Exhibit 2(c)
MANAGEMENT AGREEMENT
dated as of
February 11, 2000
NewCheck Corporation
d/b/a Productivity Solutions, Inc.
TABLE OF CONTENTS Page
ARTICLE I APPOINTMENT OF MANAGER 1
1.1 Appointment of Manager 1
1.2 Duties of Manager 2
1.3 Standard of Care 3
ARTICLE II REPORTS TO BOARD OF DIRECTORS;
BUSINESS PLAN 3
2.1 Board Oversight 3
2.2 Business Plan 3
ARTICLE III TERM 4
3.1 Term of Agreement 4
3.2 Early Termination 4
ARTICLE IV COMPENSATION 5
4.1 Warrants 5
4.2 Reimbursement of Expenses 5
ARTICLE V REPRESENTATIONS AND WARRANTIES OF
THE COMPANY 6
5.1 Incorporation 6
5.2 Authorization 6
5.3 Conflicts 6
5.4 Warrant Shares 7
5.5 Securities Laws 7
5.6 Purchase Agreement. 7
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF
THE MANAGER 7
6.1 Incorporation 7
6.2 Authorization 7
6.3 Conflicts 7
6.4 Investment Intention 8
ARTICLE VII COVENANTS OF COMPANY 8
7.1 Affirmative Covenants of Company 8
7.2 Negative Covenants of the Company 8
ARTICLE VIII CONFIDENTIALITY 9
8.1 Confidential Material 9
8.2 Obligation of Nondisclosure 9
8.3 Permitted Disclosures 9
8.4 Injunctive Relief 10
ARTICLE IX CONFLICTS OF INTEREST 10
9.1 Conflict of Interest 10
ARTICLEX INDEMNIFICATION 11
10.1 Basis of Indemnity 11
10.2 Payment 11
10.3 Limitation of Liability 11
ARTICLE XI MISCELLANEOUS 11
11.1 Force Majeure 11
11.2 Relationship of Parties 12
11.3 Notices 12
11.4 Entire Agreement 13
11.5 Amendments 13
11.6 Further Actions 13
11.7 Assignment 13
11.8 Expenses 13
11.9 Governing Law 13
11.10 Headings 13
11.11 Counterparts 13
Exhibit A - Form of Initial Warrant Certificate
Exhibit B - Form of Additional Warrant Certificate
Exhibit C - Form of Amended and Restated Registration Rights
Agreement
-ii-
MANAGEMENT AGREEMENT
THIS AGREEMENT made as of this 11th day of February, 2000,
between ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC., a
corporation organized and validly existing under the laws of the
State of Delaware (hereinafter referred to as the "Manager"), and
NEWCHECK CORPORATION d/b/a Productivity Solutions, Inc., a
corporation organized and validly existing under the laws of the
State of Delaware (hereinafter referred to as the "Company").
W I T N E S S E T H:
WHEREAS, the Company, is engaged in the development and
commercialization of automated self-checkout systems and related
labor resource management systems for use in supermarkets and
other retailers (together with any related, ancillary or
complementary business and any business utilizing any technology,
know-how, patents, processes or other intellectual property now
or hereinafter developed by the Company, hereinafter referred to
as the "Business");
WHEREAS, the Manager and the Company, inter alia, are
parties to a Stock and Convertible Note Purchase Agreement dated
as of February 11, 2000 (hereinafter referred to as the "Stock
and Note Purchase Agreement") with respect to, among other
things, the purchase by the Manager and the other investors named
therein of certain securities of the Company;
WHEREAS, in accordance with the terms and provisions of the
Stock and Note Purchase Agreement, it is a condition to the
consummation of the placement thereunder that the parties hereto
execute and deliver this Management Agreement; and
WHEREAS, the parties have determined that it is in their
respective best interests to enter into the transactions set
forth herein in order for the Company to retain the Manager to
provide such management services as set forth hereinafter, so as
to assist in the supervision and management of the Business, and
to satisfy the foregoing condition to closing under the Stock and
Note Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
APPOINTMENT OF MANAGER
1.1 Appointment of Manager. Subject to the terms and
conditions of this Agreement, the Company hereby appoints the
Manager as its agent, on behalf of the Company, to operate,
supervise and manage the Business and the Company, and the
Manager hereby accepts such appointment. The Company and the
Manager hereby agree that, during the term set forth in Article
II hereof: (i) the Manager shall, within the parameters of each
Business Plan (as hereinafter defined) and the related provisions
of this Agreement, have the power and authority to take all such
action as it shall deem necessary, and in the best interests of
the Company, for the protection, operation, supervision, and
management of the Business and the Company, and (ii) the Company
shall not appoint, engage or employ any party other than the
Manager to perform any of the Manager's duties hereunder, except
as approved in advance in writing by the Manager.
