shall not relieve
the Indemnifying Party from any liability which it may have to such Indemnified
Party (a) other than pursuant to this Article VIII or (b) under this Article
VIII unless, and only to the extent that, such omission results in the
Indemnifying Party's forfeiture of substantive rights or defenses. In case any
such Claim shall be brought against any Indemnified Party, and it shall notify
the Indemnifying Party of the commencement thereof, the Indemnifying Party shall
be entitled to assume the defense thereof at its own expense by so notifying the
Indemnified Party within twenty (20) Business Days of receipt of the notice of
the commencement of any Claim, with counsel satisfactory to such Indemnified
Party in its reasonable judgment; provided, however, that any Indemnified Party
may, at its own expense, retain
19
separate counsel to participate in such defense at its own expense. If the
Indemnifying Party does not provide notice to the Indemnified Party of its
assumption of the defense of a Claim within twenty (20) Business Days of notice
of the commencement of a Claim, the Indemnified Party shall have the right to
employ counsel in connection with the defense of such Claim; provided, that the
Indemnifying Party shall not be liable for the fees and expenses of more than
one counsel to all Indemnified Parties; provided, further, that in the event the
Indemnified Party has hired counsel in connection with the defense of a Claim
after the Indemnifying Party has failed to deliver notice in the manner
described above, the Indemnifying Party may, at any time thereafter, assume the
defense of a Claim (and terminate any liability for the Indemnified Party's
counsel, except for the payment of such counsel's fees and expenses incurred
prior to such assumption) by providing notice to the Indemnified Party.
Notwithstanding the foregoing, in any Claim in which both the Indemnifying
Party, on the one hand, and an Indemnified Party, on the other hand, are, or are
reasonably likely to become, a party, such Indemnified Party shall have the
right to employ separate counsel and to control its own defense of such Claim
if, in the reasonable opinion of counsel to such Indemnified Party, either (x)
one or more defenses are available to the Indemnified Party that are not
available to the Indemnifying Party or (y) a conflict or potential conflict
exists between the Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, that would make such separate representation
advisable; provided, however, that the Indemnifying Party (i) shall not be
liable for the fees and expenses of more than one counsel to all Indemnified
Parties and (ii) shall reimburse the Indemnified Parties for all of such fees
and expenses of such counsel incurred in any action between the Indemnifying
Party and the Indemnified Parties or between the Indemnified Parties and any
third party, as such expenses are incurred. The Indemnifying Party agrees that
it will not, without the prior written consent of the Purchaser, settle,
compromise or consent to the entry of any judgment in any pending or threatened
Claim relating to the matters contemplated hereby (if any Indemnified Party is a
party thereto or has been actually threatened to be made a party thereto) unless
such settlement, compromise or consent (i) includes an unconditional release of
each Indemnified Party from all liability arising or that may arise out of such
Claim and (ii) does not require any action other than the payment of money. The
Indemnifying Party shall not be liable for any settlement of any Claim effected
against an Indemnified Party without its written consent, which consent shall
not be unreasonably withheld. The rights accorded to an Indemnified Party
hereunder shall be in addition to any rights that any Indemnified Party may have
at common law, by separate agreement or otherwise; provided, however, that
notwithstanding the foregoing or anything to the contrary contained in this
Agreement, nothing in this Article VIII shall restrict or limit any rights that
any Indemnified Party may have to seek equitable relief.
8.3 Contribution. If the indemnification provided for in this
Article VIII from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any Losses referred to herein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Losses in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions which
resulted in such Losses, as well as any other relevant equitable considerations.
The relative faults of such Indemnifying Party and Indemnified Party
20
shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been made by, or
relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable by a
party as a result of the Losses referred to above shall be deemed to include,
subject to the limitations set forth in Sections 8.1 and 8.2, any legal or other
fees, charges or expenses reasonably incurred by such party in connection with
any investigation or proceeding.
