XXXXXX CORPORATION
STOCK PURCHASE AGREEMENT
DATED AS OF JUNE 30, 1999
XXXXXX CORPORATION
STOCK PURCHASE AGREEMENT
Dated as of June 30, 1999
INDEX
ARTICLE I PURCHASE AND SALE OF SHARES 1
1.1 Purchase and Sale 1
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1.2 Purchase and Sale of Warrant 1
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1.3 The Conversion Shares 2
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1.4 Closing 2
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1.5 Use of Proceeds 2
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ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY 2
2.1 Organization and Corporate Power 2
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2.2 Authorization 3
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2.3 Government Approvals 3
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2.4 Authorized and Outstanding Stock 3
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2.5 Subsidiaries 5
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2.6 Securities Law Compliance 5
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2.7 Commission Documents; Financial Information 5
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2.8 Absence of Certain Events; No Material Adverse Change 6
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2.9 Litigation 7
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2.10 Compliance with Laws and Other Instruments 7
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2.11 Taxes 8
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2.12 Intentionally Omitted 8
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2.13 Intentionally Omitted 8
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2.14 Patents, Trademarks, etc. 8
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2.15 Intentionally Omitted 9
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2.16 Governmental and Industrial Approvals 9
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2.17 Federal Reserve Regulations 9
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2.18 Contracts and Commitments 9
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2.19 Intentionally Omitted 9
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2.20 Intentionally Omitted 9
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2.21 No Brokers or Finders 9
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2.22 Transactions with Affiliates 10
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2.23 Intentionally Omitted 10
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2.24 Restrictions on Subsidiaries 10
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2.25. Intentionally Omitted 10
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2.26 U.S. Real Property Holding Corporation 10
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2.27 Intentionally Omitted. 10
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2.28 Corporate Records 10
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2.29 Intentionally Omitted. 10
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2.30 Intentionally Omitted 10
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2.31 Management Presentation 10
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2.32 Disclosures 11
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ARTICLE III AFFIRMATIVE COVENANTS OF THE COMPANY 11
3.1 Accounts and Reports 11
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3.2 Payment of Taxes 12
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3.3 Intentionally Omitted. 13
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3.4 Compliance with Laws, etc. 13
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3.5 Inspection 13
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3.6 Corporate Existence; Ownership of Subsidiaries 13
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3.7 Compliance with ERISA 13
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3.8 Intentionally Omitted 14
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3.9 Intentionally Omitted 14
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3.10 Board of Directors Meetings 14
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3.11 Rule 144A Information 14
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3.12 Regular Course of Business 14
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3.13 Registration of Conversion Shares and Warrant Shares. 14
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ARTICLE IV NEGATIVE COVENANTS OF THE COMPANY 15
4.1 Distributions 15
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4.2 Dealings with Affiliates 16
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4.3 Limitation on Restrictions on Subsidiary Dividends and Other
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Distributions 16
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4.4 No Conflicting Agreements 16
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4.5 Intentionally Omitted 16
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4.6 Intentionally Omitted 16
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4.7 Other Negative Covenants 16
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ARTICLE V INVESTMENT REPRESENTATIONS 17
5.1 Representations and Warranties 17
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5.2 Permitted Sales; Legends 18
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ARTICLE VI CONDITIONS OF PURCHASERS' OBLIGATION 19
6.1 Effect of Conditions 19
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6.2 Representations and Warranties 19
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6.3 Performance 20
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6.4 Amendment to Amended Certificate of Incorporation 20
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6.5 Warrant Agreement 20
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6.6 Opinion of Counsel 20
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6.7 Certified Documents, etc 20
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6.8 No Material Adverse Change 20
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6.9 Registration Rights Agreement 20
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6.10 Board Election 20
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6.11 Consents and Waivers 20
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6.12 Series A Preferred Stock Certificates 21
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ARTICLE VII CONDITIONS OF THE COMPANY'S OBLIGATION 21
7.1 Effect of Conditions 21
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7.2 Representations and Warranties; Performance 21
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ARTICLE VIII PREEMPTIVE RIGHT 21
8. Purchase Rights 21
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8.1 Right of Purchase 21
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8.2 Right of Over-Allotment 21
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8.3 Definition of New Securities 22
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8.4 Notice from the Company 22
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8.5 Sale by the Company 22
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8.6 Termination of Rights 23
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ARTICLE IX CERTAIN DEFINITIONS 23
ARTICLE X TERMINATION 25
10.1 Termination by Mutual Written Consent 25
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10.2 Termination for Breach 25
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10.3 Termination for Delay 26
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10.4 Rights After Termination 26
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ARTICLE XI MISCELLANEOUS 26
11.1 Survival of Representations 26
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11.2 Parties in Interest 26
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11.3 Shares Owned by Affiliates 26
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11.4 Amendments and Waivers 27
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11.5 Notices 27
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11.6 Expenses 28
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11.7 Counterparts 28
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11.8 Effect of Headings 28
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11.9 Adjustments 28
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11.10 Governing Law 28
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11.11 Confidentiality 28
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11.12 Assignment 29
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11.13 Waiver of Jury Trial 29
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June 30, 1999
To: The Persons Listed on
Schedule 1.1 attached hereto
Re: Series A Convertible Redeemable Preferred Stock
Gentlemen:
XxXxxx Corporation, a Delaware corporation (the "Company"), hereby
agrees with you as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale. Subject to the terms and conditions hereinafter
set forth, at the Closing (as defined below) the Company shall issue and sell to
each of the persons listed on Schedule 1.1 hereto (collectively, the
"Purchasers" and individually, a "Purchaser"), and each Purchaser shall purchase
from the Company, the number of shares of the Company's Series A Convertible
Redeemable Preferred Stock, $.01 par value per share (the "Series A Preferred
Stock"), set forth opposite the name of such Purchaser on Schedule 1.1, for the
aggregate purchase price set forth opposite the name of such Purchaser on such
Schedule 1.1. The aggregate number of shares to be sold and purchased pursuant
to this Section 1.1 shall be Five Hundred Thousand (500,000) for an aggregate
purchase price of Ten Million Dollars ($10,000,000) payable as provided in
Section 1.4. The Series A Preferred Stock shall have the rights, terms and
privileges set forth in the Certificate of Designation attached hereto as
Exhibit A (the "Certificate of Designation"), which shall be filed with, and
approved by, the Secretary of State of Delaware (the Company's Certificate of
Incorporation, as amended to date, including such Certificate of Designation,
shall be referred to herein as the "Amended Certificate of Incorporation"). The
shares of Series A Preferred Stock purchased pursuant to this Section 1.1 (the
"Purchased Shares") shall be convertible following the Closing (as hereinafter
defined) in accordance with the Company's Amended Certificate of Incorporation
into 500,000 of the then outstanding shares of the Company's common stock, par
value $.01 per share ("Common Stock"). Terms used herein as defined terms that
are not defined in the context hereof shall have the meaning set forth in
Article IX.
1.2 Purchase and Sale of Warrant. At the Closing, the Company will sell
to each Purchaser a warrant (collectively, the "Warrant") at an aggregate price
of $.01 to purchase an aggregate of 250,000 shares of Common Stock. The Warrant
will be issued pursuant to a Warrant Agreement in the form of Exhibit B attached
hereto (the "Warrant Agreement"). The warrants to
be issued to each Purchaser is set forth in Schedule 1.1. The number of shares
of Common Stock issuable upon exercise of the Warrant purchased pursuant to this
Section 1.2 are referred to herein as the "Warrant Shares."
1.3 The Conversion Shares. The Company has authorized and reserved and
hereby covenants that it will continue to reserve, free of any preemptive rights
or encumbrances, a sufficient number of its authorized but previously unissued
shares of Common Stock to satisfy the rights of conversion of the holders of the
Purchased Shares and the issuance of the Warrant Shares. The shares of Common
Stock issued or issuable upon conversion of the Purchased Shares are referred to
herein as the "Conversion Shares."
1.4 Closing. Subject to the satisfaction or waiver of the conditions
set forth in Articles VI and VII hereof, a closing (the "Closing") of the sale
and purchase of the Purchased Shares specified in Section 1.1 above shall take
place at the offices of Xxxxxxxx, Xxxxxxx & Xxxxxxx, A Professional Corporation,
000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, at 10:00 A.M., on June 30, 1999, or
such other date, time and place as shall be mutually agreed upon by the Company
and the Purchasers (the "Closing Date"). At the Closing, the Company will
deliver the Purchased Shares being acquired by each Purchaser in the form of a
certificate issued in such Purchaser's name, upon receipt by the Company of
payment of the full purchase price therefor by or on behalf of each Purchaser to
the Company by wire transfer of immediately available funds.