1.2 Duties of Manager. Without in any way limiting the
scope of the appointment of the Manager in accordance with
Section 1.1 hereof, the Manager shall, subject to Section 1.3
hereof and within the parameters of each Business Plan and the
related provisions of this Agreement, perform the following
duties for the Company;
(a) maintain the character of the Business as now
established; provided however, that the Manager shall also be
empowered during the term hereof to take such action as is
necessary or appropriate to expand or to consolidate the products
and services provided by the Company as part of the Business, as
presently or hereinafter constituted, consistent with the general
nature and scope of the Business, and to introduce such
additional products and services as the Manager shall deem
appropriate fully to utilize and to develop the resources of the
Company;
(b) operate and supervise the Business in the usual,
regular and ordinary manner utilized by the Manager in the
operation of its business and in accordance with good business
practices;
(c) preserve the present business relationships of the
Company, provide management and supervisory services to the
Company at least comparable to those supplied by the Company's
present officers and employees and procure for the Company all
additional management, administrative, supervisory and other
personnel required by the Business;
(d) develop and recommend to the Board of Directors of the
Company business plans, research and development programs and/or
marketing programs in respect of the Business, and arrange for
the active promotion, operation and sale of the products and
services of the Company;
(e) propose, accept, and cause the Company to perform
contracts, on behalf and at the expense of the Company, modify
existing contracts, provide for the development and manufacture
of products and the furnishing of services ordered from the
Company and arrange for the procurement of equipment, tools,
materials and supplies necessary for the operation of the
Business;
(f) establish overall cost accounting systems in respect
of the conduct of the Business, maintain or cause the Company to
maintain records and books of account in accordance with good
business practices, and furnish to the Company and its
representatives such information concerning the Business and its
scope and direction as the Company shall from time to time
reasonably request;
(g) develop and recommend to the Board of Directors of the
Company financing plans for the Company and the Business; engage
and dismiss financial advisors, investment bankers and other
consultants in the name and on behalf of the Company; make
recommendations to the Board of Directors regarding the issuance
of securities generally by the Company; and determine grants of
options with respect to the common stock, $.0001 par value
(hereinafter referred to as "Common Stock"), of the Company to
management, employees and consultants of the Company (including,
without limitation, those furnished by the Manager) from the
authorization of the Board of Directors of the Company as at the
date hereof and as hereinafter augmented thereby;
(h) subject to the terms of the Stock and Note Purchase
Agreement and the other documents referred to therein, determine
on behalf of the Company if the Company shall cause or permit a
Participation Event (as defined in the Stock and Note Purchase
Agreement) to occur;
(i) cause the Company to prosecute claims, suits,
proceedings, and actions against third parties, and defend
claims, suits, proceedings and actions against the Company; and
(j) take all such other actions as the Manager deems
necessary or desirable in order to discharge the Manager's duties
hereunder, and exercise all rights of management as allowed by
law or generally accepted business practice.
1.3 Standard of Care. At all times during the performance
of its duties under this Agreement, the Manager shall, and shall
cause each Affiliate of the Manager or other person employed or
retained by the Manager and involved in providing the services
under this Agreement to, act in a manner that is in good faith
and in the best interests of or not opposed to the best interests
of the Company and of its shareholders, taken as a whole.