ARTICLE IX
COVENANTS OF THE PARTIES
9.1 Preservation of Existence. The Company shall:
(a) preserve and maintain in full force and effect its
existence and good standing under the laws of its jurisdiction of formation or
organization;
(b) preserve and maintain in full force and effect all
material rights, privileges, qualifications, applications, licenses and
franchises necessary in the normal conduct of its business;
(c) use its reasonable best efforts to preserve its
business organization;
(d) conduct its business in the ordinary course in
accordance with sound business practices, keep its properties in good working
order and condition (normal wear and tear excepted), and from time to time make
all needed repairs to, renewals of or replacements of its properties so that the
efficiency of its business operation shall be reasonably maintained and
preserved;
(e) comply with all Requirements of Law and with the
directions of any Governmental Authority having jurisdiction over the Company or
its business or property; and
(f) file or cause to be filed in a timely manner all
reports, applications, estimates and licenses that shall be required by a
Governmental Authority.
9.2 Reservation of Common Stock. The Company shall at all
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issue or delivery upon conversion of the Shares, as
provided in the Certificate of Designations, the maximum number of shares of
Common Stock that may be issuable or deliverable upon such conversion. Such
shares of Common Stock are duly authorized and, when issued or delivered in
accordance with the Certificate of Designations, shall be validly issued, fully
paid and non-assessable. The Company shall issue such shares of Common Stock, in
accordance with the terms of the Certificate of Designations, and otherwise
comply with the terms hereof and thereof.
21
9.3 Publicity. Except as may be required by any applicable
law, none of the parties hereto shall issue a publicity release or public
announcement or otherwise make any disclosure concerning this Agreement or the
transactions contemplated hereby, without prior approval by the other parties
hereto (which approval shall not be unreasonably withheld). If any announcement
is required by law to be made by any party hereto, prior to making such
announcement such party will deliver a draft of such announcement to the other
parties and shall give the other parties an opportunity to comment thereon.
9.4 Shelf Registration. On or before December 31, 2001, the
Company shall (i) comply with Section 1.(a) of the Registration Rights
Agreement, dated as of February 7, 2001, as amended on the Closing Date, between
the Company and the Purchaser and (ii) provide evidence reasonably satisfactory
to the Purchaser of such compliance.
9.5 Issuance of Series B Preferred. The Company shall not
issue any shares of Series B Preferred except as provided in this Agreement.
ARTICLE X
MISCELLANEOUS
10.1 Survival of Representations and Warranties. The
representations and warranties made herein shall survive the execution and
delivery of this Agreement (i) until the third anniversary of the Closing Date,
with respect to Section 4.14, and (ii) until the second anniversary of the
Closing Date in the case of all other representations and warranties.
10.2 Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
telecopier, courier service or personal delivery:
(i) if to the Company:
Vertex Interactive, Inc.
00 Xxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telecopy: 000-000-0000
Attention: Chief Financial Officer
with a copy to:
Law Offices of Xxxxxxx X. Xxxxx PC
000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
22
(ii) if to the Purchaser:
Pitney Xxxxx Inc.
0 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Telecopy: 000-000-0000
Attention: Xxxxx Xxxxx, Vice President and
Chief Financial Officer
with a copy to:
Pitney Xxxxx Inc.
0 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Vice President and General
Counsel
and
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
All such notices, demands and other communications shall be
deemed to have been duly given when delivered by hand, if personally delivered;
when delivered by courier, if delivered by commercial courier service; and when
receipt is mechanically acknowledged, if telecopied. Any party may by notice
given in accordance with this Section 10.2 designate another address or Person
for receipt of notices hereunder.
10.3 Successors and Assigns; Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto. The Purchaser may not assign any of its
rights or obligations under this Agreement or the other Transaction Documents
without the written consent of the Company except that the Purchaser may by
notice to the Company assign such rights to any of its Affiliates, provided that
any such Affiliate agrees in writing to be bound by all of the terms, conditions
and provisions thereof. The Company may not assign any of its rights under this
Agreement without the written consent of the Purchaser. Except as provided in
Article VIII, no Person other than the parties hereto and their successors and
permitted assigns is intended to be a beneficiary of this Agreement.