1.5 Use of Proceeds. As an integral part of the purpose and structure
of the financing contemplated herein, the Company shall use the proceeds
received upon the sale of the Purchased Shares at the Closing to fund general
working capital, including, but not limited to, working capital for product
development, possible acquisitions of businesses, repayment of debt, enhancement
of the Company's sales and marketing capabilities, and research and development,
all as determined by the Company's Board of Directors, subject to compliance
with the covenants and agreements contained herein and in the Company's Amended
Certificate of Incorporation.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
In order to induce the Purchasers to purchase the Purchased Shares and
the Warrant, the Company makes the following representations and warranties
which shall be true, correct and complete in all respects on the date hereof.
2.1 Organization and Corporate Power. The Company and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation
and has all requisite corporate power and authority
to own its properties and to carry on its business as presently conducted. The
Company and each of its Subsidiaries is duly licensed or qualified to do
business as a foreign corporation in each jurisdiction wherein the character of
its property, or the nature of the activities presently conducted by it, makes
such qualification necessary and where the failure to so qualify would have a
Material Adverse Effect.
2.2 Authorization. The Company has all necessary corporate power and
has taken all necessary corporate action required for the due authorization,
execution, delivery and performance by the Company of this Agreement, the
Certificate of Designation, the Warrant Agreement, the Registration Rights
Agreement referred to in Section 6.9 (the "Registration Rights Agreement") and
any other agreements or instruments executed by the Company in connection
herewith or therewith (collectively, the "Related Agreements"), and the
consummation of the transactions contemplated herein or therein, and for the due
authorization, issuance and delivery of the Purchased Shares, the Warrant, the
Warrant Shares issuable upon exercise of the Warrant and the Conversion Shares
issuable upon conversion of the Purchased Shares. Sufficient shares of
authorized but unissued Common Stock have been reserved for issuance upon
conversion of the Purchased Shares and the Warrant Shares. The issuance of the
Purchased Shares and the Warrant does not, the Warrant Shares issuable upon
exercise of the Warrant and the Conversion Shares issuable upon conversion of
the Purchased Shares will not, require any further corporate action and is not
and will not be subject to any preemptive right, right of first refusal,
conversion rights or demands of any character relating to the capital stock of
the Company. This Agreement, the Related Agreements and the other agreements and
instruments executed by the Company in connection herewith or therewith will
each be a valid and binding obligation of the Company enforceable in accordance
with its terms.
2.3 Government Approvals. No consent, approval, license or
authorization of, or designation, declaration or filing with, any court or
governmental authority is or will be required on the part of the Company in
connection with the execution, delivery and performance by the Company of this
Agreement, any of the Related Agreements and any other agreements or instruments
executed by the Company in connection herewith or therewith, or in connection
with the issuance of the Purchased Shares and Warrant or the issuance of the
Warrant Shares upon exercise of the Warrant or the issuance of the Conversion
Shares upon conversion of the Purchased Shares, except for (i) those which have
already been made or granted and (ii) the filing of a Form D and a registration
statement with the Securities and Exchange Commission (the "Commission") and any
applicable state securities commission.
2.4 Authorized and Outstanding Stock.
(a) The authorized capital stock of the Company (immediately
prior to the Closing and the transactions contemplated by Sections 1.1 and 1.2
hereof) will consist of (i) 45,000,000 shares of Common Stock and (ii) 5,000,000
shares of preferred stock of which 500,000 has been designated as Series A
Preferred Stock.
(b) The issued and outstanding capital stock of the Company
(immediately prior to the Closing and the transactions contemplated by Sections
1.1 and 1.2 hereof) will consist of (i) 7,674,256 shares of Common Stock and
(ii) no shares of Series A Preferred Stock. In addition, (i) 500,000 shares of
Common Stock have been reserved for issuance upon the conversion of the Series A
Preferred Stock, (ii) options to purchase 1,960,403 shares of Common Stock have
been granted and are unexercised under the Company's Amended and Restated 1993
Stock Incentive Plan, and options for 106,493 shares of Common Stock are
available for future grants under the Company's Amended and Restated 1993 Stock
Incentive Plan, (iii) options to purchase 60,000 shares of Common Stock have
been granted and are unexercised under the Company's 1995 Non-Employee Director
Stock Option Plan, and options for 440,000 shares of Common Stock are available
for future grants under the Company's 1995 Non-Employee Director Stock Option
Plan. All of the issued and outstanding shares of Common Stock are, and when
issued in accordance with the terms hereof, the Purchased Shares, the Warrant
Shares and the Conversion Shares will be, duly authorized and validly issued and
fully paid and non-assessable, with no personal liability attaching to the
ownership thereof and will be free and clear of all Liens, claims, charges,
Encumbrances, or transfer restrictions imposed by or through the Company, except
for restrictions imposed by Federal or state securities or "blue sky" laws and
except for those imposed pursuant to this Agreement or the Registration Rights
Agreement. The designations, powers, preferences, rights, qualifications,
limitations and restrictions in respect of each class or series of capital stock
of the Company are as set forth in the certified corporate charter of the
Company delivered under Section 6.7 hereof and all such designations, powers,
preferences, rights, qualifications, limitations and restrictions are valid,
binding and enforceable in accordance with their terms and in accordance with
applicable law.
(c) Except as set forth in Schedule 2.4(c) hereto or as
provided in this Agreement, (i) no subscription, warrant, option, convertible
security or other right (contingent or otherwise) to purchase or acquire any
shares of capital stock of the Company is authorized by the Company or
outstanding against the Company, (ii) there is not any commitment of the Company
to issue any subscription, warrant, option, convertible security or other such
right or to issue or distribute to holders of any shares of its capital stock
any evidences of indebtedness or assets of the Company, (iii) the Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any shares of its capital stock or any interest therein or to pay any dividend
or make any other distribution in respect thereof and (iv) there are no
agreements, written or oral, between the Company and any holder of its capital
stock or among any holders of its capital stock, relating to the acquisition,
disposition or voting of the capital stock of the Company. No person or entity
is entitled to (i) any preemptive right, right of first refusal or similar
rights granted by the Company with respect to the issuance of any capital stock
of the Company. Except as provided in the Registration Rights Agreement, no
person or entity currently holds rights granted by the Company with respect to
the registration of any capital stock of the Company under the Securities Act of
1933, as amended (the "Act"). All of the issued and outstanding shares of the
Company's capital stock have been offered, issued and sold by the Company in
compliance with applicable Federal and state securities laws.
2.5 Subsidiaries. Except as set forth in Schedule 2.5, the Company has
no Subsidiaries nor any investment or other interest in any Person. Except as
set forth on Schedule 2.5, the Company owns of record and beneficially, free and
clear of all Liens, charges, restrictions, claims and Encumbrances of any
nature, all of the issued and outstanding capital stock of each of its
Subsidiaries.
2.6 Securities Law Compliance. Assuming the representations and
warranties of the Purchasers set forth in Section 5.1 hereof are true and
correct in all material respects, the offer and sale of the Purchased Shares,
the Warrant, the Warrant Shares and the Conversion Shares (collectively, the
"Issuable Securities") pursuant to this Agreement will be exempt from the
registration requirements of the Act. Neither the Company nor any person acting
on its behalf has, in connection with the offering of the Issuable Securities,
engaged in (i) any form of general solicitation or general advertising (as those
terms are used within the meaning of Rule 502(c) under the Act), (ii) any action
involving a public offering within the meaning of Section 4(2) of the Act, or
(iii) any action that would require the registration under the Act of the
offering and sale of the Issuable Securities pursuant to this Agreement or that
would violate applicable state securities or "blue sky" laws. The Company has
not made and will not prior to the Closing make, directly or indirectly, any
offer or sale of the Issuable Securities or of securities of the same or similar
class as the Issuable Securities if, as a result, the offer and sale
contemplated hereby could fail to be entitled to exemption from the registration
requirements of the Act. As used herein, the terms "offer" and "sale" have the
meanings specified in Section 2(3) of the Act.
2.7 Commission Documents; Financial Information.
(a) The Company has made available to the Purchasers true and
complete copies of all SEC Documents filed with the Commission prior to the date
hereof. As of their respective filing dates, the SEC Documents complied in all
material respects with the requirements of the Act, the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and the rules and regulations of the
Commission thereunder applicable to such SEC Documents, and as of their
respective dates none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company and its Subsidiaries included in the SEC Documents
comply as of their respective dates as to form in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto (except as may be indicated in the notes thereto
or, in the case of the unaudited statements, as permitted by Form 10-Q
promulgated by the Commission), and present fairly as of their respective dates
the consolidated financial position of the Company and the Subsidiaries as at
the dates thereof and the consolidated results of their operations and their
consolidated cash flows for each of the respective periods, in conformity with
GAAP. As used in this Agreement, the consolidated balance sheet of the Company
and its Subsidiaries at March 31, 1999 previously provided to the Purchasers is
hereinafter referred to as the "Balance Sheet," and March 31, 1999 is
hereinafter referred to as the "Balance Sheet Date."