ARTICLE II
REPORTS TO BOARD OF DIRECTORS; BUSINESS PLAN
2.1 Board Oversight. The Manager shall confer on a regular
basis with the Board of Directors of the Company or a designated
committee thereof, at regularly scheduled meetings or upon the
demand of the Board (in all events at least twice per year), to
report matters of materiality and to report the general status of
ongoing operations. In addition, the Manager shall, at the
request of the Board of Directors upon reasonable prior notice,
attend, or cause its representatives to attend, any and all
meetings held of the Board, and shall respond to all reasonable
inquiries of the directors raised with respect to the Business or
the Company.
2.2 Business Plan. At least 30 days prior to the
commencement of each fiscal year of the Company during the term
of this Agreement (except that, in respect of the first such
fiscal year, such date shall fall within 90 days after the date
of this Agreement), the Manager shall prepare and submit to the
Board of Directors of the Company, for review and approval,
operating and capital budgets, setting forth projections of cash
receipts for such year on a quarterly basis, together with a
summary of operating and capital expenditures projected by the
Manager on a quarterly basis, in connection with the operation of
the Business, such budgets to constitute the business plan for
the Company for such year (each herein referred to as a "Business
Plan"). The Manager shall not incur any expenses in the name or
on behalf of the Company other than those projected in a Business
Plan recommended pursuant to this Section 2.2 and approved by the
Board of Directors of the Company, except for expenses that do
not vary by more than five percent from the aggregate of similar
expenses under major line items in the budget contained in any
such Business Plan (and except that, in the event the Board of
Directors shall fail to approve a Business Plan for any period,
the Manager shall operate hereunder consistent with past practice
of the Company and subject to Section 1.3 hereof). From time to
time, the Manager may recommend to the Board of Directors of the
Company, for review and approval, one or more supplements to or
revisions of a Business Plan approved as aforesaid (it being
acknowledged that, without limiting the provisions of this
Section 2.2 hereinabove set forth, the Manager shall not incur
any expenses in the name or on behalf of the Company contained in
any such supplement until it is reviewed and approved by the
Board of Directors of the Company). Each such supplement, once
reviewed and approved as aforesaid, shall constitute part of the
Business Plan to which it pertains.
ARTICLE III
TERM
3.1 Term of Agreement. Subject to Section 3.2 hereof, the
appointment of the Manager pursuant to Article I hereof shall
extend through the fifth anniversary of the date hereof;
provided, however, that, so long as the Manager or its Affiliates
owns or has rights to acquire at least 7% of the outstanding
equity of the Company, the Manager shall have the option to
extend such term for up to an additional five years upon giving
the Company written notice of such extension at least 90 days
prior to the expiration of the fifth anniversary of the date
hereof.
3.2 Early Termination.
(a) Notwithstanding the foregoing provisions of Section
3.1 hereof, this Agreement shall forthwith terminate, at the
option of the Manager, in the event that the Company shall:
(i) admit in writing its inability to pay its debts
generally as they become due;
(ii) file a petition in bankruptcy or a petition to
take advantage of any insolvency act;
(iii) make an assignment for the benefit of creditors;
(iv) consent to the appointment of a receiver of
itself or of the whole or any substantial part of its
property;
(v) on a petition in bankruptcy filed against it, be
adjudicated bankrupt; or
(vi) file a petition or answer seeking reorganization
or arrangement under the Federal bankruptcy laws or any
other applicable law or statute of the United States of
America or any state, district or territory thereof.
(b) Notwithstanding the foregoing provisions of Section
3.1 hereof, this Agreement shall further be terminable by either
party upon 180 days' prior written notice to the other party
following any material breach of this Agreement by the other
party (provided that such breach shall remain uncured at the end
of such period or, if such breach is not reasonably susceptible
to cure during such period, provided that the breaching party
shall not have diligently taken steps to cure such breach at the
end of such period).
ARTICLE IV
COMPENSATION
4.1 Warrants.
(a) In consideration of the performance by the Manager of
its duties as set forth in Article I hereof, the Company herewith
issues to the Manager warrants (hereinafter referred to as the
"Initial Warrants") to purchase shares of Common Stock, as
evidenced by the warrant certificate (hereinafter referred to as
the "Initial Warrant Certificate") in the form of Exhibit A
annexed hereto.