10.4 Amendment and Waiver.
(a) No failure or delay on the part of the Company or the
Purchaser in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy
23
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy.
(b) Any amendment, supplement or modification of or to
any provision of this Agreement, any waiver of any provision of this Agreement,
and any consent to any departure by the Company or the Purchaser from the terms
of any provision of this Agreement, shall be effective (i) only if it is made or
given in writing and signed by the Company and the Purchaser and (ii) only in
the specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Agreement, no notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances.
10.5 Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
10.6 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
10.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
10.8 Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.
10.9 Rules of Construction. Unless the context otherwise
requires, references to sections or subsections refer to sections or subsections
of this Agreement.
10.10 Entire Agreement. This Agreement, together with the
exhibits and schedules hereto, and the other Transaction Documents are intended
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, representations, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement, together with the exhibits and schedules hereto, and the other
Transaction Documents supersede all prior agreements and understandings between
the parties with respect to such subject matter.
24
10.11 Expenses. Except as otherwise provided in this
Agreement, each party will pay its own costs and expenses incurred in connection
with the negotiation, execution and closing of this Agreement and the
transactions contemplated hereby.
10.12 Further Assurances. Each of the parties shall execute
such documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
25
IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Agreement on the date first written above.
PITNEY XXXXX INC.
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: Executive Vice President &
Chief Financial Officer
VERTEX INTERACTIVE, INC.
By: /s/ Xxxxxxxx X. Xxxx
----------------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Chief Executive Officer
xxvi
PB schedule 4.3
Schedule 4.3
None.
Section 4.7b
Subsidiaries
Issued
Authorized and
Jurisdiction Capital Outstanding Shares
Name of Subsidiary Of Incorporation Stock Shares Owned Ownership %
----------------
Vertex Interactive, Inc.
Data Control Systems, Inc. (DCS) New York, USA 100%
Communication Services International
(Division as of 6/1/01)(CSI) Nevada, USA 100%
Positive Developments, Inc. (PDI) California, USA 100%
Renaissance Software, Inc.(RSI) Delaware, USA 100%
Applied Tactical Systems
(Division as of 12/29/00) (ATS) New Jersey, 100%
USA
Auto ID Systems (Division as of 6/1/01) Florida, USA 100%
Vertex Interactive (UK) Ltd. United Kingdom 300,000 200 100%
Vertex Interactive Ireland Ltd Ireland 5,000,000 2 100%
Vertex Interactive (Mfg) Ltd Ireland 5,000,000 5,200 100%
Vertex Support and Maintenance
France (VSM France) France 100%
Vertex Support & Maintenance (UK) Ltd.
(VSM - UK) United Kingdom 100,000 100%
Trend Investments Ltd Ireland 500,000 100%
VTX GmbH Germany 100%
ICS International AG Identicode-Systems 100%
(ICS-Germany) Germany
ICS France Identcode-Systems 100%
SA (ICS-France) France 500,000 FF
Identicode Systems Italia SRL (ICS-Italy) Italy 100,000,000 51%
LIT
Identicode Systems Nederland BV (ICS Netherlands 400,000 100%
Netherlands or Benelux) HFL
ICS Identifikacni systemy a.s. Czech Republic 1,000,000 43%
KCS
Vertex Interactive Italia SRL Italy 100%
Vertex Support and Maintenance Italy 100%
Italia (VSM Italia)
Binas Beheer BV Netherlands 100%
Euronet Consulting Srl Italy 100%
Dynasys SA France 100%
Adapta Solutions Inc New York, USA 100%
PB Schedule 4.8
Schedule 4.8
Contracts for which the Company is currently not in compliance or in default:
1) Renaissance Promissory Note Holders--In connection with the purchase of
Renaissance Software Inc. the Company assumed approximately $1.5 million
in promissory notes payable, which were originally due on June 30, 2001.