(b) Except as and to the extent expressly set forth in the
Balance Sheet, or the notes, schedules or exhibits thereto, or as disclosed in
the SEC Documents, (i) as of the Balance Sheet Date, neither the Company nor the
Subsidiaries had any material liabilities or obligations (whether absolute,
contingent, accrued or otherwise) that would be required to be included on a
balance sheet or in the notes, schedules or exhibits thereto prepared in
accordance with GAAP and (ii) since the Balance Sheet Date, the Company and its
Subsidiaries have not incurred any such material liabilities or obligations
other than in the ordinary course of business.
2.8 Absence of Certain Events; No Material Adverse Change. Except as
disclosed in the SEC Documents filed with the Commission prior to the date
hereof, since the Balance Sheet Date, each of the Company and its Subsidiaries
has conducted its business operations in the ordinary course and there has not
occurred any event or condition having, or that is reasonably likely to have, a
Material Adverse Effect. Without limiting the generality of the foregoing, other
than as is disclosed in the SEC Documents filed with the Commission prior to the
date hereof or on Schedule 2.8 hereto, since the Balance Sheet Date there has
not occurred:
(a) any change or agreement to change the character or
nature of the business of the Company or any of its Subsidiaries;
(b) any purchase, sale, transfer, assignment, conveyance or
pledge of the assets or properties of the Company or any of its Subsidiaries,
except in the ordinary course of business;
(c) any waiver or modification by the Company or any of its
Subsidiaries of any right or rights of substantial value, or any payment, direct
or indirect, in satisfaction of any liability, in each case, having a Material
Adverse Effect;
(d) any liability, contract, agreement, license or other
commitment entered into or assumed by or on behalf of the Company or any of its
Subsidiaries relating to the business, assets or properties of the Company or
any of its Subsidiaries, whether oral or written, except in the ordinary course
of business;
(e) any loan, advance or capital expenditure by the Company or
any of its Subsidiaries, except for loans, advances and capital expenditures
made in the ordinary course of business;
(f) any change in the accounting principles, methods,
practices or procedures followed by the Company in connection with the business
of the Company or any change in the depreciation or amortization policies or
rates theretofore adopted by the Company in connection with the business of the
Company and its Subsidiaries;
(g) any declaration or payment of any dividends, or other
distributions in respect of the outstanding shares of capital stock of the
Company or any of its Subsidiaries (other than dividends declared or paid by any
Subsidiary of the Company);
(h) any issuance of any shares of capital stock of the Company
or any of its Subsidiaries or any other change in the authorized capitalization
of the Company or any of its Subsidiaries, except as contemplated by this
Agreement or except pursuant to employee benefit plans, programs or arrangements
in existence on the date hereof, in the ordinary course of business consistent
with past practice;
(i) any grant or award of any options, warrants, conversion
rights or other rights to acquire any shares of capital stock of the Company or
any of its Subsidiaries, except as contemplated by this Agreement or except
pursuant to employee benefit plans, programs or arrangements in existence on the
date hereof, in the ordinary course of business consistent with past practice;
or
(j) entering into any commitment (contingent or otherwise) to
do any of the foregoing.
2.9 Litigation. Except as otherwise set forth on Schedule 2.9, there is
no litigation or governmental proceeding or investigation pending or, to the
knowledge of the Company, threatened, against the Company or any Subsidiary or
affecting any of the Company's or such Subsidiary's properties or assets, or to
the knowledge of the Company against any officer or key employee of the Company
or any Subsidiary in his or her capacity as such. Neither the Company, any
Subsidiary, nor any officer or key employee of the Company, any Subsidiary in
his or her capacity as such is, to the knowledge of the Company, in default with
respect to any order, writ, injunction, decree, ruling or decision of any court,
commission, board or other government agency.
2.10 Compliance with Laws and Other Instruments. The Company and its
Subsidiaries are in compliance with all of the provisions of this Agreement and
of its charter and by-laws, and in all material respects with the provisions of
each mortgage, indenture, lease, license, other agreement or instrument, and
each judgment, decree, judicial order, statute, and regulation (whether issued
under domestic, foreign or international law) by which any of them is bound or
to which any of them or any of their respective properties are subject except
where the failure to be in such compliance would not result in a Material
Adverse Effect. Neither the execution, delivery or performance of this Agreement
and the Related Agreements, nor the offer, issuance, sale or delivery of the
Purchased Shares and Warrant, or the Warrant Shares upon exercise of the Warrant
or the Conversion Shares upon conversion of the Purchased Shares, with or
without the giving of notice or passage of time, or both, will violate, or
result in any breach of, or constitute a default under, or result in the
imposition of any encumbrance upon any asset of the Company or any Subsidiary
pursuant to any provision of the Company's or such Subsidiary's charter or
by-laws, or any statute, rule or regulation, contract, lease, judgment,
decree or other document or instrument by which the Company or any Subsidiary is
bound or to which the Company or any Subsidiary or any of their respective
properties are subject, or, to the knowledge of the Company, will cause the
Company or any Subsidiary to lose the benefit of any right or privilege it
presently enjoys or, to the knowledge of the Company, cause any Person who is
expected to normally do business with the Company or any Subsidiary to
discontinue to do so on the same basis.
2.11 Taxes. The Company and each Subsidiary has filed all Tax returns
(including statements of estimated Taxes owed) required to be filed within the
applicable periods for such filings and has paid all Taxes required to be paid,
and has established adequate reserves (net of estimated Tax payments already
made) for the payment of all Taxes payable in respect to the period subsequent
to the last periods covered by such returns. Except as set forth on Schedule
2.11, no deficiencies for any Tax are currently assessed against the Company or
any Subsidiary, and no Tax returns of the Company or any Subsidiary have been
audited during the last three (3) years, and, there is no such audit pending or,
to the knowledge of the Company, contemplated. There is no Tax Lien, whether
imposed by any federal, state or local Taxing authority, outstanding against the
assets, properties or business of the Company or any Subsidiary except for such
Tax Liens as are currently being contested in good faith and by appropriate
proceedings diligently conducted, and for which adequate reserves have been set
aside in accordance with GAAP. For the purposes of this Agreement, the terms
"Tax" and "Taxes" shall include all federal, state, local and foreign taxes,
including income, franchise, property, sales, withholding, payroll and
employment taxes.
2.12 Intentionally Omitted.
2.13 Intentionally Omitted.
2.14 Patents, Trademarks, etc. The Company and its Subsidiaries own or
possess adequate licenses or other rights to use all patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, trade names, copyrights, manufacturing processes, formulae, trade
secrets and know how (collectively, "Intellectual Property") necessary to the
conduct of their business as conducted and as proposed to be conducted, and no
claim is pending or, to the knowledge of the Company, threatened to the effect
that the operations of the Company infringe upon or conflict with the asserted
rights of any other person under any Intellectual Property. No claim is pending
or, to the knowledge of the Company, threatened to the effect that any such
Intellectual Property owned or licensed by the Company, or which the Company or
any Subsidiary otherwise has the right to use, is invalid or unenforceable by
the Company or such Subsidiary. All technical information developed by and
belonging to the Company and its Subsidiaries which has not been patented or
copywritten has been kept confidential. Neither the Company nor any Subsidiary
has granted or assigned to any other person or entity any right to manufacture,
assemble or sell the products or proposed products or to provide the services or
proposed services of the Company or such Subsidiary. No current or former
stockholder, employee, officer or director of the Company or any of its
Subsidiaries has
(directly or indirectly) any right, title or interest in any of the Intellectual
Property other than such right which such Person may enjoy as a stockholder of
the Company.
2.15 Intentionally Omitted.
2.16 Governmental and Industrial Approvals. The Company and each of its
Subsidiaries has all the permits, licenses, orders, franchises and other rights
and privileges of all federal, state, local or foreign governmental or
regulatory bodies necessary for the Company and such Subsidiaries to conduct
their respective businesses as presently conducted. All such permits, licenses,
orders, franchises and other rights and privileges are in full force and effect
and no suspension or cancellation of any of them is threatened, and none of such
permits, licenses, orders, franchises or other rights and privileges will be
affected by the consummation of the transactions contemplated in this Agreement
and the Related Agreements.
2.17 Federal Reserve Regulations. Neither the Company nor any of its
Subsidiaries has engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation G of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of the sale of the Purchased Shares will be used to purchase or carry any margin
security or to extend credit to others for the purpose of purchasing or carrying
any margin security or in any other manner which would involve a violation of
any of the regulations of the Board of Governors of the Federal Reserve System.
2.18 Contracts and Commitments. All of the material contracts of the
Company or any of its Subsidiaries that are required to be described in the SEC
Documents or to be filed as exhibits thereto prior to the date hereof are
described in the SEC Documents filed prior to the date hereof or filed as
exhibits thereto and are in full force and effect. All material contracts to
which the Company or its Subsidiaries are parties on or prior to the date hereof
which will be required to be described or filed as an exhibit in the SEC
Documents required to be filed following the date hereof have been provided to
the Purchasers or are listed on Schedule 2.18 and are in full force and effect.
Neither the Company nor any of its Subsidiaries nor, to the knowledge of the
Company, any other party is in material breach of or in default under any such
contract.
