SECURITIES EXCHANGE AGREEMENT
THIS SECURITIES EXCHANGE AGREEMENT (the "Agreement") is made and entered into
as of this 31st day of December, 1996 by and among Scriptel Holding, Inc., a
Delaware corporation ("Scriptel") and Xxxxxx X. Xxxxx, an individual
("Xxxxx").
RECITALS
WHEREAS, Xxxxx has loaned money to Scriptel on the dates and amounts shown
below, which loans are evidenced by convertible notes or demand notes as
provided herein;
WHEREAS, the Company is desirous of having Xxxxx convert into equity both the
existing convertible notes and non-convertible notes and the interest thereon;
and
WHEREAS, the Company and Xxxxx are willing to resolve all other matters
between them relating to any obligations, legal, moral or otherwise, to issue
additional equity to Xxxxx in consideration of prior equity conversions,
surrender of previously outstanding options and warrants, and forbearance with
respect to notes in default; and
WHEREAS, Xxxxx is willing to convert all outstanding indebtedness and release
Scriptel from all outstanding obligations to him on the terms set forth
herein;
NOW, THEREFORE, the parties agree as follows.
1. Exchange of Securities.
(a) Scriptel is indebted to Xxxxx in the amounts set forth below
Interest Thru Convertible
Date of Loan Current Principal Dec. 31, 1996 Note
------------ ----------------- ------------- -----------
July 1, 1991 $125,000 $68,982.69 yes
February 1, 1993 75,000 38,502.57 yes
May 18, 1993 100,000 32,244.84 yes
Jan. 31, 1996 200,000 99,666.00 no
June 7, 1996 30,000 3,003.29 no
-------- -----------
Totals $530,000 $242,399.39
======== ===========
(b) Xxxxx agrees to convert all outstanding indebtedness, including interest,
in an amount equal to $772,399.39, into shares of Scriptel Common Stock, $.10
par value (the "Shares"), at a conversion rate equal to $0.10 per share, for a
total of 7,723,994 shares. In addition, as a further inducement to Xxxxx to
convert his indebtedness and in exchange for the release set forth in Section
2 below and the cancellation of currently owned warrants to purchase 5,669,332
Shares at exercise prices ranging from $0.40 to $0.75 per share and expiring
at various dates through October 23, 2002, Scriptel shall issue to Xxxxx a
warrant (the "Warrant") to purchase 5,669,332 shares at an exercise price of
$0.14 per share. The Warrant shall have an expiration date of December 31,
2001, subject to earlier termination if the fair value of the Company's shares
of common stock equals or exceeds $1.00 per share. The Warrant shall be in
the form of Exhibit A hereto.
2. Mutual Release. Except as to their respective covenants, representations,
warranties and obligations under this Agreement, (i) Xxxxx agrees to fully
release, acquit and discharge Scriptel and its officers, directors, employees
and subsidiaries from and against any and all actions, causes of actions,
claims and demands of whatever kind or nature, known and unknown, foreseen and
unforeseen, suspected and unsuspected, asserted or unasserted, that Xxxxx has
or may have against them by reason of any fact, matter or thing through the
date of this Agreement, and (ii) Scriptel agrees to fully release Xxxxx from
and against any and all actions, causes of actions, claims and demands of
whatever kind or nature, known and unknown, foreseen and unforeseen, suspected
and unsuspected, asserted or unasserted, that Scriptel has or may have against
him by reason of any fact, matter or thing through the date of this Agreement.
3. Representations, Warranties and Covenants of Scriptel. As a material
inducement to Xxxxx to enter into this Agreement and consummate the
transactions contemplated hereby, Scriptel represents, warrants and, where
applicable, covenants to Xxxxx as follows:
(a) Corporate Status. Scriptel is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
Scriptel has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now conducted.
(b) Corporate Power and Authority. Scriptel has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and consummate the transactions contemplated hereby. Scriptel has
taken all necessary corporate action to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
(c) Enforceability. This Agreement has been duly executed and delivered by
Scriptel and constitutes a valid, legal and binding obligation of Scriptel,
enforceable against Scriptel in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
(d) No Violation. The execution and delivery by Scriptel of this Agreement,
the consummation of the transactions contemplated hereby, and the compliance
by Scriptel with the terms and provisions hereof, will not: (i) result in a
breach of, or constitute a material default under (with or without due notice
or lapse of time or both), or give rise to any right of termination,
cancellation or acceleration under, or create any obligations to pay money or
otherwise perform a material act pursuant to, any of the terms, conditions, or
provisions of any contract, agreement, promissory note or other instrument to
which Scriptel is a party or by which Scriptel or a material portion of its
assets or properties may be bound; (ii) conflict with, or result in any breach
of any provision of, the Certificate of Incorporation or Bylaws or other
governing instruments of Scriptel (iii) violate any domestic or foreign,
federal, state or local law, rule, regulation, statute or ordinance
application to or binding on Scriptel or its properties, or any determination,
ruling, decree or judgment of any arbitrator or a court or any other
governmental or quasi-governmental entity, official or authority having
jurisdiction over Scriptel or any material portion of its assets or
properties; or (iv) result in the imposition of any lien or encumbrance upon
any of the capital stock, properties or assets of Scriptel.