(b) In further consideration of the performance by the
Manager of its duties as set forth in Article I, the Company
herewith issues to the Manager additional warrants (together with
the Initial Warrants, hereinafter referred to as the "Warrants")
to purchase shares (together with the shares of Common Stock
issuable upon exercise of the Initial Warrants, hereinafter
referred to as the "Warrant Shares") of Common Stock, as
evidenced by the warrant certificate (together with the Initial
Warrant Certificate, hereinafter referred to as the "Warrant
Certificate") in the form of Exhibit B annexed hereto.
(c) In connection with issuance of the Warrants, the
Company herewith executes and delivers to the Manager the Amended
and Restated Registration Rights Agreement in the form of Exhibit
C annexed hereto, extending thereby to the Manager the
registration rights specified therein with respect to the Warrant
Shares.
4.2 Reimbursement of Expenses. In the event that the
Manager or any Affiliate thereof shall incur any expenses for its
own account in connection with its performance hereunder, whether
in connection with services or materials devoted hereunder or
otherwise, or in connection with any other activities relative to
the Company (whether prior to or after the date hereof), the
Company shall from time to time be obligated to reimburse the
Manager for such expenses, to the extent reasonably incurred, in
cash, within fifteen days after the rendering by the Manager of a
statement therefor. Such expenses shall extend, without
limitation, to expenses reasonably incurred directly or
indirectly in connection with performance hereunder or in
connection with any such other activities relative to the
Company, and to a portion of the Manager's (or its Affiliates')
general and administrative expenses reasonably allocated by the
Manager to performance hereunder, including, without limitation,
a reasonable allocation of compensation and benefits to employees
of the Manager and its Affiliates. The Company's obligation as
aforesaid shall extend to investment banking fees in the amount
of $150,000 plus reasonable expenses incurred to BNY Capital
Markets under the engagement letter dated January 21, 2000, and
reasonable legal fees and expenses incurred by the Manager in
connection with the negotiation, execution and delivery of the
Stock and Note Purchase Agreement and the additional agreements
contemplated thereby (including, without limitation, this
Agreement), it being understood and agreed that any and all
securities deliverable by the Manager in such connection shall be
valued by the Manager in its reasonable discretion. For purposes
of this Agreement, the term "Affiliate" shall mean any person or
entity controlled by, controlling or under common control with
the Manager. Notwithstanding the foregoing or any other provision
contained in this Agreement, the parties understand and agree
that the Manager shall not be required to advance any amounts to
the Company, or to guarantee or in any manner secure any
obligations of the Company or in any manner become obligated for
any of the liabilities of the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents, warrants and covenants that:
5.1 Incorporation. The Company is duly organized, validly
existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to own or
hold under lease the assets and properties which it owns or holds
under lease and to perform all its obligations under the
agreements to which it is a party, including, without limitation,
this Agreement and the Warrant Certificates. The Company is in
good standing in each other jurisdiction in which the failure to
be so qualified would have a material adverse effect on its
assets or properties or to the conduct of the Business.
5.2 Authorization. The execution and delivery of this
Agreement and the Warrant Certificates by the Company, the
performance by the Company of its covenants and agreements
hereunder and thereunder and the consummation by the Company of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action. Without limiting
the generality of the foregoing, the Board of Directors has
authorized the Manager to determine, without further action by
the Board of Directors, grants (and the terms thereof) of options
with respect to Common Stock to management, employees and
consultants of the Company (including, without limitation, those
furnished by the Manager), covering up to an aggregate of
1,550,000 shares of Common Stock (which the Company has duly
reserved for issuance upon exercise of such options); and such
options, and the Common Stock issuable upon exercise thereof,
will be duly authorized, validly-issued, fully-paid and non-
assessable, issuable without violation of the preemptive rights
of any party. This Agreement and the Warrant Certificates
constitute the valid and legally binding obligation of the
Company enforceable against the Company in accordance with their
respective terms, except as may be limited by bankruptcy,
insolvency or other laws affecting generally the enforceability
of creditors' rights and by limitations on the availability of
equitable remedies.