2.19 Intentionally Omitted.
2.20 Intentionally Omitted.
2.21 No Brokers or Finders. No person has or will have, as a result of
the transactions contemplated by this Agreement, any right, interest or claim
against or upon the Company or any of its Subsidiaries for any commission, fee
or other compensation as a finder or broker because of any act or omission by
the Company or any of its Subsidiaries.
2.22 Transactions with Affiliates. Except as set forth on Schedule
2.22, there are no loans, leases or other agreements, understandings or
continuing transactions between the
Company or any Subsidiary on the one hand, and any officer or director of the
Company or any Subsidiary or any person owning one percent (1%) or more of the
Common Stock of the Company or any respective family member or affiliate of such
officer, director or stockholder on the other hand.
2.23 Intentionally Omitted.
2.24 Restrictions on Subsidiaries. Except as set forth on Schedule
2.24, there are no restrictions on the Company or any of its Subsidiaries which
prohibit or otherwise restrict the transfer of cash or other assets between the
Company and any of its Subsidiaries or between any Subsidiaries of the Company.
2.25. Intentionally Omitted.
2.26 U.S. Real Property Holding Corporation. Neither the Company nor
any Subsidiary is now or has ever been a "United States real property holding
corporation," as defined in Section 897(c)(2) of the Code and Section 1.897-2(b)
of the Regulations promulgated by the Internal Revenue Service, and the Company
or any Subsidiary has filed with the Internal Revenue Service all statements, if
any, with its United States income Tax returns which are required under Section
1.897-2(h) of such Regulations.
2.27 Intentionally Omitted.
2.28 Corporate Records. The minute books of the Company and each of its
Subsidiaries contain accurate, complete and current copies of all charter
documents and of all minutes of meetings, resolutions and other proceedings of
its board of directors and stockholders, duly signed by the Secretary, an
Assistant Secretary or another appropriate officer, all directors or all
stockholders, as appropriate. The stock record book of the Company and each of
its Subsidiaries are also complete, correct and current. The Company has made
available true, correct and complete copies of such minute books and stock
record books to the Purchasers.
2.29 Intentionally Omitted.
2.30 Intentionally Omitted.
2.31 Management Presentation. The Company has previously delivered to
each Purchaser a copy of the Company's Management Presentation attached hereto
as Schedule 2.31 (the "Management Presentation"). The description in the
Management Presentation of the Company's business is true and correct in all
material respects as of the date of the specific document of the Management
Presentation in which such description is found. The pro forma financial
information and financial projections included in the Management Presentation
were prepared with due care based on assumptions believed by the Company to be
reasonable, and
presents the Company's good faith estimate of future results. Schedule 2.31
lists the assumptions and risks of pro forma financial information.
2.32 Disclosures. Neither this Agreement, any Schedule or Exhibit to
this Agreement, the Related Agreements or the Financial Statements contains any
untrue statement of a material fact or omits a material fact necessary to make
the statements made herein or therein, in light of the circumstances in which
made, not misleading. There is no fact known to the Company which, in the
Company's reasonable business judgment on the date hereof, materially and
adversely affects the business, or financial condition of the Company or its
properties or assets, which has not been set forth herein or in any other
document delivered in connection herewith.
ARTICLE III
AFFIRMATIVE COVENANTS OF THE COMPANY
Without limiting any other covenants and provisions hereof, the Company
covenants and agrees that it will observe the following covenants on and after
the date hereof and for so long as the Purchasers hold any shares of Series A
Preferred Stock, unless the Advent Representative otherwise consents:
3.1 Accounts and Reports. The Company will, and will cause each of its
Subsidiaries to, maintain a standard system of accounts in accordance with GAAP
consistently applied and the Company will, and will cause each of its
Subsidiaries to, keep full and complete financial records. The Company will
furnish to each Purchaser the information set forth in this Section 3.1.
(a) Within one hundred twenty (120) days after the end of each
fiscal year, a copy of the audited annual consolidated financial statement
(including income statements and balance sheets) and cash flow statements of the
Company and its Subsidiaries as of the end of such year, prepared in accordance
with GAAP, duly certified by an independent public accountant of national
recognition selected by the Board of Directors of the Company and accompanied by
a written discussion and analysis by management, including any relevant
supporting documentation and data of such financial statements.
(b) Within forty-five (45) days after the end of each calendar
quarter (other than the last quarter in each fiscal year) an unaudited
consolidated quarterly financial statement (including income statements, balance
sheets, cash flow statements, and comparisons to budget) of the Company and its
Subsidiaries as of the end of such quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding period of the
preceding fiscal year for the Company and each of its Subsidiaries, as the case
may be, all in reasonable detail and prepared in accordance with GAAP (except
for normal year end adjustments and the absence of footnotes) and certified to
by the Chief Financial Officer of the Company.
(c) At the time of delivery of each annual statement, a
certificate, executed by either the president or chief financial officer of the
Company stating (i) that such officer has caused this Agreement to be reviewed
and has no knowledge of any default by the Company or any Subsidiary in the
performance or observance of any of the provisions of this Agreement or, if such
officer has such knowledge, specifying such default, and (ii) with respect to
the delivery of annual statements, a statement as to the then conversion value
of the Purchased Shares and the number of Conversion Shares into which each
share of Series A Preferred Stock may then be converted.
(d) Promptly upon receipt thereof and review by the Company's
Board of Directors, any written report, so called "management letter," and any
other communication submitted to the Company or any Subsidiary by its
independent public accountants relating to the business, prospects or financial
condition of the Company and its Subsidiaries;
(e) Promptly after the commencement thereof, notice of (i) all
actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Company or any Subsidiary which, if successful, could have a
Material Adverse Effect; and (ii) all material defaults by the Company or any
Subsidiary (whether or not declared) under any agreement for money borrowed
(unless waived or cured within applicable grace periods);
(f) Promptly upon sending, making available, or filing the
same, all reports and financial statements which the Company (or any Subsidiary)
shall send or make available generally to the stockholders of the Company as
such or to the Commission; and
(g) Such other information with regard to the business,
properties or the condition or operations, financial or otherwise, of the
Company or its Subsidiaries as the Purchasers may from time to time reasonably
request.
3.2 Payment of Taxes. The Company will pay and discharge (and cause any
Subsidiary to pay and discharge) all Taxes, assessments and governmental charges
or levies imposed upon it, the Company and the Subsidiaries or upon their
respective income or profits, or upon any properties belonging to each of them,
prior to the date on which penalties attach thereto, and all lawful claims
which, if unpaid, might become a Lien or charge upon any properties of the
Company (or any Subsidiary), provided that neither the Company nor any
Subsidiary shall be required to pay any such Tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings if the
Company or such Subsidiary shall have set aside on its books adequate reserves
with respect thereto.
3.3 Intentionally Omitted.
3.4 Compliance with Laws, etc. The Company will comply (and cause each
of its Subsidiaries to comply) with all applicable laws, rules, regulations and
orders of any governmental authority, the noncompliance with which could result
in a Material Adverse Effect.
3.5 Inspection. Upon prior notice, at any reasonable time during normal
business hours and from time to time, the Company and each of its Subsidiaries
will permit any one or more of the Purchasers, or any of their authorized agents
or representatives, to examine and make copies of and extracts from the records
and books of account of and visit the properties of the Company and any of its
Subsidiaries and to discuss the Company's affairs, finances and accounts with
any of its officers or directors; provided that any Person or Persons exercising
rights under this Section 3.5 shall (i) use all reasonable efforts to ensure
that any such examination or visit results in a minimum of disruption to the
operations of the Company or any of its subsidiaries and (ii) prior to the
Company disclosing or providing access to information with respect to the
Company, shall agree in writing to keep all proprietary information of the
Company or any of its subsidiaries disclosed to him in the course of such
inspection confidential in a manner consistent with prudent business practices
and treatment of such Person's or Persons' own confidential information. The
rights granted under this Section 3.5 shall be in addition to any rights which
any Purchaser may have under applicable law in its capacity as a stockholder of
the Company.
3.6 Corporate Existence; Ownership of Subsidiaries. The Company will,
and will cause its Subsidiaries to, at all times preserve and keep in full force
and effect their corporate existence, and rights and franchises material to the
business of the Company and its Subsidiaries, taken as a whole, and will
qualify, and will cause each of its Subsidiaries to qualify, to do business as a
foreign corporation in any jurisdiction where the failure to do so would have a
Material Adverse Effect; provided, however, that the Company may merge or
liquidate one or more of its Subsidiaries into the Company or into another
Subsidiary. The Company or a Subsidiary shall at all times own of record and
beneficially, free and clear of all Liens, charges, restrictions, claims and
Encumbrances of any nature, all of the issued and outstanding capital stock of
each of its Subsidiaries, except for XxXxxx Newco Corporation.