The due date for approximately $1.25 million of the balance was extended
to September 30, 2001. The Company has verbally agreed with the note
holders to accept stock in lieu of cash.
2) Genicom acquisition--In connection with the purchase of several
divisions of Genicom International in October 2000, the Company agreed
to pay the shareholders of Genicom a deferred payment of $500,000 in
September 2001. Such payment was secured by shares in the Company, which
are being held in escrow. This cash payment has not been made and the
Company has verbally agreed with the shareholders to accept the escrowed
stock in lieu of cash.
3) ICS acquisition--The Company has a note payable, with a remaining
balance of approximately $500,000 plus interest, to the former owner of
ICS. This note is currently due and payable and the Company is currently
negotiating for the note holder to accept stock in lieu of cash.
4) Registration Rights--As a result of the Company's inability to use Form
S-3 to register shares, there are a number of shareholders that have
shareholder registration rights, under private placement transactions
and merger and acquisition transaction, that are currently past due. The
Company has begun the process of filing a Form S-1 to register all such
shares.
AMENDMENT TO THE REGISTRATION RIGHTS AGREEMENT
AMENDMENT, dated as of October 18, 2001 (the "Amendment"), to
the Registration Rights Agreement (the "Agreement"), dated as of February 7,
2001, by and between Vertex Interactive, Inc., a New Jersey corporation (the
"Company"), and Pitney Xxxxx Inc., a Delaware corporation ("PB")
WHEREAS, this Amendment is made in connection with the Stock
Purchase Agreement, dated as of October 18, 2001 (the "Stock Purchase
Agreement"), between the Company and PB, pursuant to which the Company has
agreed to issue and sell to PB shares of Series B Convertible Preferred Stock,
par value $.01 per share (the "Series B Preferred"), of the Company;
WHEREAS, on or prior to the date hereof, the Company shall
have filed a Certificate of Designations with respect to the Series B Preferred
fixing the terms of the Series B Preferred and the number of shares constituting
such series;
WHEREAS, in order to induce PB to purchase shares of Series B
Preferred pursuant to the Stock Purchase Agreement, the parties hereto wish to
amend the Agreement to provide for the grant of registration rights with respect
to the Series B Preferred; and
WHEREAS, all terms used and not defined herein shall have the
meaning ascribed to such terms in the Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth herein and in the Agreement, the adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
2
1. Amendment to Section 1.(a).
(a) In the first sentence in Section 1.(a) of the Agreement (Filing of
Registration Statement) the phrase "within 180 days after the date hereof" shall
be deleted, and the phrase "prior to December 31, 2001" shall be inserted in
replacement thereof.
(b) The second sentence in Section 1.(a) of the Agreement (Filing of
Registration Statement) shall now provide as follows:
"For purposes of this Agreement, "Registrable Stock" means each of the
following: (a) any and all shares of Common Stock issued or issuable upon
conversion of shares of Preferred Stock and shares of Series B Convertible
Preferred Stock, par value $.01 per share, of the Company and (b) any shares of
Common Stock issued or issuable to a Designated Holder with respect to the
Registrable Stock by way of stock dividend or stock split or in connection with
the combination of shares, recapitalization, merger, consolidation or other
reorganization."
2. Ratification of the Agreement.
Except as otherwise expressly provided herein, all of the terms and
conditions of the Agreement are hereby ratified and shall remain unchanged and
the Agreement shall continue in full force and effect in accordance with its
terms.
3
IN WITNESS WHEREOF, this amendment to the Agreement has been
executed and delivered as of the date first above written.
VERTEX INTERACTIVE, INC.
By: /s/ Xxxxxxxx Xxxx
---------------------------------------
Name: Xxxxxxxx Xxxx
Title: Chief Executive Officer
PITNEY XXXXX INC.
By: /s/ Xxxxx Xxxxx
----------------------------------------------
Name: Xxxxx Xxxxx
Title: Executive Vice President and Chief
Financial Officer