5.3 Conflicts. Neither the execution and delivery of this
Agreement and the Warrant Certificates by the Company, nor the
consummation of the transactions contemplated herein and therein
to be consummated by the Company, will violate any provision of
the certificate of incorporation or by-laws of the Company, or
any law, rule, regulation, writ, judgment, injunction, decree,
determination, award or other order of any court, government, or
governmental agency or instrumentality, domestic or foreign,
applicable to the Company, or conflict with or result in any
breach of any of the terms of or the creation or imposition of
any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature pursuant to the terms
of any contract or agreement to which the Company is a party or
by which the Company or any of their respective properties or
assets is bound.
5.4 Warrant Shares. The Company has duly reserved for
issuance a number of shares of Common Stock adequate to comply
with its obligations to issue the Warrant Shares. The Warrants
have been and, upon exercise of the Warrants the Warrant Shares
will be, duly authorized, validly issued and fully-paid and non-
assessable, issued without violation of the preemptive rights of
any party. The Warrants are and, upon exercise of the Warrants
the Warrant Shares will be, free and clear of any and all
pledges, charges, liens, mortgages, deeds of trust and any other
encumbrances of any nature whatsoever created by the Company.
5.5 Securities Laws. In reliance on the investment
representations contained in Section 6.4, the issuance and
delivery of the Warrants and the Warrant Shares, as provided in
this Agreement and the Warrant Certificates, are exempt from the
registration requirements of the Securities Act of 1933
(hereinafter referred to as the "Securities Act") and all
applicable state securities laws. Neither the Company nor any
person or entity authorized to act on its behalf has taken or
will take any action (including, without limitation, any offering
of any securities of the Company under circumstance which would
require the integration of such offering with the offering of the
Warrants or the Warrant Shares under the Securities Act and the
rules and regulations of the Securities and Exchange Commission
thereunder) which might subject the offering, issuance or sale of
the Warrants or the Warrant Shares to the registration
requirements of Section 5 of the Securities Act.
5.6 Purchase Agreement. Each and every representation and
warranty of the Company set forth in the Purchase Agreement is
hereby incorporated by reference into this Agreement as if set
forth herein.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE MANAGER
The Manager hereby represents, warrants and covenants that:
6.1 Incorporation. The Manager is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the full corporate power
and authority to enter into this Agreement and to perform its
agreements and covenants to be performed hereunder. The Manager
is in good standing in each other jurisdiction wherein the
failure so to qualify would have a material adverse effect on its
ability to consummate the transactions contemplated hereunder.
6.2 Authorization. The execution and delivery of this
Agreement by the Manager and the performance by the Manager of
its covenants and agreements hereunder have been duly authorized
by all necessary corporate action and, when executed and
delivered by the Manager, this Agreement shall constitute the
valid and legally binding agreement of the Manager enforceable
against the Manager in accordance with its terms, except as may
be limited by bankruptcy, insolvency, or other laws affecting the
enforceability of creditors' rights and by limitations on the
availability of equitable remedies.
6.3 Conflicts. Neither the execution and delivery of this
Agreement by the Manager nor the consummation of the transactions
contemplated herein to be consummated by the Manager, will
violate any provision of the certificate of incorporation or by-
laws of the Manager or any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any
court, government or governmental agency or instrumentality,
domestic or foreign, applicable to the Manager or conflict with
or result in any breach of any mortgage, deed of trust, pledge,
lien, security interest or other charge or encumbrance of any
nature pursuant to the terms of any contract or agreement to
which the Manager is a party or by which the Manager or any of
the assets of the Manager are bound.
6.4 Investment Intention. The Manager is acquiring the
Warrants for investment purposes and not with a view to the
distribution thereof in violation of the Securities Act. The
Manager will not, directly or indirectly, offer, transfer, sell,
assign, pledge, hypothecate or otherwise dispose of any of the
Warrants (or solicit any offers to buy, purchase, or otherwise
acquire any of the Warrants), except in compliance with the
Securities Act.