3.7 Compliance with ERISA. The Company will comply (and cause each of
its Subsidiaries to comply) in all material respects with all minimum funding
requirements applicable to any pension or other employee benefit plans which are
subject to ERISA or to the Code, and comply in all other material respects with
the provisions of ERISA and the Code, and the rules and regulations thereunder,
which are applicable to any such plan. Neither the Company nor any of its
Subsidiaries will permit any event or condition to exist which could permit any
such plan to be terminated under circumstances which cause the Lien provided for
in Section 3068 of ERISA to attach to the assets of the Company or any of its
Subsidiaries.
3.8 Intentionally Omitted.
3.9 Intentionally Omitted.
3.10 Board of Directors Meetings. The Company shall use its best
efforts to cause the election of, and to thereafter continue in office, the
Advent Representative (as defined below) as a member of its Board of Directors.
The Advent Representative will be nominated by Advent Global GECC III Limited
Partnership, and shall initially be Xxxxxxx X. Xxxxxxxx. The Amended Certificate
of Incorporation (and all subsequent amendments and restatements thereof) or
By-laws of the Company shall at all times provide for indemnification of the
directors and limitations on the liability of the directors to the fullest
extent permitted under applicable state law. The Company shall reimburse the
Advent Representative for his reasonable travel expenses, including the cost of
airfare and any necessary meals and lodging, incurred in connection with
attending meetings of the Board of Directors. In addition, the Company shall
maintain at all times a Compensation Committee and an Audit Committee of the
Board of Directors. A vacancy in the directorship to be occupied by the Advent
Representative shall be filled only by a nominee of the Purchasers holding a
majority of Purchased Shares who must be appointed by the Board of Directors in
accordance with the by-laws of the Company. The Advent Representative shall be a
member of the Compensation Committee and shall have those responsibilities as
may be determined from time to time by a majority of the entire Board of
Directors.
3.11 Rule 144A Information. The Company shall, upon the written request
of any Purchaser, provide to such Purchaser and to any prospective institutional
transferee of the Purchased Shares or Warrant designated by such Purchaser, such
financial and other information as is available to the Company or can be
reasonably obtained by the Company without material expense and as such
Purchaser may reasonably determine is required to permit such transfer to comply
with the requirements of Rule 144A promulgated under the Act.
3.12 Regular Course of Business. The Company agrees that on and after
the date hereof the Company and each of its Subsidiaries will carry on its
business diligently and in the ordinary course and substantially in the same
manner as heretofore carried on and will use its best efforts to preserve its
present business organization intact, keep available the services of its present
officers, agents and employees, keep its insurable properties insured against
liability and the perils of casually, fire and extended coverage, maintain
adequate insurance against other hazards and risks and preserve its present
relationships with suppliers, customers and other persons having business
dealings with it.
3.13 Registration of Conversion Shares and Warrant Shares. The Company
shall, within one hundred twenty (120) calendar days from the date hereof, file
with the Commission a registration statement on Form S-3 (or any successor form
to Form S-3) for a public resale offering by the Purchasers of the Conversion
Shares and Warrant Shares issuable to the Purchasers and shall use its best
efforts to cause such registration statement to become and remain effective for
the period ending on the first to occur of (x) the date the resale of all of the
Conversion Shares and Warrant Shares registered thereunder is complete or (y)
the fifth anniversary of the date hereof. Such registration shall be effected
pursuant to the terms of the Registration Rights Agreement attached hereto as
Exhibit C.
ARTICLE IV
NEGATIVE COVENANTS OF THE COMPANY
Without limiting any other covenants and provisions hereof, the Company
covenants and agrees that it will comply (and will cause each Subsidiary to
comply) with each of the provisions of this Article IV on and after the date
hereof until conversion of all the Series A Preferred Stock.
4.1 Distributions. No dividends shall be declared or paid or set aside
for payment on any shares of any class or classes of stock of the Company or any
series thereof ranking, as to dividends, on a parity with or junior to the
Series A Preferred Stock for any period unless full cumulative dividends have
been or contemporaneously are declared and paid, or declared and sum sufficient
for the payment thereof set apart for such payment, on the Series A Preferred
Stock for all dividend payment periods terminating on or prior to the date of
payment of such full cumulative dividends. When dividends are not paid in full,
as aforesaid, upon the shares of the Series A Preferred Stock and any other
shares of any class or classes of stock or series thereof ranking on a parity as
to dividends with the Series A Preferred Stock, all dividends declared upon
shares of the Series A Preferred Stock and any other shares of such class or
classes or series thereof ranking on a parity as to dividends with the Series A
Preferred Stock shall be declared pro rata so that the amount of dividends
declared per share on the Series A Preferred Stock and such other shares shall
in all cases bear to each other the same ratio that accrued and unpaid dividends
per share on the shares of the Series A Preferred Stock and such other shares
bear to each other. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series A Preferred
Stock which may be in arrears. In addition, when and if the Board of Directors
shall declare a dividend payable with respect to the then outstanding shares of
Common Stock of the Corporation, the holders of the Series A Preferred Stock
shall be entitled to the amount of dividends per share as would be payable on
the largest number of whole shares of Common Stock into which each share of
Series A Preferred Stock could then be converted (such number to be determined
as of the record date for the determination of holders of Common Stock entitled
to receive such dividend). Declared and unpaid dividends on the Series A
Preferred Stock will be payable upon the liquidation or winding up of the
Corporation first to the holders of Series A Preferred Stock and then to the
holders of Common Stock.
4.2 Dealings with Affiliates. Except as set forth on Schedule 4.2 and
except for transactions made on an arms-length basis, or through the Company's
normal and customary dealings, the Company will not enter into any transaction
including, without limitation, any loans or extensions of credit or royalty
agreements with any officer or director of the Company or any Subsidiary or
holder of any class of capital stock of the Company, or any member of their
respective immediate families or any corporation or other entity directly or
indirectly controlled by one or more of such officers, directors or stockholders
or members of their immediate families, except for (i) advances in reasonable
amounts made to employees of the Company or any
Subsidiary for valid business purposes, provided that such advances are repaid
to the Company within ninety (90) days, and (ii) advances made to employees of
the Company, upon approval of the Board of Directors, related to such employees'
exercise of stock options.
4.3 Limitation on Restrictions on Subsidiary Dividends and Other
Distributions. Except as set forth on Schedule 4.3, the Company shall not permit
any of its Subsidiaries, directly or indirectly, to create or suffer to exist or
become effective any Encumbrances or restrictions on the ability of any of its
Subsidiaries to (i) pay dividends or make any other distributions on its capital
stock or any other interest or participation in its profit owned by any of the
Company or any of its Subsidiaries, or pay any indebtedness owed by any of the
Subsidiaries, (ii) make loans or advances to the Company, or (iii) transfer any
of its properties or assets to the Company.
4.4 No Conflicting Agreements. The Company agrees that neither it nor
any Subsidiary will, without the consent of a majority in interest of the
Purchasers, enter into or amend any agreement, contract, commitment or
understanding which would restrict or prohibit the exercise by the Purchasers of
any of their rights under this Agreement.
4.5 Intentionally Omitted.
4.6 Intentionally Omitted.
4.7 Other Negative Covenants. The Company hereby further
covenants and agrees that it will not:
(a) Create or authorize the creation of any additional class
or series of shares of stock or equity unless the same ranks junior to the
Series A Preferred Stock as to conversion, redemption, the distribution of
assets on the liquidation, dissolution or winding up of the Company, or increase
the authorized amount of the Series A Preferred Stock or any series thereof or
increase the authorized amount of any additional class or series of shares of
stock unless the same ranks junior to the Series A Preferred Stock as to
conversion, redemption, or the distribution of assets on the liquidation,
dissolution or winding up of the Company, or create or authorize any obligation
or security convertible into shares of Series A Preferred Stock or into shares
of any other class or series of stock unless the same ranks junior to the Series
A Preferred Stock as to conversion, redemption or the distribution of assets on
the liquidation, dissolution or winding up of the Company, whether any such
creation, authorization or increase shall be by means of amendment to the
Amended Certificate of Incorporation or by merger, consolidation or otherwise;
(b) Amend, alter or repeal its Amended Certificate of
Incorporation, By-laws or other organizational documents in any manner, or take
any other corporate action, that would alter, change or adversely affect the
terms, conditions, rights or privileges of the Series A Preferred Stock, except
any amendment to its Amended Certificate of Incorporation in
connection with the creation of an additional class or series of shares
permitted pursuant to Section 4.7(a);
(c) Redeem, purchase or otherwise acquire for value (or pay
into or set aside for a sinking fund for such purpose) any of the Common Stock
of any class, any other capital stock of the Company, or any of the Company's
options, warrants or convertible or exchangeable securities except that these
provisions shall not prohibit the Company from completing any redemption
permitted by the Certificate of Incorporation and except for acquisitions of
securities of employees of the Company or its affiliates; or
(d) within one (1) year following the Closing, merge or
consolidate with or into any other corporation or sell, lease or convey all or
substantially all of its property or business without obtaining the prior
written consent of the Purchasers.