(e) Consents and Approvals. No consent, approval, waiver or other action by
any person or entity who is not a party to this Agreement or under any
domestic or foreign, federal, state or local law, rule, regulation, statute or
ordinance applicable to or binding on Scriptel or is properties is required or
necessary for the execution or delivery by Scriptel of this Agreement or the
consummation of the transactions contemplated hereby, or the performance by
Scriptel of its obligations hereunder.
(f) Capitalization. The authorized capital stock of Scriptel consists of
125,000,000 shares of common stock, $0.10 par value per share. As of the date
of this Agreement, 34,211,457 shares of the common stock of Scriptel are
issued and outstanding. Except a maximum of 53,000,000 shares subject to
outstanding option, warrants or convertible notes reserved for issuance under
the Company's employee benefit plans or otherwise, there are (Y) no rights,
options, warrants, convertible securities, subscription rights or other
agreements, calls, plans, contracts or commitments of any kind relating to the
issued and unissued capital stock of, or other equity interests in, Scriptel,
and (Z) no contractual obligations of Scriptel to repurchase, redeem or
otherwise acquire any shares of the common stock of Scriptel or any capital
stock of, or any equity interest in, any of its subsidiaries.
(g) Although the Shares being issued to Xxxxx have not been registered under
the Securities Act of 1933, as amended, the Shares issuable in exchange for
the principal of the convertible notes, pursuant to Rule 144 promulgated by
the SEC under the Act, may tack the holding period relating to the original
convertible notes. Scriptel will request a no-action letter from the SEC with
respect to its belief that Rule 144 would also allow Xxxxx to tack the holding
period of the notes that were not convertible notes. The holding period with
respect to the accrued interest does not commence until the interest has been
paid.
4. Representations and Warranties of Xxxxx. As a material inducement to
Scriptel to enter into this Agreement and consummate the transactions
contemplated hereby, Xxxxx represents and warrants to Scriptel as follows:
(a) Enforceability. This Agreement has been duly executed and delivered by
Xxxxx and constitutes a valid, legal and binding obligation of Xxxxx,
enforceable against him in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and general
equitable principles regardless of whether such enforceability is considered
in a proceeding at law or in equity.
(b) Investment Intent. Xxxxx is acquiring the Shares and Warrant solely for
the purpose of investment and not with the intent of re-selling the Shares or
Warrant except pursuant to a valid registration statement under applicable law
or a valid exemption from such registration.
(c) Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreements made by or on behalf of Xxxxx.
5. Demand Registration.
(a) Request for Registration. In the event that Scriptel shall receive from
Xxxxx a written request that it effect any registration, qualification or
compliance with respect to all or any portion of the Scriptel Shares then held
by Xxxxx, Scriptel will, as soon as practicable, use its best efforts, at its
sole cost and expense, to effect all such registrations, qualifications, and
compliances (including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualifications under the
applicable blue sky or other state securities laws and appropriate compliance
with exemptive regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of
Scriptel Shares as are specified in such request.
(b) Filing of Registration Statement. Scriptel shall file a registration
statement covering Xxxxx'x Scriptel Shares so requested to be registered as
soon as practical, but in any event within 90 days, after receipt of the
request of Xxxxx; provided that if Scriptel shall furnish to Xxxxx a
certificate signed by the President of Scriptel stating in the good faith
judgment of the Board of Directors that it would be detrimental to Scriptel
and its stockholders for such registration statement to be filed at the date
filing would be required and it is therefore essential to defer the filing of
such registration statement, Scriptel shall have an additional period of not
more than 90 days within which to file such registration statement. Such
certificate and deferral of registration may be given only once in any 360 day
period.
(c) Limitation on Request. Xxxxx shall have three demand registration
statements and an unlimited number of rights to demand registration under a
Form S-3, provided that only one demand to register may be made in any one
year period.
6. Miscellaneous.
(a) Survival. The representations, warranties, covenants and agreements made
herein shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, notwithstanding any
investigation made by any of the parties, or their agents or representatives.
(b) SEC Filings Relating to Transfer of Shares. Each party to this Agreement
shall, at its own expense, file whatever documents with the SEC or state
securities agreement as may be necessary or advisable under the Exchange Act
and the rules and regulations promulgated thereunder or state law to report
the issuance of Shares and Warrants contemplated by this Agreement.
(c) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
(d) Entire Agreement, Amendment. This Agreement constitutes the entire
agreement between Xxxxx and Scriptel with respect to the subject matter
hereof; supersedes all prior or contemporaneous negotiations, communications,
discussions and correspondence concerning the subject matter hereof; and may
be amended or modified only with the written consent of all the parties
hereto.
(e) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware exclusive of choice of law
provisions which would direct the application of another jurisdiction's law.
(f) Counterparts. This Agreement may be executed in separate counterparts,
each of which, when so executed, shall be deemed to be an original and all of
which, when taken together, shall constituted but one and the same agreement.
(g) Expenses. Except as otherwise provided in this Agreement, the parties
shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby.
(h) Further Action. Each party hereto agrees to perform all further acts and
to execute and deliver or cause to be executed and delivered all documents,
instruments and agreements which may be reasonably necessary to carry out the
intents and purposes of this Agreement or to enable the other party to enforce
any of its rights under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first written above.
SCRIPTEL HOLDING, INC.
by: /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx Xxxxxxxx, Chairman and Chief Executive Officer
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