ARTICLE VII
COVENANTS OF COMPANY
7.1 Affirmative Covenants of Company. During the term of
this Agreement, the Company shall:
(a) pay to the Manager all amounts due pursuant to the
terms hereof, without setoff or counterclaim for any reason
whatsoever;
(b) notify the Manager promptly in writing of any default
under any instrument or agreement to which the Company is a party
and any litigation, arbitration, or other governmental
proceeding, or threatened litigation, arbitration, or other
governmental proceeding, involving the Company;
(c) provide the Manager with drawing rights on such
accounts maintained with financial institutions by the Company as
are or shall be necessary, or in the interests of the Company, to
operate the Business;
(d) furnish to the Manager such financial, legal and other
information in its possession or available to it with respect to
the Company as shall from time to time be requested by the
Manager;
(e) use its best efforts in all respects to cooperate with
the Manager in its performance under this Agreement.
7.2 Negative Covenants of the Company. During the term of
this Agreement, the Company shall not, without the concurrence of
the Manager (acting pursuant to Section 1.3 hereof):
(a) (i) issue, grant, sell or encumber any shares of its
capital stock, (ii) other than pursuant to commitments existing
on the date hereof and as contemplated by Section 1.2(g) hereof,
issue, grant, sell or encumber any security, option, warrant,
put, call subscription or other right of any kind, fixed or
contingent, that directly or indirectly calls for the
acquisition, issuance, sale, pledge or other disposition of any
shares of capital stock or other equity interests of the Company,
(iii) enter into any agreement, commitment or understanding
calling for any transaction referred to in clause (i) or (ii) of
this Paragraph (a), or (iv), make any other changes in its equity
capital structure;
(b) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock, securities, indebtedness,
rights or property or any combination thereof) in respect of any
shares of its capital stock or other equity interests, or redeem
or otherwise acquire any shares of the capital stock or other
equity interests;
(c) without limiting any rights of any party to require
the Company to effect a registration under the Amended and
Restated Registration Rights Agreement hereinabove referenced,
cause or permit any Participation Event (if within the control of
the Company and except for any Liquidity Event [as defined in the
Senior Preferred Certificate of Designation referenced in the
Stock and Note Purchase Agreement] in the ordinary course of
business) to occur;
(d) make or permit any change in its certificate of
incorporation or by-laws; or
(e) acquire, directly or indirectly, any interest in any
corporation, association, partnership or other controlling
entity, unless provision satisfactory to the Manager shall be
made whereby such entity shall be covered by this Agreement in
all relevant respects as if the Company hereunder.
ARTICLE VIII
CONFIDENTIALITY
8.1 Confidential Material. For purposes of this Article
VIII, the term "Confidential Material" shall be defined to mean
all proprietary or confidential information furnished to the
Manager, or any of its directors, officers, employees or agents
(each hereinafter referred to as a "Receiving Party") by the
Company, or any of its directors, officers, employees or agents
(each hereinafter referred to as a "Disclosing Party").
Notwithstanding the foregoing, the term "Confidential Material
shall not include information which (i) is known to the Receiving
Party, prior to the date hereof, (ii) becomes generally available
to the trade or the public other than as a result of a disclosure
by the Disclosing Party, (ii) was available to the Receiving
Party on a non-confidential basis prior to its disclosure to the
Receiving Party by the Disclosing Party, or (iv) becomes
available to the Receiving Party on a non-confidential basis from
a source other than the Disclosing Party, provided that such
source is not bound by a confidentiality agreement with the
Disclosing Party.
8.2 Obligation of Nondisclosure. In connection with and as
a condition to the Disclosing Party furnishing Confidential
Material to the Receiving Party, the Manager hereby agrees that,
during the term of this Agreement and for a period of three years
thereafter, the Receiving Party shall treat all Confidential
Material confidentially, and not disclose it except in accordance
herewith. Notwithstanding the foregoing or any other provision
contained herein, unless otherwise agreed to by the parties
hereto, the Receiving Party may not in any manner use any
Confidential Material for any purpose other than in connection
with conduct of the Business.