ARTICLE V
INVESTMENT REPRESENTATIONS
5.1 Representations and Warranties. Each Purchaser hereby severally as
to itself (but not jointly) represents and warrants to the Company,
understanding and agreeing that the Company is entering into this Agreement in
part in reliance on such representations and warranties, as follows:
(a) Such Purchaser is an "Accredited Investor" as that term is
defined in Rule 501(a) of Regulation D promulgated under the Act;
(b) Such Purchaser is duly authorized to execute this
Agreement and the Related Agreements, and assuming due execution and delivery by
the Company of the Agreement and the Related Agreements, this Agreement and the
Related Agreements to which such Purchaser is a party constitute legal, valid
and binding obligations of such Purchaser, enforceable against such Purchaser in
accordance with their respective terms;
(c) Such Purchaser has been advised by the Company that none
of the Purchased Shares or Warrant have been registered under the Act, that the
Purchased Shares and Warrant will be issued on the basis of the statutory
exemption provided by Section 4(2) of the Act or Regulation D promulgated
thereunder, or both, relating to transactions by an issuer not involving any
public offering and under similar exemptions under certain state securities
laws, that this transaction has not been reviewed by, passed on or submitted to
any federal or state agency or self-regulatory organization where an exemption
is being relied upon, and that the Company's reliance thereon is based in part
upon the representations made by such Purchaser in this Agreement and the
Related Agreements. Such Purchaser acknowledges that he, she or it has been
informed by the Company of, or is otherwise familiar with, the nature of the
limitations imposed by the Act and the rules and regulations thereunder on the
transfer of securities;
(d) Such Purchaser has been further advised and understands
that no public market now exists for the Purchased Shares or Warrant and that a
public market may never exist for the Purchased Shares and Warrant and may cease
to exist for the Conversion Shares;
(e) Such Purchaser is purchasing the Purchased Shares and
Warrant for investment purposes, for its own account and not with a view to, or
for sale in connection with, any distribution thereof in violation of federal or
state securities laws;
(f) By reason of its business or financial experience, such
Purchaser has the capacity to protect its own interest in connection with the
transactions contemplated hereunder;
(g) Such Purchaser is aware of the Company's business affairs
and financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the Purchased
Shares and Warrant; provided, however, that nothing in this Section 6.1 shall be
deemed to vitiate or limit the representations, warranties and covenants of the
Company contained in this Agreement; and
(h) No person has or will have, as a result of the
transactions contemplated by this Agreement, any right, interest or claim
against or upon any Purchaser, the Company, or any of its Subsidiaries for any
commission, fee or other compensation as a finder or broker because of any act
or omission by such Purchaser.
5.2 Permitted Sales; Legends. Notwithstanding the foregoing
representations, the Company agrees that it will permit (i) a distribution of
Purchased Shares, Conversion Shares or Warrant Shares by a partnership to one or
more of its partners or investors or a limited liability company and its
members, where no consideration is exchanged therefor by such members, partners,
or to a retired or withdrawn partner who retires or withdraws after the date
hereof in full or partial distribution of his interest in such partnership, or
to the estate of any such partner or the transfer by gift, will or intestate
succession of any partner to his spouse or to the siblings, lineal descendants
or ancestors of such partner or his spouse, or to a trust created for the
benefit of one or more of the foregoing, if the transferee agrees in writing to
be subject to the terms hereof to the same extent as if it were an original
Purchaser hereunder, and (ii) a sale or other transfer of any of the Purchased
Shares, Conversion Shares, the Warrant Shares or the Warrant upon obtaining
assurance satisfactory to the Company that such transaction is exempt from the
registration requirements of, or is covered by an effective registration
statement under, the Act and applicable state securities or "blue-sky" laws,
including, without limitation, receipt of an unqualified opinion to such effect
of counsel reasonably satisfactory to the Company. The certificates representing
the Purchased Shares shall bear a legend evidencing such restriction on transfer
substantially in the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended ("the Act"), and have been
acquired for investment and not with
a view to, or in connection with, the sale or distribution thereof.
Such shares may not be sold, offered for sale, pledged or hypothecated
in the absence of such registration unless (a) the Corporation receives
an opinion of counsel reasonably satisfactory to it stating that such
sale or transfer is exempt from the registration and prospectus
delivery requirements of the Act, (b) it is established to the
satisfaction of the Corporation that such sale or transfer is in a
transaction which is exempt under, or otherwise in compliance with,
such laws or (c) the Corporation receives a "no action" letter or
similar declaration from the Securities and Exchange Commission to the
effect that such sale or transfer without registration will not result
in a recommendation by said Commission that action be taken with
respect thereto. Copies of the agreements covering the purchase of
these shares and restricting the sale, assignment, transfer, or other
disposition of, or the voting of, the shares represented by this
certificate may be obtained at no cost by written request made by the
holder of record of this certificate to the Secretary of the
Corporation at the principal executive offices of the Corporation.
The Corporation is authorized to issue more than one class of stock.
Stockholders may obtain, upon written request and without charge, a
statement of the rights, preferences, privileges, and restrictions
granted to or imposed upon each class or series of shares authorized to
be issued and upon the holders thereof from the principal office of the
Corporation."
ARTICLE VI
CONDITIONS OF PURCHASERS' OBLIGATION
6.1 Effect of Conditions. The obligation of the Purchasers to purchase
and pay for the Purchased Shares and the Warrant at the Closing, if any, shall
be subject at their election to the satisfaction of each of the conditions
stated in the following Sections of this Article VI.
6.2 Representations and Warranties. The representations and warranties
of the Company contained in this Agreement shall be true and correct on the date
of the Closing, and the Purchasers shall have received a certificate dated as of
such Closing and signed on behalf of the Company to that effect.
6.3 Performance. The Company shall have performed and complied with all
of the agreements, covenants and conditions contained in this Agreement required
to be performed or complied with by it at or prior to the Closing, and the
Purchasers shall have received a certificate dated as of such Closing and signed
on behalf of the Company to that effect.
6.4 Amendment to Amended Certificate of Incorporation. The Amended
Certificate of Incorporation of the Company shall have been amended by the
filing with, and acceptance by, the Secretary of State of Delaware of the
Certificate of Designation.
6.5 Warrant Agreement. A Warrant Agreement in the form attached hereto
as Exhibit B shall have been executed by the Company and each of the Purchasers.
6.6 Opinion of Counsel. The Purchasers shall have received an opinion,
dated the date of the Closing, from Xxxxxxx Xxxx LLP, counsel to the Company, in
the form attached hereto as Exhibit D.
6.7 Certified Documents, etc. Counsel for the Purchasers shall have
received a copy of the Company's Certificate of Incorporation, as amended,
certified by the Secretary of State of the State of Delaware and copies of the
Company's By-Laws certified by its Secretary, as well as any and all other
documents, including certificates as to votes adopted and incumbency of officers
and certificates from appropriate authorities as to the legal existence and good
standing of the Company and its Subsidiaries, which the Purchasers or their
counsel may reasonably request.
6.8 No Material Adverse Change. The business, properties, assets or
condition (financial or otherwise) of the Company and its Subsidiaries shall not
have been materially adversely affected since the date of this Agreement,
whether by fire, casualty, act of God or otherwise, and there shall have been no
other changes in the business, properties, assets or condition (financial or
otherwise), of the Company or any of its Subsidiaries that would have a material
adverse effect on their respective businesses or assets.
6.9 Registration Rights Agreement. The Company and the Purchasers shall
have executed the Registration Rights Agreement in the form of Exhibit C
attached hereto.
6.10 Board Election. Concurrently with the Closing, the Advent
Representative shall have been appointed as a Director of the Company.
6.11 Consents and Waivers. The Company shall have obtained all consents
or waivers necessary to execute this Agreement and the other agreements and
documents contemplated herein, to issue the Purchased Shares, and the Warrant
and to carry out the transactions contemplated hereby and thereby. All corporate
and other action and governmental filings necessary to effectuate the terms of
this Agreement, the Related Agreements, the Purchased Shares, the Conversion
Shares, the Warrant and the Warrant Shares and other agreements and instruments
executed and delivered by the Company in connection herewith shall have been
made or taken.
6.12 Series A Preferred Stock Certificates. The Company shall have
delivered a stock certificate to each Purchaser representing that number of
shares of Series A Preferred Stock set forth beside such Purchaser's name on
Schedule 1.1 attached hereto.
ARTICLE VII
CONDITIONS OF THE COMPANY'S OBLIGATION
7.1 Effect of Conditions. The Company's obligation to sell the
Purchased Shares and the Warrant shall be subject at its election to the
satisfaction of each of the conditions stated in the following Sections of this
Article VII.
7.2 Representations and Warranties; Performance. The representations
and warranties of the Purchasers contained in this Agreement shall be true and
correct on the date of the Closing with the same effect as though made on and as
of that date and, with respect to the Company's obligation to issue and deliver
Purchased Shares and Warrant to any Purchaser, such Purchaser shall have
tendered payment for the Purchased Shares at the Closing by wire transfer to an
account designated in writing by the Company in accordance with Section 1.4
hereof.
ARTICLE VIII
PREEMPTIVE RIGHT
8. Purchase Rights.
8.1 Right of Purchase. The Company hereby grants to each
Purchaser so long as it shall own, of record or beneficially, or have the right
to acquire from the Company, any Series A Preferred Stock, the right to purchase
all or part of his or its Pro Rata Share of New Securities (as such term is
defined herein) which the Company, from time to time, proposes to sell and
issue. For purposes of this purchase right, the term "Pro Rata Share" shall mean
the ratio of the number of shares of Series A Preferred Stock (calculated on a
fully converted basis, including without limitation the Conversion Shares and
Warrant Shares) which such Purchaser owns to the total number of shares of
Series A Preferred Stock (calculated on a fully converted basis) and shares of
Common Stock then outstanding.
8.2 Right of Over-Allotment. The Purchasers shall have a right
of over-allotment pursuant to this Section 8.2 such that to the extent a
Purchaser does not exercise its or his purchase right in full hereunder, such
additional shares of New Securities which such Purchaser did not purchase may be
purchased by the other Purchasers in proportion to the total number of shares of
Series A Preferred Stock, which each such other Purchaser owns or has the right
to acquire from the Company compared to the total number of shares of Series A
Preferred Stock which all such other Purchasers own or have the right to acquire
from the Company.
8.3 Definition of New Securities. "New Securities" shall mean
any capital stock of the Company whether now authorized or not, and rights,
options or warrants to purchase capital stock, and securities of any type
whatsoever that are, or may become convertible into or exchangeable for capital
stock, issued on or after the date hereof; provided, however, that the term "New
Securities" does not include (a) securities purchased under this Agreement, the
Warrant, the Warrant Shares or the Conversion Shares, (b) Common Stock issued as
a stock dividend to holders of Common Stock or upon any stock split, subdivision
or
combination of shares of Common Stock, (c) shares (or options or rights to
acquire such shares) of the Company's Common Stock (such number of shares shall
be proportionately adjusted to reflect any stock dividend, stock split or other
form of recapitalization occurring after the date hereof) reserved for issuance
upon exercise of options pursuant to the Company's Amended and Restated 1993
Stock Incentive Plan and the Company's 1995 Non-Employee Director Stock Option
Plan that have been or may be granted by the Company's Board of Directors, and
(d) securities issued pursuant to an acquisition or Strategic Financing,
provided that (i) any such transaction is approved by a majority of the
Company's Board of Directors. For purposes of this Section 8.3, the term
"Strategic Financing" shall mean any sale or issuance of capital stock of the
Company in connection with an operational, technical or strategic contract,
agreement, partnership or joint venture wherein the primary purpose of such a
transaction is not to raise funds, but rather to develop a strategic partnering
or alliance with the Company.
8.4 Notice from the Company. In the event the Company proposes
to undertake an issuance of New Securities, it shall give each Purchaser written
notice of its intention, describing the type of New Securities and the price and
the terms upon which the Company proposes to issue the same. Each Purchaser
shall have twenty (20) business days from the date of receipt of any such notice
to agree to purchase up to their Pro Rata Share of such New Securities (and any
over-allotment amount pursuant to the operation of Section 8.2 hereof) for the
price and upon the terms specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased.
8.5 Sale by the Company. In the event any Purchaser fails to
exercise in full his or its purchase right (after giving effect to the
over-allotment provision of Section 8.2 hereof), the Company shall have ninety
(90) days thereafter to sell the New Securities with respect to which such
Purchaser purchase right was not exercised, at a price and upon terms no more
favorable to the purchasers thereof than specified in the Company's notice. To
the extent the Company does not sell all the New Securities offered within said
ninety (90) day period, the Company shall not thereafter issue or sell such New
Securities without first again offering such securities to each Purchaser in the
manner provided above.
8.6 Termination of Rights. The rights granted under this
Article VIII shall expire immediately prior to, and shall not apply in
connection with the conversion of all of the Purchased Shares.
ARTICLE IX
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Act" shall have the meaning set forth in Section 2.4(c).
"Advent Representative" shall have the meaning set forth in
Section 3.10.
"Agreement" means this Stock Purchase Agreement as from time to time
amended and in effect between the parties.
"Closing" and "Closing Date" shall the meanings set forth in
Section 1.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall have the meaning set forth in Section 2.3.
"Common Stock" will include (a) the Company's Common Stock as
authorized on the date of this Agreement, (b) any other capital stock of any
class or classes of the Company authorized on or after the date hereof, the
holders of which shall have the right, without limitation as to amount, either
to all or to a share of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions on any shares
entitled to preference, and (c) any other securities of the Company into which
or for which any of the securities described in (a) or (b) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
"Company" means and shall include XxXxxx Corporation, a Delaware
corporation, its predecessors, successors and assigns.
"Confidential Information" shall have the meaning set forth in
Section 11.11.
"Conversion Shares" shall have the meaning set forth in Section 1.3.
"Encumbrances" means any lien, mortgage, security interest, pledge,
restriction on transferability, defect of title or other claim, charge or
encumbrance of any nature whatsoever on any property or property interest.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Intellectual Property" shall have the meaning set forth in
Section 2.14.
"Knowledge" of the Company and similar terms shall mean the actual
knowledge of the Company's Chief Executive Officer, the Chief Financial Officer
and those members of the Company's senior management who report directly to the
Company's Chief Executive Officer.
"Lien" means, with respect to any asset, any mortgage, deed of trust,
pledge, hypothecation, assignment, security interest, lien, charge, restriction,
adverse claim by a third party, title defect or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any assignment or other conveyance of any right to receive
income and any assignment of receivables with recourse against assignor), any
filing of any financing statement as debtor under the Uniform Commercial Code or
comparable law of any jurisdiction and any agreement to give or make any of the
foregoing.
"Material Adverse Effect" shall mean a material adverse effect upon the
business, condition (financial or otherwise), assets or results of operations of
the Company and the Subsidiaries taken as a whole.
"Permitted Recipients" shall have the meaning set forth in
Section 11.11.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, trust or unincorporated organization or a
government or agency or political subdivision thereof.
"Purchased Shares" shall have the meaning set forth in Section 1.1.
"Purchaser" shall have the meaning set forth in Section 1.1.
"Registration Rights Agreement" shall have the meaning set forth in
Section 2.2.
"Related Agreements" shall have the meaning set forth in Section 2.2.
"SEC Documents" means all reports, schedules, registration statements
and other documents (including all exhibits and schedules thereto) filed by the
Company with the Commission.
"Series A Preferred Stock" shall have the meaning set forth in
Section 1.1.
"Subsidiary" or "Subsidiaries" means any corporation, association or
other business entity of which the Company and/or any of its other Subsidiaries
(as herein defined), directly or indirectly owns at the time more than fifty
percent (50%) of the outstanding voting shares of every class of such
corporation or trust other than directors' qualifying shares.
"Tax" and "Taxes" shall have the meaning set forth in Section 2.11.
"Warrant" shall have the meaning set forth in Section 1.2.
"Warrant Agreement" shall have the meaning set forth in Section 1.2.
"Warrant Shares" shall have the meaning set forth in Section 1.2.
ARTICLE X
TERMINATION
10.1 Termination by Mutual Written Consent. This Agreement may be
terminated, and the transactions contemplated hereby abandoned, at any time
prior to the Closing by the written agreement of the Company and the Purchasers.
10.2 Termination for Breach. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time before the Closing
(or any date to which such Closing may have been extended by the written
agreement of the parties obligated to perform at such Closing) by any party
obligated to perform at such Closing if the conditions for its benefit set forth
in Article VI or VII, as the case may be, have not been satisfied on or prior to
such Closing and if the conditions for the benefit of the other parties have
been satisfied or waived, and if such performing party shall have given written
notice of termination to the non-performing party.
10.3 Termination for Delay. Unless earlier terminated in accordance
with Section 10.1 or 10.2, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned by the Company or the Purchasers if the
Closing does not occur by June 30, 1999, provided, however, that the right to
terminate this Agreement under this Section 10.3 shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or before such
date.
10.4 Rights After Termination. Upon termination of this Agreement under
this Article X, the parties shall be released from all obligations arising
hereunder, except as to any liability for misrepresentations, breach or default
in connection with any warranty, representation, covenant, duty or obligation
given, occurring or arising prior to the date of termination and except as to
the Company's obligations under Section 11.6 hereof.
ARTICLE XI
MISCELLANEOUS
11.1 Survival of Representations. The representations, warranties,
covenants and agreements made herein or in any certificates or documents
executed in connection herewith shall survive the execution and delivery hereof
and the Closing of the transaction contemplated hereby
until the earlier of (i) five (5) years from the date hereof, or (ii) the
conversion of all of the Purchased Shares.