8.3 Permitted Disclosures. In the event that the Receiving
Party is required (by oral questions, interrogatories, requests
for information or documents, subpoena, civil investigative
demand or similar process) to disclose any Confidential Material,
the Receiving Party shall provide the Disclosing Party with
prompt notice thereof so that the Disclosing Party may seek an
appropriate protective order and/or waive compliance by the
Receiving Party with the provisions hereof; provided, however,
that, if in the absence of a protective order or the receipt of a
waiver hereunder, the Receiving Party is, in the opinion of its
counsel, compelled to disclose Confidential Material not
otherwise disclosable hereunder to any legislative, judicial or
regulatory body, agency or authority, or else be exposed to the
liability for contempt, fine or penalty, or to other censure,
such Confidential Material may be so disclosed. In addition, the
Manager shall be permitted to make any and all disclosures which
the Manager or its counsel deems necessary or appropriate under
federal and state securities laws and regulations with respect to
the performance of services hereunder or otherwise related to the
obligations of the Manager under such laws or regulations.
8.4 Injunctive Relief. In view of the irreparable harm and
damage which would be incurred by the Company in the event of any
violation of any of the provisions of this Article VIII, the
Manager hereby consents and agrees that, if any Receiving Party
violates any such provision, the Company shall be entitled to an
injunction or similar equitable relief to be issued by any court
of competent jurisdiction restraining the breaching party from
committing or continuing any such violation.
ARTICLE IX
CONFLICTS OF INTEREST
9.1 Conflict of Interest. The Company and the Manager each
understand that in fulfilling its obligations hereunder, the
Manager may encounter facts and circumstances giving rise to a
conflict between the interests of the Manager and the interests
of the Company. Notwithstanding the foregoing (but subject to the
proviso hereinafter contained), the parties understand and agree
that the Manager may engage, directly or indirectly, in any other
business venture or ventures of any nature and description,
independently or with others, and whether or not related to the
Business; provided, however, that the Manager shall not, during
the term of this Agreement, without prior approval of the Board
of Directors of the Company acting by a majority of the members
thereof not constituting employees, officers, directors or
principal stockholders of the Manager, engage in the
commercialization of any automated self-checkout system for use
in supermarkets and other retailers competitive with any such
system of the Company. Without limiting the generality of the
foregoing, the parties acknowledge and agree that, in the event
the parties enter into any additional transactions not
contemplated by the provisions of this Agreement, such
transactions shall be on arms-length terms, no less favorable to
the Company in any material respect than the terms that could be
obtained from unaffiliated parties, if any, in the same area
entering into comparable transactions with the Company.
ARTICLE X
INDEMNIFICATION
10.1 Basis of Indemnity. The Company hereby agrees to
indemnify and hold harmless, the Manager, its directors,
officers, employees, agents and their respective legal
representatives, successors and assigns (each hereinafter
referred to as an "Indemnified Party"), from and against any and
all direct or consequential damages, costs, expenses, losses,
claims, demands, liabilities and/or obligations, including,
without limitation, reasonable counsel's fees (hereinafter
referred to as "Damages"): (i) resulting from any breach of any
warranty, representation, agreement or covenant of the Company
set forth or incorporated by reference in this Agreement, or the
discharge by the Manager of its obligations under this Agreement
(except insofar as arising from the gross negligence or willful
breach of this Agreement by the Manager or its employees or
agents); or (ii) in any way related to the Company, and/or the
obligations, liabilities or properties thereof or the Business,
whether incurred or resulting from any state of facts heretofore
or hereinafter arising (except insofar as any such Damages shall
have arisen as a result of the gross negligence or willful
misconduct of the Manager, its employees or agents in the
performance of the Manager's duties hereunder).
10.2 Payment. In the event that an Indemnified Party shall
incur any Damages in respect of which indemnity may be sought
pursuant to this Agreement, the Company shall be given written
notice thereof promptly by such Indemnified Party, which notice
shall, to the extent reasonably available to such Indemnified
Party, specify the amount and nature of such Damages and include
the request by the Indemnified Party of the Company for
indemnification therefor. The Company shall promptly pay to such
Indemnified Party the amount of the Damages so specified.