11.2 Parties in Interest. Except as otherwise set forth herein, all
covenants, agreements, representations, warranties and undertakings contained in
this Agreement shall be binding on and shall inure to the benefit of the
respective successors and assigns of the parties hereto (including permitted
transferees of any of the Purchased Shares). Except as may be required to be
disclosed by order of a court or otherwise required by law, the parties agree to
maintain in confidence the terms of the purchase of the Purchased Shares
hereunder, except that the Purchasers may disclose such terms to their investors
in the ordinary course and except that the Company may disclose such terms to
its stockholders, accountants, bankers and advisors in the ordinary course.
11.3 Shares Owned by Affiliates. For the purposes of applying all
provisions of this Agreement which condition the receipt of information or
access to information or exercise of any rights upon ownership of a specified
number or percentage of shares, the shares owned of record by any affiliate of a
Purchaser shall be deemed to be owned by such Purchaser. For the purpose of this
Agreement, the term "affiliate" shall mean any Person controlling, controlled by
or under common control with, a Purchaser and any general or limited partner of
a Purchaser. Without limiting the foregoing, each Purchaser shall be considered
an affiliate of each other Purchaser.
11.4 Amendments and Waivers. Amendments or additions to this Agreement
may be made and compliance with any term, covenant, agreement, condition or
provision set forth herein may be omitted or waived (either generally or in a
particular instance and either retroactively or prospectively) upon the written
consent of the Company and the holders of a majority of the Conversion Shares,
assuming for such purposes the conversion of all shares. Prompt notice of any
such amendment or waiver shall be given to any Person who did not consent
thereto. This Agreement (including the Schedules and Exhibits annexed hereto,
which are an integral part of this Agreement) constitutes the full and complete
agreement of the parties with respect to the subject matter hereof.
11.5 Notices. All notices, requests, consents, reports and demands
shall be in writing and shall be hand delivered, sent by facsimile or other
electronic medium, or mailed, postage prepaid, to the Company or to the
Purchasers at the address set forth below or to such other address as may be
furnished in writing to the other parties hereto:
The Company: XxXxxx Corporation
000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxx, XX 00000-0000
Attention: President
Tel: (000) 000-0000
Fax: (000) 000-0000
with copy to: Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
The Purchasers: The address set forth opposite the Purchaser's name on
Schedule 1.1 attached hereto.
with copy to: Xxxxxxxx, Xxxxxxx & Xxxxxxx
A Professional Corporation
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx., P.C.
Tel: (000) 000-0000
Fax: (000) 000-0000
11.6 Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby, provided, however, that
the Company shall pay the Purchasers' reasonable costs and expenses for legal
counsel in connection with the investigation, preparation, execution and
delivery of this Agreement (and due diligence related thereto) and the other
instruments and documents to be delivered hereunder and the transactions
contemplated hereby and thereby on the date of the Closing; provided, further,
that in no case shall such costs and expenses exceed $20,000.
11.7 Counterparts. This Agreement and any exhibit hereto may be
executed in multiple counterparts, each of which shall constitute an original
but all of which shall constitute but one and the same instrument. One or more
counterparts of this Agreement or any exhibit hereto may be delivered via
telecopier, with the intention that they shall have the same effect as an
original counterpart hereof.
11.8 Effect of Headings. The article and section headings herein are
for convenience only and shall not affect the construction or interpretation
hereof.
11.9 Adjustments. All provisions of this Agreement shall be
automatically adjusted to reflect any stock dividend, stock split or other such
form of recapitalization.
11.10 Governing Law. This Agreement shall be deemed a contract made
under the laws of The Commonwealth of Massachusetts and together with the rights
and obligations of the parties hereunder, shall be construed under and governed
by the laws of such state. Each of the parties hereto agrees that any action or
proceeding brought to enforce the rights or obligations of any party hereto
under this Agreement may be commenced and maintained in any court of competent
jurisdiction located in The Commonwealth of Massachusetts, and that the United
States District Court for Massachusetts shall have non-exclusive jurisdiction
over any such action, suit or proceeding brought by any of the parties hereto.
Each of the parties hereto further agrees that process may be served upon it by
certified mail, return receipt requested, addressed as more generally provided
in Section 11.5 hereof, and consents to the exercise of jurisdiction over it and
its properties with respect to any action, suit or proceeding arising out of or
in connection with this agreement or the transactions contemplated hereby or the
enforcement of any rights under this Agreement.
11.11 Confidentiality. Each Purchaser covenants and agrees that such
Purchaser shall maintain the confidentiality of all financial, confidential and
proprietary information of the Company ("Confidential Information") that is
provided to such Purchaser under this Agreement or that is otherwise provided to
such Purchaser by the Company and identified by the Company in writing to such
Purchaser as being of a confidential nature. For purposes hereof, "Confidential
Information" shall not include any information which (i) was available to or in
possession of such Purchaser or any employees thereof or any beneficial owner of
a partnership interest in such Purchaser (collectively referred to herein as
"Permitted Recipients") prior to the time of disclosure to such Purchaser by the
Company or its representatives, (ii) is or becomes generally available to the
public other than as a result of a disclosure by any of such Permitted
Recipients, or (iii) is or becomes available to such Permitted Recipients on a
nonconfidential basis by a third party which is not bound by a confidentiality
agreement with the Company. Notwithstanding the preceding sentence, a Purchaser
may (a) disclose such confidential information when required by law or
governmental order or regulation or when required by a subpoena or other
process, provided that such Purchaser shall use reasonable efforts to give the
Company prior notice thereof; (b) disclose such confidential information to the
extent necessary to enforce this Agreement; (c) disclose such confidential
information to its attorneys, accountants, consultants and other professionals
to the extent necessary to obtain their services in connection with its
investment in the Company, provided that the requirements of this Section 11.11
shall in turn be binding on any such attorney, accountant, consultant or other
professional; (d) disclose such confidential information as may be required by
any prospective purchaser of any Purchased Shares or Conversion Shares from such
Purchaser, provided that such proposed sale is in compliance with the
restrictions imposed by this Agreement and the Related Agreements and such
prospective purchaser agrees in writing to be bound by the provisions of this
Section 11.11; and (e) disclose such confidential information to any of its
affiliates, provided that the requirements of this Section 11.11 shall in turn
be binding on such affiliates.
11.12 Assignment. Each Purchaser has the right to assign or transfer
any of its rights pursuant to this Agreement in connection with (and in
proportion to) its transfer of securities purchased hereunder. The Company may
not assign or transfer any of its rights pursuant to this Agreement unless the
Company first obtains the express written consent of a majority of the
Purchasers.
11.13 Waiver of Jury Trial. Each of the Company and the Purchasers
hereby expressly waives its respective rights to a jury trial of any claim or
cause of action based upon or arising out of this agreement, any other related
agreements or any dealings between them relating to the
subject matter of this Agreement. The Company and Purchasers also waive any bond
or surety or security upon such bond which might, but for this waiver, be
required of any party. The scope of this waiver is intended to be all
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including without limitation,
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. The Company and the Purchasers further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each voluntarily waives its jury trial rights following consultation with legal
counsel. This waiver is irrevocable and may only be modified either orally or in
amendments, renewals, supplements or modifications to this agreement, any other
related agreement or the Purchased Shares. In the event of litigation, this
Agreement may be filed as a written consent to a trial (without a jury) by the
court.
* * * * * * *
XXXXXX CORPORATION
COUNTERPART SIGNATURE PAGE
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
Company, whereupon, this letter shall become a binding agreement among us.
XXXXXX CORPORATION
By:_______________________________________
Name: Xxxx X. Xxxx
Title: Vice President-Finance, Chief Financial Officer,
Secretary and Treasurer
PURCHASERS:
ADVENT GLOBAL GECC III LIMITED PARTNERSHIP
By: Advent Global Management Limited Partnership,
General Partner
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation,
General Partner
By:
Xxxxxxx X. Xxxxxxxx
Senior Vice President
ENVIROTECH INVESTMENT FUND I LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation,
General Partner
By:
Xxxxxxx X. Xxxxxxxx
Senior Vice President
ADWEST LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation,
General Partner
By:
Xxxxxxx X. Xxxxxxxx
Senior Vice President
OAKSTONE VENTURES LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation,
General Partner
By:
Xxxxxxx X. Xxxxxxxx
Senior Vice President
ADVENT PARTNERS LIMITED PARTNERSHIP
By: Advent International Corporation,
General Partner
By: _______________________________________
Xxxxxxx X. Xxxxxxxx
Senior Vice President
Schedule 1.1
Purchaser Purchased Shares Consideration
--------- ---------------- -------------
Advent Global GECC III Limited Partnership 350,000 $ 7,000,000
EnviroTech Investment Fund I Limited Partnership 71,250 $ 1,425,000
Adwest Limited Partnership 20,000 $ 400,000
Oakstone Ventures Limited Partnership 50,000 $ 1,000,000
Advent Partners Limited Partnership 8,750 $ 175,000
Totals 500,000 $10,000,000
c/o Advent International Corporation
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
HWD2: 541005-8