10.3 Limitation of Liability. Without limiting the
provisions of Section 10.1 hereof, in any event the liability of
the Manager and its Affiliates with respect to this Agreement or
anything done in connection herewith, including but not limited
to the performance or breach hereof, or from the sale, delivery,
provision or use of any service or product provided under or
covered by this Agreement, whether in contract, tort (including
negligence or strict liability) or otherwise, shall not exceed
the amounts previously paid to the Manager and its Affiliates by
the Company under this Agreement (including the then current fair
market value of the Warrants, and of any shares theretofore
issued upon exercise of the Warrants, held by the Manager, plus
the proceeds of any shares theretofore so issued and disposed of
by the Manager), except as a result of the Manager's gross
negligence or willful misconduct; and the Company hereby releases
the Manager and its Affiliates from any act done or omitted to be
done by the Manager except to the extent aforesaid.
ARTICLE XI
MISCELLANEOUS
11.1 Force Majeure. The Company and the Manager agree that
neither shall be deemed to be in default of any of their
respective obligations hereunder to the extent only that
performance of any such obligation shall have been prevented by
an act of God, fire, riot, war or government, but only to the
extent of the duration of the act or acts comprising the basis
for the operation of this Section 11.1.
11.2 Relationship of Parties. The relationship between the
Parties, created by this Agreement shall for all purposes be that
of independent contractors and neither shall be deemed or
construed as an agent of the other for any purpose; it being
specifically the intent of the parties to avoid forming any
partnership or joint venture and it being understood and agreed
that each party shall exercise full power and authority, subject
only to the respective rights and obligations of the parties set
forth herein, in the performance of any or all of their
respective obligations hereunder.
11.3 Notices. All notices, requests, or instructions
hereunder shall be in writing and delivered personally, or sent
by registered, certified, or express mail, postage prepaid,
return receipt requested, or by a reputable overnight courier
service, as follows:
(1) if to the Manager:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Krugman & Kailes LLP
Park 80 West-Plaza Two
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(2) if to the Company:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Powell, Goldstein, Frazer, Murphy LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. ▇.▇.
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as a party may designate by written
notice to the other parties. If delivered personally, the date on
which such notice, request, instruction or document is deemed
given shall be the date on which such delivery is made, or if
delivered by mail, three days after the date on which deposited
in the mail or if delivered by a reputable overnight courier
service, the day after the date on which deposited with or turned
over to said courier service. Each notice, request, instruction
or document shall bear the date on which it is delivered.
11.4 Entire Agreement. This Agreement and the documents
referred to herein contain the entire agreement between the
parties hereto with respect to the transactions contemplated
herein.
11.5 Amendments. No modifications or amendments hereof
shall be effective unless in writing and signed by the party
against which it is sought to be enforced.
11.6 Further Actions. Each of the parties hereto shall take
such additional actions as may be necessary or reasonably
requested by the other party hereto to carry out and consummate
the transactions contemplated in this Agreement.
11.7 Assignment. This Agreement may not be assigned or
transferred by either party without the prior written consent of
the other party having first been obtained. Any attempted
assignment or transfer in breach of the provisions of this
Section 11.7 shall be void and of no further effect and shall
constitute a material breach of this Agreement.
11.8 Expenses. Except as otherwise set forth herein, each
of the parties shall bear its expenses in connection with this
Agreement and the transactions contemplated herein.
11.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut
applicable in the case of agreements made and to be entirely
performed within such State.
11.10 Headings. The headings appearing herein are for the
convenience of the parties only and shall not be construed to
affect the meaning of the provisions of this Agreement.
11.11 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
ATTEST: ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
s/▇▇▇▇▇▇ ▇▇▇▇▇▇ By s/▇▇▇▇▇ ▇. Failing, Jr.
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Assistant Secretary Vice Chairman and
Chief Executive Officer
ATTEST: NEWCHECK CORPORATION d/b/a
Productivity Solutions, Inc.
s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------- ---------------------------
Secretary President and Chief Executive
Officer
